Compersion
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Does Pakistan census also cover Saudi Arabia ??
Pakistan Economy: News & Discussion
- Thread starter A.V.
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Move to moderate imports
“The cash margin requirements are imposed for a short period to accommodate the import of products essential to support a growing economy” — SBP
Mikesingh
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Ports and airports now handed over to the Chinese masters! What's next? Let me guess.....Ah yes! Railways, metros, surface transport, manufacturing, infrastructure and of course, the PIA!! The next PM of Pakistan will probably be a Chinese too!!!
sthf
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Current account deficit surges by 120pc
https://www.dawn.com/news/1321772/current-account-deficit-surges-by-120pc
......................
So, current account deficit is turning out to be disastrous, remittances are shrinking, same goes for exports & debt servicing takes up 42% of the budget.
https://www.dawn.com/news/1321772/current-account-deficit-surges-by-120pc
......................
So, current account deficit is turning out to be disastrous, remittances are shrinking, same goes for exports & debt servicing takes up 42% of the budget.
Flame Thrower
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This is not even the beginning mate...
From next year onwards, Pak is supposed to start repaying Chinese...
I seriously doubt they would default debts by 2020-21 budget...
Our esteemed Pak panel @Neo; @Zarvan; @Zulfiqar Khan.... When would Pak default debts according to you!! OR do you contradict my statement and share the plan how Pak is going to manage it's debt.
Please feel free to invite pakis, if I've missed any....
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Possible US aid cut to push Pakistan in murkier waters
https://www.google.co.in/amp/s/www....US-aid-cut-to-push-Pakistan-in-murkier-waters
https://www.google.co.in/amp/s/www....US-aid-cut-to-push-Pakistan-in-murkier-waters
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Petrol price raised by Rs 1 per litre
Thefederal government on Friday revised the price of petroleum products. Finance Minister Ishaq Dar during a press conference held here announced that the price of petrol and diesel would be raised by Rs 1 per litre.
The finance minister is in Dubai where talks between Pakistan and the International Monetary Fund (IMF) are being held since the last three days.
While Addressing the media, Ishaq Dar expressed that the prices of kerosene oil and light diesel oil would remain unchanged.
Finance Minister said: “The government would absorb an additional burden of Rs 3 billion for the month of April by not transferring the full impact of the prices of petrol and diesel to consumers.”
He maintained that the government was trying to increase petroleum prices by minimum possible amount.
Earlier, the Oil and Gas Regulatory Authority (Ogra) had sent its summary to the Finance Ministry for approval, seeking increase of Rs 2.28 per litre and Rs 2.04 per litre in prices of petrol and diesel respectively. A Rs 13.76 per litre hike in the price of kerosene oil and Rs7.75 per litre increase in light diesel was also recommended.
With the increased prices, Petrol would be sold at Rs 74 per litre and Diesel at Rs 84.
Ishaq Dar said that the government has been passing on the price impact partially to consumers and loss of revenue on this account has reached to around 97 billion rupees during the current financial year.
https://www.geo.tv/latest/136234-Govt-hikes-petrol-price-by-Rs1-per-litre
Close to a billion dollar in revenue loss. Enough to fund a year long jihad in India.
Thefederal government on Friday revised the price of petroleum products. Finance Minister Ishaq Dar during a press conference held here announced that the price of petrol and diesel would be raised by Rs 1 per litre.
The finance minister is in Dubai where talks between Pakistan and the International Monetary Fund (IMF) are being held since the last three days.
While Addressing the media, Ishaq Dar expressed that the prices of kerosene oil and light diesel oil would remain unchanged.
Finance Minister said: “The government would absorb an additional burden of Rs 3 billion for the month of April by not transferring the full impact of the prices of petrol and diesel to consumers.”
He maintained that the government was trying to increase petroleum prices by minimum possible amount.
Earlier, the Oil and Gas Regulatory Authority (Ogra) had sent its summary to the Finance Ministry for approval, seeking increase of Rs 2.28 per litre and Rs 2.04 per litre in prices of petrol and diesel respectively. A Rs 13.76 per litre hike in the price of kerosene oil and Rs7.75 per litre increase in light diesel was also recommended.
With the increased prices, Petrol would be sold at Rs 74 per litre and Diesel at Rs 84.
