The World Bank Report on the performance of South Asian economies titled: “South Asia Focus 2019 fall” predicts that inflation rate in Pakistan will shoot up to 13 percent, fiscal deficit will widen and public debt will mount further during the next two years. It depicts different picture when compared with the quarterly economic reviews presented by the Advisor on Finance Dr. Abdul Hafeez Sheikh in a press conference the other day. The report expresses satisfaction over the substantial reduction in imports and modest increase in exports which has contained the most worrying macroeconomic imbalance of bulging current account deficit. It also appreciates the currency depreciation towards the real exchange rate.
The bottom-line of the World Bank Report is that it laid squarely the blame of prevailing economic mess on the policies pursued by the previous two governments. It is pertinent to mention that before the joint meeting of the World Bank and International Monetary Fund (IMF) the World Bank had drawn the attention of PML-N to the macroeconomic imbalances of swelling current account deficit, fast widening fiscal deficit and rising trend of the public debt to unsustainable limit in its report titled: South Asia Focus, fall 2017.” Instead of admitting the worsening macroeconomic indicators and initiating corrective measures former Planning Minister Ahsan Iqbal rejected the objective contents of that report in a Press Conference in Pakistan’s embassy in Washington after attending the meeting with donor agencies in September, 2017. On the contrary the PTI government is not indulging in disinformation campaign about the bitter facts of the economy and has embarked upon implementing structural reforms which significantly brought down deficit in foreign trade but it could not tackle acceleration in fiscal deficit and sharp rise in public debt. The fiscal deficit will remain high at 7.5 percent and public debt at 82 percent of the GDP. Safe and approved limit under “Fiscal Responsibility and Debt Limitation Act” 2005 is 60 percent of the GDP for the economy of Pakistan.
Referring to the satisfactory growth of other developing economies in the South Asia, the World Bank has suggested to Pakistan substantial increase in foreign direct investment and achieving competitiveness of export products. This can be done only when a viable long term industrial policy is formulated and implemented with the induction and indigenization of fourth and fifth generation technologies, skill development and improving the economic environment. The improvement in business environment will require minesweeping of the mines laid in the economy by the previous PML-N government which pushed placed Pakistan in the World Bank Ease of Doing Business Index at 147th position. During the past one year the ranking has improved to 133rd position but more improvement in business environment is inevitable to attract both foreign and domestic investment.
