Pakistan faces economic challenges for lack of consensus: WB

Bhurban : The World Bank’s Country Director Patchamuthu Illangovan said on Wednesday that challenges arising out on economic front because of lack of political consensus and next 10 years were crucial for Pakistan to set higher growth trajectory.

“There are challenges arising out of lack of political consensus. Next 10 years are crucial for Pakistan where political consensus is required to overcome challenges,” the WB’s country director in Pakistan told journalists in a conference here on Wednesday.

Dwelling upon macroeconomic issues, he said Pakistan’s economy was facing short term headwinds in the context of rising external account deficit. He said that the government had hold back exchange rate for long, but recently they allowed around five percent adjustments in rupee-dollar parity.

“More flexibility is needed to move towards the desired direction,” he said and added that imports were rising and exports earning went up little bit, but the current account deficit had largely remained on higher side. The remittances, he said, also flattened.

The domestic revenue mobilisation, he said, in terms of tax to GDP ratio stood at 12.4 percent which was still not adequate. “These headwinds will continue impacting Pakistan until adjustments were not made on economic front,” he said and added more coordination was needed among the Centre and provinces on fiscal reforms. To another query, he said that the government had not yet requested for budgetary support and policy credit related to natural disaster, but it also required macroeconomic framework.

When asked about his assessment of the possibility of seeking another IMF bailout package, he said that there were conspiracies hatched by the donors to push the government towards the IMF programme.

“I would leave to the authorities what they wanted to do,” he maintained. Pakistan did well in first three years of the government as the GDP growth went up, but, in last 12 months, the external problems had surfaced. “Let’s have one common approach to evolve political consensus,” he added.

He said that Pakistan’s population touched 207 million, and it was projected that it might go up to 400 million by 2047. If the population growth remained same then the GDP per capita would stand at the existing level, but if population growth was reduced to one percent and GDP growth touched eight percent then the per capita income could go up to $10,000 by 2047. He said next 10 years were quite important for Pakistan to lay the foundation, and the country could achieve turnaround after completing 100 years after becoming independent.