Ishaq Dar said that the government has been passing on the price impact partially to consumers and loss of revenue on this account has reached to around 97 billion rupees during the current financial year.
https://www.geo.tv/latest/136234-Govt-hikes-petrol-price-by-Rs1-per-litre
Close to a billion dollar in revenue loss. Enough to fund a year long jihad in India.
Kshatriya87
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Every Pakistani now owes over Rs101,338 in debt
By Our Correspondent
Published: June 4, 2015
LAHORE:
One of the most obvious legacies of a crisis-ridden economy is a sharp increase in public debt. The country’s debt has grown since 2007, with successive governments making huge borrowings, pushing the country towards a debt trap.
As of March 2015, the total debt liabilities of the country stood at Rs19,299.2 billion. Every Pakistani now owes a debt of about Rs101,338. This figure was Rs90,772 in 2013. It was estimated at Rs80,894 in 2012 and was only Rs37,170 in early 2008.
This was the crux of a discussion held at a seminar jointly organised by the Institute for Social and Economic Justice (ISEJ) and the Islamic Relief Pakistan under the campaign ‘Breaking the Chains of Debt’, at Forman Christian College.
The debt-to-gross domestic product (GDP) ratio stands at 66.4%, in which foreign debt is Rs6.4 trillion and domestic debt is Rs12 trillion.
The external debt servicing reached close to $7 billion in fiscal year 2014, which is almost 50% of the current reserves of the State Bank of Pakistan.
The country paid $6.820 billion in debt servicing in FY15, including $5.910 billion as principal amount and $915 million in interest payments. Worryingly, 47% of whatever the government generates in revenue is going to pay off debt against 44% in the previous year.
Ideally, this ratio should be less than 30% to allocate more resources to social and poverty-related expenditures.
Speaking on the occasion, ISEJ Executive Director Abdul Khaliq said the debt situation was alarming and the government must review its reckless borrowing behaviour.
“We must demand an audit of the public debt,” he said. “All new loan contracts should be subjected to a debate in parliament and its approval.”
The government must stop reckless international borrowing and minimise reliance on foreign debt in the future and take measures to get the illegitimate loans cancelled, he said.
Khaliq emphasised the need for synergising efforts for a debt-free Pakistan and making the people of Pakistan the real drivers of the economy.
Prime Minister Nawaz Sharif during his election campaign made tall claims that on assuming power he will get rid of the ‘cancer of debts’ and promised to break the ‘begging bowl’, however, there is little evidence of measures towards freedom from debt, said political economist Dr Qais Aslam.
The government proved no different from its predecessors and started knocking on the doors of international lenders even more vigorously, he added.
In a country where 60% of the population lives below the poverty line and 58% faces food insecurity, this additional burden means more miseries for the generations to come.
Speakers further said the impact of mounting debt burden on the people is horrific. Fiscal space for social spending has drastically squeezed. Pakistan spends just 2% and 2.6% of its GDP on education and health respectively, making it the lowest in South Asia.
Published in The Express Tribune, June 4th, 2015.
By Our Correspondent
Published: June 4, 2015
LAHORE:
One of the most obvious legacies of a crisis-ridden economy is a sharp increase in public debt. The country’s debt has grown since 2007, with successive governments making huge borrowings, pushing the country towards a debt trap.
As of March 2015, the total debt liabilities of the country stood at Rs19,299.2 billion. Every Pakistani now owes a debt of about Rs101,338. This figure was Rs90,772 in 2013. It was estimated at Rs80,894 in 2012 and was only Rs37,170 in early 2008.
This was the crux of a discussion held at a seminar jointly organised by the Institute for Social and Economic Justice (ISEJ) and the Islamic Relief Pakistan under the campaign ‘Breaking the Chains of Debt’, at Forman Christian College.
The debt-to-gross domestic product (GDP) ratio stands at 66.4%, in which foreign debt is Rs6.4 trillion and domestic debt is Rs12 trillion.
The external debt servicing reached close to $7 billion in fiscal year 2014, which is almost 50% of the current reserves of the State Bank of Pakistan.
The country paid $6.820 billion in debt servicing in FY15, including $5.910 billion as principal amount and $915 million in interest payments. Worryingly, 47% of whatever the government generates in revenue is going to pay off debt against 44% in the previous year.
Ideally, this ratio should be less than 30% to allocate more resources to social and poverty-related expenditures.
