Pakistan urgently needs foreign loans to avoid debt crisis, World Bank warns World news
The World Bank has said that several economic shocks have resulted in nearly four million Pakistanis being pushed into poverty this financial year, The Express Tribune reported. The World Bank also called on Pakistan to immediately arrange for new foreign loans to avoid a “public debt crisis.”
The World Bank in its flagship report ‘Pakistan’s Development Update’ warned Pakistan of serious risks to the economy and debt sustainability while predicting flat economic growth, with an inflation rate of 29.5 for the current financial year, as like the news report. .
Also Read: China’s loans to Pak, Lanka and other countries worth $240bn in 2 years: Report
Pakistan’s future remains “highly uncertain” with only 0.4 per cent economic growth this year and 2 per cent for the next financial year. The average inflation rate for FY2023 is projected at 29.5 per cent and at 18.5 per cent for the next year, which indicates that the annual inflation rate will be very high, according to The Express Tribune report.
The World Bank has said that “poverty is projected to increase to 37.2 per cent in FY23, pushing 3.9 million people into poverty compared to the last financial year” in Pakistan without public transfers covering losses or reduce the effect of higher prices.
According to the news report, the depth and severity of poverty has also witnessed an increase, showing the overlapping effects of multiple shocks and families do not have savings to mitigate the short-term effects.
Also Read: Pakistan rupee hits record low amid IMF loan suspension
According to the World Bank, the implementation of the macroeconomic and structural reforms adopted under the International Monetary Fund (IMF) program and the much-needed external restructuring protection are essential for restoring macro-stability, as well as confidence and avoiding “general debt crisis.”
The World Bank’s statement reflects growing concern among international lenders over Pakistan’s dilly-dally approach with the IMF, as reported by The Express Tribune. According to the report, Pakistan’s external financing needs are projected to total USD 28.9 billion per year or 8 percent of GDP during FY23-FY25, including IMF disbursements, matured Eurobonds, and loan repayments. Chinese business. However, the reservation status of Pakistan is projected to improve gradually.
Najy Benhassine, Country Director of the World Bank, said that the IMF program is an initiative to stay on the path for reforms in the current situation. He stressed that it was not an easy time to write the Pakistan Development Update report.
Also Read: Pakistan inflation skyrockets up to 47%, wheat and eggs are more expensive: Report
The World Bank has criticized the Pakistani government’s decision to impose restrictions on imports which has led to a major erosion of confidence. The report said, “The government has taken ad hoc administrative measures to conserve scarce foreign exchange reserves, but these measures have weakened consumer and investor confidence.”
He also said that the performance of the private sector has been affected by import and dollar exchange controls, higher borrowing and oil prices, and continued policy uncertainty that slows down growth, as as reported by The Express Tribune.
The World Bank suggests that the government of Pakistan needs to sustain IMF program reforms and continue to monitor sound macroeconomic management to maintain stability and set the foundations for a medium-term recovery. He further said that there is a need to remove all import and dollar flow restrictions to restore investors’ confidence.
