ISLAMABAD, September 24 (ANI): Ahead of the general elections in Pakistan, the World Bank has given a candid warning for the upcoming government to make choices while making it clear that international lenders and development partners could only advise with international experiences of successes and some financing but hard choices and course correcting decisions could only be taken within the country, Dawn news reported.
“Poverty in Pakistan shot up to 39.4 per cent as of last fiscal year, with 12.5 million more people falling into the trap due to poor economic conditions, the World Bank has said, as it urged the cash-strapped country to take urgent steps to achieve financial stability, ” reports PTI.
The country director for the World Bank in Pakistan, Najy Banhassine said in an overview of ‘Reforms for a Brighter Future : Time to Decide’, “Policy decisions are heavily influenced by strong vested interests, including those of military, political and business leaders.”
Pakistan is on the brink of crisis where it should decide to remain a laggard with 40 per cent population living below the poverty line under elite capture and policy decisions driven by strong vested interests of military, political and business leaders or change course to take off for a brighter future.
World Bank officials said Pakistan had been facing numerous economic hardships including inflation, rising electricity prices, severe climate shocks, and insufficient public resources to finance development and climate adaptation — when the country was among the most vulnerable to climate change impacts.
“It is also facing a ‘silent’ human capital crisis: abnormally high child stunting rates, low learning outcomes, and high child mortality,” Mr Najy said, adding that Pakistan’s economic model no longer reducing poverty and it was very concerning that poverty reduction successes until 2018 had been reversed since.
Additionally, the World Bank also said that Pakistan’s average real per capita growth rate was just 1.7 per cent between 2000 and 2020, less than half the average per capita growth rate for South African countries over the period and well below the average of comparator countries with similar economic structures.
The human development outcomes lag well behind the rest of South Asia and are roughly equivalent to those in many Su-Saharan African countries with the costs disproportionately borne by girls and women while close to 40 per cent of children under five years of age were stunted and had the largest number (20.3m) of out-of-school children in the world.
The World Bank proposed shifting policies from underfunded, inefficient, and fragmented service delivery and social protection systems towards coordinated, efficient, and adequately financed service delivery, targeting the most vulnerable — in particular, to reduce abnormally high child stunting rates and to increase learning outcomes for all children, especially for girls.
It also advised a shift from wasteful and rigid public expenditures benefiting a few, towards tightly prioritised spending on public services, infrastructure, and investments in climate adaptation, benefiting populations most in need.
The Pakistani Rupee (PKR) touched a record low of Rs 299.64 against the dollar in the interbank market by further sliding 0.63 per cent on Wednesday, ARY News reported.
According to the State Bank of Pakistan, the local unit fell by Rs 0.63 against the US dollar to close at Rs 299.64 in interbank against Tuesday’s close of Rs 299.1, extending the losses for the third season.
In the open market, the dollar was changing hands for PKR 314. The currency dealers have attributed the depreciation in the rupee to an easing in import restrictions that have lifted demand for the USD, as per ARY News.
Notably, Pakistan imposed import restrictions in 2022 to stem outflows from its shrinking foreign reserves. The removal of those restrictions beginning in June was a condition of a USD 3 billion International Monetary Fund (IMF) loan programme to help the crisis-ridden economy.
Pakistan is currently being governed by a caretaker government that is tasked with steering the country through to a national election while grappling with searing political tension as well as historically high inflation and interest rates, ARY News reported.
Notably, Pakistan is battling a huge economic crisis, with staggering inflation and depleting Forex reserves.
Earlier this month, Islamabad witnessed a downfall in the productive and services sectors as the companies were scrambling to cut expenses and weighing the option of job cuts, salary freeze or reduction in salaries, as per The News International.
Although Pakistan was able to secure the IMF deal just in time, the conditions imposed by the body are turning out to be tedious to implement.
Under this, Pakistan imposed additional taxes of 215 billion Pakistani Rupees (PKR) and slashed expenditures by 85 billion PKR in its budget. With sky-high inflation and foreign exchange reserves barely enough to cover one month of controlled imports, Pakistan has been facing its worst economic crisis in decades, which analysts say could have spiralled into a debt default in the absence of the IMF deal.