Speaking on the occasion, ISEJ Executive Director Abdul Khaliq said the debt situation was alarming and the government must review its reckless borrowing behaviour.
“We must demand an audit of the public debt,” he said. “All new loan contracts should be subjected to a debate in parliament and its approval.”
The government must stop reckless international borrowing and minimise reliance on foreign debt in the future and take measures to get the illegitimate loans cancelled, he said.
Khaliq emphasised the need for synergising efforts for a debt-free Pakistan and making the people of Pakistan the real drivers of the economy.
Prime Minister Nawaz Sharif during his election campaign made tall claims that on assuming power he will get rid of the ‘cancer of debts’ and promised to break the ‘begging bowl’, however, there is little evidence of measures towards freedom from debt, said political economist Dr Qais Aslam.
The government proved no different from its predecessors and started knocking on the doors of international lenders even more vigorously, he added.
In a country where 60% of the population lives below the poverty line and 58% faces food insecurity, this additional burden means more miseries for the generations to come.
Speakers further said the impact of mounting debt burden on the people is horrific. Fiscal space for social spending has drastically squeezed. Pakistan spends just 2% and 2.6% of its GDP on education and health respectively, making it the lowest in South Asia.
Published in The Express Tribune, June 4th, 2015.
Last edited:
Kshatriya87
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Every Pakistani now owes over Rs115,000
By Bilal Memon
Published: February 25, 2017
KARACHI: Much talk has revolved around the narrative on Pakistan’s economy. The government would have you believe that it has been the best thing that happened to the country in a long time. It will cite international publications and foreign institutions when a positive report emerges from within the complex web of what is the country’s economic structure.
Here is some context.
Every Pakistani owes over Rs115,000 as the country’s pile of total debt and liabilities increased to Rs23.14 trillion by the end of December 31, 2016, a year-on-year increase of 10%, according to provisional figures updated by the State Bank of Pakistan (SBP).
In three years, Pakistan has taken on $25b in fresh loans
The share of external debt and liabilities stood at Rs7.8 trillion, or roughly $74 billion, but the PML-N would tell you, as part of its effort to show it was a good government, that the total stock of debt – domestic and otherwise – has reduced to 69.1% of GDP from 71.1% a year ago.
But with an ever-increasing debt pile comes another problem for the country’s economic managers. Foreign exchange reserves held by the SBP have come down to $17 billion and the current account deficit has widened by 90% in the first seven months (Jul-Jan) of 2016-17, standing at $4.72 billion. Together with falling exports, near-stagnant remittances, repayments to international creditors and increasing oil prices, pressure on reserves is likely to be fiercer than it was before.
“Both government debt and, related to it, the government’s gross financing needs are high,” IMF Mission Chief Harald Finger told The Express Tribune in an emailed response.
“Under baseline assumptions, we project a gradual decline in the ratio of government debt to GDP through the medium term but this is subject to uncertainty, and adverse economic shocks could push the debt ratio higher.”
Will Pakistan need another bailout?
Critics say Pakistan, which completed the latest IMF programme in September 2016, will be in need of another bailout package near election time, slated to be held in the mid of 2018.
“Pakistan will need to go to the IMF for another bailout around election time – either right before it or right after it,” said Dr Ashfaque Hasan Khan, principal and Dean, School of Social Sciences and Humanities at the National University of Sciences & Technology (NUST), Islamabad.
“There is panic among the ranks. Reserves have fallen by $1.9 billion since October 2016 and the government’s financing requirements will increase in the near-term. The current account deficit is likely to hit the $7-8 billion mark this fiscal year and debt servicing requirements will add to the pressure on the country’s reserves.
“There are no more flows from the Coalition Support Fund (CSF). Exports are falling and remittances are unlikely to compensate. They (government) will tell you that the import bill is rising because of CPEC-related machinery, but that is not the case. Imports under the food and auto vehicles category are rising, and this is because the rupee is strong, making imports cheaper.”
The latest SBP decision
Dr Ashfaque’s statement comes on the heels of SBP’s decision to impose 100% cash margin requirement on import of certain consumer items. In a statement released on Friday, the SBP said the “regulatory measure would, interalia, discourage the import of these items and would have nominal impact on the general public.”
