Pakistan's economy on edge of precipice, warns World Bank
With 40 per cent of the population living below the poverty line, Pakistan is battling economic hardships, climate shocks, and human development challenges
Pakistan's economy has reached a tipping point, with 40 per cent of its population living below the poverty line, and policy decisions driven by strong vested interests of military, political and business leaders, the World Bank has warned.
The candid warning came ahead of the new election cycle for the incoming government, making it clear that while international lenders and development partners can advise with examples of success stories and some financing, hard choices and course-correcting decisions can only be made within the country, Pakistani paper Dawn reported.
"This may be Pakistan's moment to make policy shifts," said Najy Benhassine, country director for the World Bank in Pakistan at a news briefing, while releasing a set of policy notes for debate and discussion before the new elected government comes in, the Dawn report said.
Benhassine said Pakistan was in the middle of a human resource capital and economic crisis. "Policy decisions are heavily influenced by strong vested interests, including those of military, political and business leaders," reads the overview of the report titled 'Reforms for a Brighter Future: Time to Decide' that Benhassine released.
He added that Pakistan has been facing numerous economic hardships including inflation, rising electricity prices, severe climate shocks, and insufficient public resources to finance development and climate adaptation — leaving the country among the most vulnerable to climate change impacts, Dawn reported.
Pakistan's human development outcomes lag well behind the rest of South Asia and are roughly equivalent to those in many sub-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 suffer from stunted growth. The country also has the largest number of out-of-school children in the world at 20.3 million, Dawn said.
Its growth model has resulted in periodic balance of payments crises driven by unsustainable fiscal and current account deficits that necessitated subsequent contractionary adjustments, slowing growth, reducing certainty and undermining investments.