Projecting a massive decline in Pakistans GDP growth to 0.4 per cent, the World Bank has warned that the non-completion of IMF programme, failure to secure financing from key bilateral partners and political instability may result in eruption of a major macroeconomic crisis.
While the Asian Development Bank (ADB), in a separate report, projects a significantly lower GDP growth rate of 0.6 per cent, ballooning inflation of up to 27.5 per cent and an ongoing foreign exchange crisis in Pakistan, The News reported.
The World Bank says: “The country’s outlook is subject to major downside risks, which, if they materialise, could result in a macroeconomic crisis. The non-completion of the IMF programme and failure to secure expected rollovers, refinancing, and new financing from key bilateral partners presents major risks.”
According to the World Bank report, approximately four million people fell below the poverty line as poverty increased by one percentage point in Pakistan during the last year.
The poverty measured at the lower middle-income poverty line is projected to increase to 37.2 per cent in FY23 against 36.2 per cent in FY22 pushing an additional 3.9 million people into poverty as compared to FY22, The News reported.
The World Bank’s Country Director Najy Behhassine stated in reply to a question that securing of external financing needs was must for the revival of the IMF programme.
He said that Pakistan would have no choice but to seek the programme as it would help restore confidence.
He said that there was no trust deficit in the case of Pakistan as the disbursement of project loans remained historically high, The News reported.
When asked about prospects of regional trade, the World Bank official said that Pakistan’s exports potential in case of regional integration stood at $68 billion out of which trade with India could jack up exports up to $10 billion over the medium term while it could go up by $13 billion with China.