The requirement of 100% cash margin has been prescribed on items such as motor vehicles (both CKDs and CBUs), mobile phones, cigarettes, jewelry, cosmetics, personal care, electrical & home appliances, arms & ammunitions etc.
Pakistan’s way out of the debt crisis
“The State Bank expects that this regulatory measure would help accommodate incremental import of growth-inducing capital goods.”
The last part of the SBP’s statement refers to those goods that will arrive as part of the CPEC initiative. But it also conveys the worry followers of the economy have over Pakistan’s balance of payments situation and the currency’s strength.
“The rupee has appreciated by 27% cumulatively over the past three years relative to trading partners in inflation-adjusted terms, which has certainly been among the factors affecting exports,” said IMF official Finger.
Dr Ashfaque says the key things to address are “senseless taxation measures” – which he believed were meant to appease the IMF – stuck refunds of exporters to show higher revenue and an uncompetitive exchange rate. “A stronger rupee means cheaper imports. By keeping the rupee’s strength, exporters are suffering as well. Pakistan’s borrowing needs will only increase from here on and by 2019-20, the stock of external debt will touch $110 billion.”
Published in The Express Tribune, February 25th, 2017.
By Bilal Memon
Published: February 25, 2017
KARACHI: Much talk has revolved around the narrative on Pakistan’s economy. The government would have you believe that it has been the best thing that happened to the country in a long time. It will cite international publications and foreign institutions when a positive report emerges from within the complex web of what is the country’s economic structure.
Here is some context.
Every Pakistani owes over Rs115,000 as the country’s pile of total debt and liabilities increased to Rs23.14 trillion by the end of December 31, 2016, a year-on-year increase of 10%, according to provisional figures updated by the State Bank of Pakistan (SBP).
In three years, Pakistan has taken on $25b in fresh loans
The share of external debt and liabilities stood at Rs7.8 trillion, or roughly $74 billion, but the PML-N would tell you, as part of its effort to show it was a good government, that the total stock of debt – domestic and otherwise – has reduced to 69.1% of GDP from 71.1% a year ago.
But with an ever-increasing debt pile comes another problem for the country’s economic managers. Foreign exchange reserves held by the SBP have come down to $17 billion and the current account deficit has widened by 90% in the first seven months (Jul-Jan) of 2016-17, standing at $4.72 billion. Together with falling exports, near-stagnant remittances, repayments to international creditors and increasing oil prices, pressure on reserves is likely to be fiercer than it was before.
“Both government debt and, related to it, the government’s gross financing needs are high,” IMF Mission Chief Harald Finger told The Express Tribune in an emailed response.
“Under baseline assumptions, we project a gradual decline in the ratio of government debt to GDP through the medium term but this is subject to uncertainty, and adverse economic shocks could push the debt ratio higher.”
Will Pakistan need another bailout?
Critics say Pakistan, which completed the latest IMF programme in September 2016, will be in need of another bailout package near election time, slated to be held in the mid of 2018.
“Pakistan will need to go to the IMF for another bailout around election time – either right before it or right after it,” said Dr Ashfaque Hasan Khan, principal and Dean, School of Social Sciences and Humanities at the National University of Sciences & Technology (NUST), Islamabad.
“There is panic among the ranks. Reserves have fallen by $1.9 billion since October 2016 and the government’s financing requirements will increase in the near-term. The current account deficit is likely to hit the $7-8 billion mark this fiscal year and debt servicing requirements will add to the pressure on the country’s reserves.
“There are no more flows from the Coalition Support Fund (CSF). Exports are falling and remittances are unlikely to compensate. They (government) will tell you that the import bill is rising because of CPEC-related machinery, but that is not the case. Imports under the food and auto vehicles category are rising, and this is because the rupee is strong, making imports cheaper.”
The latest SBP decision
Dr Ashfaque’s statement comes on the heels of SBP’s decision to impose 100% cash margin requirement on import of certain consumer items. In a statement released on Friday, the SBP said the “regulatory measure would, interalia, discourage the import of these items and would have nominal impact on the general public.”
The requirement of 100% cash margin has been prescribed on items such as motor vehicles (both CKDs and CBUs), mobile phones, cigarettes, jewelry, cosmetics, personal care, electrical & home appliances, arms & ammunitions etc.
Pakistan’s way out of the debt crisis
“The State Bank expects that this regulatory measure would help accommodate incremental import of growth-inducing capital goods.”
