Omar Ayub highlights six ‘key flaws’ in WB’s tariff reform modelling

ISLAMABAD: While Opposition Leader Omar Ayub Khan highlighted six major flaws in the World Bank’s modelling for envisaging import tariff reduction, the World Bank said Pakistan would have a positive impact of 6 percent boost in GDP, $8-15 billion increase in exports, and creation of 1 million jobs over five years.

However against the general perception of increasing imports at a rapid pace through tariff rationalisation resulting in escalation in trade deficit and flooding Pakistani markets with imports, the WB has estimated that imports would go up by only 6 percent while exports would increase by 14 percent over five years.

The WB stated that this model of envisaging tariff rationalisation does not cater to uncertainties on the political front, especially in the aftermath of the recent ongoing Iran-Israel conflict and increasing oil prices in the international market. The WB expects that the exchange rate movement would be undertaken in line with the free exchange rate.

During this briefing which was open for the media, it was conceded that these tariff reforms were front-loaded and envisaged to be implemented mostly in the first two years, knowing that the political government could implement hard decisions in the first couple of years after coming into power.

These projections as a result of the National Tariff Policy for 2025 - 2030 for Pakistan were shared by WB Economist Ms. Anna Twum with the Opposition Leader in the National Assembly along with other MNAs from the PTI here at the Parliament House on Friday morning.

Opposition Leader Omar Ayub Khan flagged six major flaws in the modelling of the WB to estimate results of these tariff reforms and stated the assumed variables are not applicable in Pakistan. “For instance, perfect competition, adopting a static model, the Pakistan Bureau of Statistics (PBS) contaminated data is being used. In addition, international bodies also use PBS data. This model is very specific to be used for assessing impact of tariff lines. It assumes that Tariff Reforms will have to take place. Political will and ability to push the reforms are not taken into account. The model does not take into account the geopolitical moves by foreign governments to impose counter veiling tariffs such as USA.”

In his sixth point, he said the government is incorrectly projecting increase in exports and increase in GDP based on this model which cannot be applied fully in case of Pakistan.