Security, political tensions, lack of reforms stall Pak economy: WB report

Pakistan

Security, political tensions, lack of reforms stall Pak economy: WB report

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A World Bank report on Pakistan paints a dismal picture of economic outlook and future projections.

18 September,2011 02:23 am

The report, presented by the WB country director to Pakistan on August 30 in Washington, DC, to the institution’s executive directors states that the overall economic scenario for Pakistan places it behind India, Sri Lanka, Bangladesh and Nepal amongst Saarc countries.The report, a copy of which is available with Dunya News, mentions low and declining growth, rising unemployment and decreasing per capita income as the major causes of concern in Pakistan, which is struggling to match the giant strides being taken by other countries in the region on economic front.Pakistan’s GDP growth in 1990 was 5%, which has fallen to 2.5% in 2010-11. Unemployment is 13% while around 17-18% people are living below poverty line. The Report blames food and oil prices as the major cause of high inflation. Low economic growth is dubbed as an obstacle in job creation, although Pakistan needs three million more jobs.In the human development sector, net enrollment in education is a sorry 67%, which is behind Sri Lanka (95%), (Bangladesh 90%) and India (85%) in SAARC while the infant and under-five mortality rate (80 per 1000) is highest in South Asia.The female participation (15-64 age group) in economic activities is 21 %, which is considerably low as compared to 38% in south Asia as a whole. The foreign Direct Investment (FDI) to Pakistan fell by 27% during last year and Tax-GDP ratio (9 %) is lowest in south Asia as per the WB report.The report criticises expensive and inefficient subsidies for energy sector that do not prevent power shortage. WB believes that subsidies have led to large and persistent fiscal deficit. This remains a contentious issue though because Pakistan government has resisted several suggestions by international financial institutions to drastically reduce subsidies.The reduction in deficit (brought down from 8.4% to 6.5%) last year was financed primarily through high borrowing and pushing-up inflation, the report argues while raising eye-brows on the projections for next year including 4%, growth, 12% inflation and 4% fiscal deficit, which the Bank believes are unreal considering the trends in last three years.Pakistan has slipped 5 placed down to 123rd amongst 139 countries in terms of global competitiveness. Pakistan also fell eight places to number 83rd in 2011 in the index for countries conducive for doing business.The report hails that the eternal balances situation is looking better for the first time in the last six years, but primarily it is because of export prices and remittances. This, according to the report, is not sustainable.The lengthy report, however, outlines conflict and security situation in the country for the last several years, slow progress on the proposed economic reforms, floods and political tensions as factors hampering economic revival, and the impact of floods alone is estimated to be around 10 billion dollars. –contributed by Awais Saleem, Dunya News Correspondent in Washington.