The last part of the SBP’s statement refers to those goods that will arrive as part of the CPEC initiative. But it also conveys the worry followers of the economy have over Pakistan’s balance of payments situation and the currency’s strength.
“The rupee has appreciated by 27% cumulatively over the past three years relative to trading partners in inflation-adjusted terms, which has certainly been among the factors affecting exports,” said IMF official Finger.
Dr Ashfaque says the key things to address are “senseless taxation measures” – which he believed were meant to appease the IMF – stuck refunds of exporters to show higher revenue and an uncompetitive exchange rate. “A stronger rupee means cheaper imports. By keeping the rupee’s strength, exporters are suffering as well. Pakistan’s borrowing needs will only increase from here on and by 2019-20, the stock of external debt will touch $110 billion.”
Published in The Express Tribune, February 25th, 2017.
Last edited:
Kshatriya87
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@Bornubus @Indx TechStyle Read above 2 posts.
WolfPack86
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Donald Trump ends years of declining aid to Pakistan
Aid to the civilian sector makes up the larger part of the increase, rising from $352 million last year to $423.
PRESIDENT DONALD Trump’s administration has put in place a modest enhancement of military and civilian aid to Pakistan — the first reversal of a uninterrupted five-year decline — for the 2017 financial year, requisitioning $743 million, against a post 9/11 low of $662 million in 2016, according to figures released by the authoritative Congressional Research Service on Friday.
Aid to the civilian sector makes up the larger part of the increase, rising from $352 million last year to $423. Of that $400 million is made up of the Economic Support Fund, a programme the State Department says is meant to encourage countries facing terrorism to join “the community of well-governed states that act responsibly in the international system”.
However, military assistance has also increased marginally, from $310 million to $320 million. The figures do not include Coalition Support Funds, or CSF-reimbursements made for logistical and operational support of US troops in theatres like Afghanistan.
In 2017, the National Defence Authorisation Act allows the US to pay Pakistan up to $1.1 billion in CSF, of which $400 million is subject to the condition that it has taken action against the Taliban-linked network of Sirajuddin Haqqani. In 2015, the US paid $550 million in CSF to Pakistan.
Aid to Pakistan declined sharply since 2011, reflecting a downturn in relations, when the country received $2.463 billion in aid. In 2012, the total fell to $1.916 billion, and further to $1.195 billion in 2013, before dipping to $979 million in 2014.
http://indianexpress.com/article/world/donald-trump-ends-years-of-declining-aid-to-pakistan-4612395/
Aid to the civilian sector makes up the larger part of the increase, rising from $352 million last year to $423.
PRESIDENT DONALD Trump’s administration has put in place a modest enhancement of military and civilian aid to Pakistan — the first reversal of a uninterrupted five-year decline — for the 2017 financial year, requisitioning $743 million, against a post 9/11 low of $662 million in 2016, according to figures released by the authoritative Congressional Research Service on Friday.
Aid to the civilian sector makes up the larger part of the increase, rising from $352 million last year to $423. Of that $400 million is made up of the Economic Support Fund, a programme the State Department says is meant to encourage countries facing terrorism to join “the community of well-governed states that act responsibly in the international system”.
However, military assistance has also increased marginally, from $310 million to $320 million. The figures do not include Coalition Support Funds, or CSF-reimbursements made for logistical and operational support of US troops in theatres like Afghanistan.
In 2017, the National Defence Authorisation Act allows the US to pay Pakistan up to $1.1 billion in CSF, of which $400 million is subject to the condition that it has taken action against the Taliban-linked network of Sirajuddin Haqqani. In 2015, the US paid $550 million in CSF to Pakistan.
Aid to Pakistan declined sharply since 2011, reflecting a downturn in relations, when the country received $2.463 billion in aid. In 2012, the total fell to $1.916 billion, and further to $1.195 billion in 2013, before dipping to $979 million in 2014.
http://indianexpress.com/article/world/donald-trump-ends-years-of-declining-aid-to-pakistan-4612395/
WolfPack86
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Most stupid decision by Donald Trump
sthf
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They are losing influence in Pakhanaland to Chinis, so it makes sense from their point of view.
Let's see what Dana Rohrabasher and ilk has to say about this.
