ISLAMABAD: The World Bank on Tuesday reaffirmed its support to help the new Pakistan Tehreek-e-Insaf-led government bring the economy back on track as twin deficits are threatening a decade-high growth achieved last year.
“(The World) Bank will continue to extend support to government of Pakistan for implementation of the agenda for economic growth and social development being pursued by the new government,” South Asia Regional Vice President of World Bank Hartwig Schafer said at a meeting with Minister for Finance, Revenue and Economic Affairs Asad Umar.
Schafer emphasised the importance of human capital development, macroeconomic stabilisation and inclusive growth for Pakistan. “(He) reaffirmed the World Bank’s support to Pakistan in these areas,” a government statement quoted him as saying.
Minster Umar said the World Bank has been long standing development partner of Pakistan and has offered significant support to the government over the years.
“He informed the vice president of World Bank that the government will take all the requisite measures to implement the economic reform agenda to help put the economy back on track,” the statement said.
Finance minister said the new government desires to enhance the role of private sector and “for that private sector will be encouraged to take lead in the economic development of the country”.
The country achieved a decade-high growth of 5.8 percent during the last fiscal year of 2017/18, guided by robust agriculture and services sectors. The current account deficit that amounted to $18 billion in FY2018 continued to pose challenge to external account position. The current account deficit continued to increase in July. It widened 13.87 percent to $2.2 billion in the first month of the current fiscal year.
The last government tried to contain bleeding foreign reserves – which are only enough to cover two months of imports – by bringing rupee down 20 percent against the US dollar three times since December last year. Yet, the devaluation failed to improve the country’s foreign trade position, which is the key catalyst to current account deficit.
Some analysts expect the current account deficit will touch $24 billion during the current fiscal year with external financing requirement estimated at $15 to 18 billion.
Earlier, the newly-elected finance minister told media that Pakistan's external debt and liabilities exceeded $94 billion. The central bank put the total external debt and liabilities at $95.097 billion as of June as against $83.431 billion till the end of fiscal 2016/17.
Out of total debt and liabilities of Rs29.861 trillion, the government's domestic debt stood at Rs16.415 trillion, while its external debt in rupee terms had reached Rs7.795 trillion. The country’s total debt and liabilities rose sharply to the equivalent of 86.8 percent of GDP on June 30.