Mikesingh
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Airports, ports, energy plants, dams, railways, garbage collection! What else is Pakistan going to hand over to their Chinese masters? The Pakis themselves have no time for such mundane stuff as they are too busy in more important things like exporting terrorism to neighboring countries and attending rallies of Generals Hafiz Saeed and Masood Azhar!!
Neo
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World Bank expects Pakistan's economy to grow 5.2%, but risks remain
By Shahbaz Rana
Published: April 17, 2017
ISLAMABAD: Upcoming national elections may change Pakistan’s economic policies, which in return could put the upward growth trajectory at risk, cautioned the World Bank on Monday while projecting 5.2% economic growth for this year.
“The upcoming national election in 2018 may affect reform momentum and macroeconomic policy orientation (of Pakistan),” said World Bank’s biannual South Asia Economic Focus Report 2017.
It added there were significant downside risks to the projected positive economic outlook for Pakistan.
Polls for National Assembly and four provincial assemblies will take place in the middle of next year and in order to win the vote the ruling PML-N party has given clear indications for adopting populous economic policies.
Among the risks that the World Bank highlighted were slower progress on much-needed structural reforms, lingering uncertainty about the US economic policy, a strong rupee and protracted global economic weakness.
World Bank revises Pakistan’s growth rate upwards to 5.2% in FY17
The bank is the third global financial institution that has smelled a change in the air in the past three weeks. Earlier, the International Monetary Fund (IMF) and the Asian Development Bank (ADB) also expressed similar concerns.
The IMF has warned that Pakistan’s “hard-won” economic stability was at risk due to challenges on the fiscal, energy and external sector fronts.
The World Bank report stated that slower progress on the structural reforms could weaken growth prospects. It added a stable nominal exchange rate of the rupee versus the US dollar had resulted in appreciation of the Real Effective Exchange Rate (REER), which was hurting exports.
Furthermore, lingering uncertainty about the course of US economic policy and the possibility of a protracted global economic weakness, especially in the euro area due to Brexit, could negatively affect exports.
‘Pakistan Development Update’: World Bank projects economy will grow at 5%, miss govt target
The bank said Pakistan was also vulnerable to any significant decline in remittance flows, particularly from oil-rich countries that contribute about two-thirds of all remittances.
Pakistan’s growth prospects continue to improve and inflation remains contained. However, weak fiscal performance and pressures in the external account posed a challenge, said the World Bank.
Efforts to reverse the current imbalances and continued implementation of structural reforms would be needed for sustaining and accelerating growth and improving welfare, it added.
Pakistan’s response
Reports of the international financial institutions were not critical, but they identified the areas where Pakistan needed improvement to remain on the higher growth trajectory, commented Ahsan Iqbal, Minister of Planning, Development and Reform.
He said the government had accepted recommendations of the ADB and IMF, which actually gave a checklist that Pakistan should take care of in order to achieve long-term growth.
Pakistan improves on World Bank’s logistics index
He also endorsed views of the World Bank, ADB and IMF that Pakistan would achieve 5% to 5.2% economic growth in the current fiscal year, ending June 30.
“Pakistan for the first time will achieve more than 5% GDP growth in the last 10 years, which is expected to remain between 5.2% and 5.5%,” he said. The government has set the growth target at 5.7%.
The World Bank report also projected 3.4% growth in the agriculture sector while the industrial sector was expected to expand 6.1%.
The minister blamed political instability for most of Pakistan’s economic ills. He expected the agriculture sector to rebound this year.
Impact of US protectionism
The World Bank report said the US economic protectionist policies against China and Mexico would benefit South Asian countries including Pakistan.
Pakistan’s exports, mainly textiles, will get around 15% boost, in case the US takes adverse trade actions against China and Mexico, according to the bank.
World Bank agrees to fund three hydro projects in K-P
However, in case of across-the-board trade barriers, Pakistan’s exports will be negatively affected by 3%.
In the trade destruction scenario, textiles in many countries are more strongly affected. In case of across-the-board adverse trade barriers, textiles were by far the most affected sector in Bangladesh, Nepal and Pakistan, said the bank.
India would experience a meaningful decline in chemical exports and in Sri Lanka and Afghanistan vegetable products would be the most harmed sector due to the US trade sanctions across the board, it added.
The bank noted that in a manifestation of economic optimism, share prices in India and Pakistan had been on a solid upward trend. Stocks listed in Mumbai and Karachi made large gains in 2016, with share prices in Pakistan rallying to levels never seen before.
By Shahbaz Rana
Published: April 17, 2017
ISLAMABAD: Upcoming national elections may change Pakistan’s economic policies, which in return could put the upward growth trajectory at risk, cautioned the World Bank on Monday while projecting 5.2% economic growth for this year.
“The upcoming national election in 2018 may affect reform momentum and macroeconomic policy orientation (of Pakistan),” said World Bank’s biannual South Asia Economic Focus Report 2017.
It added there were significant downside risks to the projected positive economic outlook for Pakistan.
Polls for National Assembly and four provincial assemblies will take place in the middle of next year and in order to win the vote the ruling PML-N party has given clear indications for adopting populous economic policies.
Among the risks that the World Bank highlighted were slower progress on much-needed structural reforms, lingering uncertainty about the US economic policy, a strong rupee and protracted global economic weakness.
World Bank revises Pakistan’s growth rate upwards to 5.2% in FY17
The bank is the third global financial institution that has smelled a change in the air in the past three weeks. Earlier, the International Monetary Fund (IMF) and the Asian Development Bank (ADB) also expressed similar concerns.
The IMF has warned that Pakistan’s “hard-won” economic stability was at risk due to challenges on the fiscal, energy and external sector fronts.
The World Bank report stated that slower progress on the structural reforms could weaken growth prospects. It added a stable nominal exchange rate of the rupee versus the US dollar had resulted in appreciation of the Real Effective Exchange Rate (REER), which was hurting exports.
Furthermore, lingering uncertainty about the course of US economic policy and the possibility of a protracted global economic weakness, especially in the euro area due to Brexit, could negatively affect exports.
‘Pakistan Development Update’: World Bank projects economy will grow at 5%, miss govt target
The bank said Pakistan was also vulnerable to any significant decline in remittance flows, particularly from oil-rich countries that contribute about two-thirds of all remittances.
Pakistan’s growth prospects continue to improve and inflation remains contained. However, weak fiscal performance and pressures in the external account posed a challenge, said the World Bank.
Efforts to reverse the current imbalances and continued implementation of structural reforms would be needed for sustaining and accelerating growth and improving welfare, it added.
Pakistan’s response
Reports of the international financial institutions were not critical, but they identified the areas where Pakistan needed improvement to remain on the higher growth trajectory, commented Ahsan Iqbal, Minister of Planning, Development and Reform.
He said the government had accepted recommendations of the ADB and IMF, which actually gave a checklist that Pakistan should take care of in order to achieve long-term growth.
Pakistan improves on World Bank’s logistics index
He also endorsed views of the World Bank, ADB and IMF that Pakistan would achieve 5% to 5.2% economic growth in the current fiscal year, ending June 30.
“Pakistan for the first time will achieve more than 5% GDP growth in the last 10 years, which is expected to remain between 5.2% and 5.5%,” he said. The government has set the growth target at 5.7%.
The World Bank report also projected 3.4% growth in the agriculture sector while the industrial sector was expected to expand 6.1%.
The minister blamed political instability for most of Pakistan’s economic ills. He expected the agriculture sector to rebound this year.
Impact of US protectionism
The World Bank report said the US economic protectionist policies against China and Mexico would benefit South Asian countries including Pakistan.
Pakistan’s exports, mainly textiles, will get around 15% boost, in case the US takes adverse trade actions against China and Mexico, according to the bank.
World Bank agrees to fund three hydro projects in K-P
However, in case of across-the-board trade barriers, Pakistan’s exports will be negatively affected by 3%.
In the trade destruction scenario, textiles in many countries are more strongly affected. In case of across-the-board adverse trade barriers, textiles were by far the most affected sector in Bangladesh, Nepal and Pakistan, said the bank.
India would experience a meaningful decline in chemical exports and in Sri Lanka and Afghanistan vegetable products would be the most harmed sector due to the US trade sanctions across the board, it added.
The bank noted that in a manifestation of economic optimism, share prices in India and Pakistan had been on a solid upward trend. Stocks listed in Mumbai and Karachi made large gains in 2016, with share prices in Pakistan rallying to levels never seen before.
Hiranyaksha
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Dude, why don't we just merge this thread with Chinese economy . It serves no difference. 
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