ISLAMABAD
\nThe World Bank on Tuesday cautioned Pakistan against short-term measures like domestic debt restructuring and attracting one-time investment through a new civil-military initiative, without addressing the country\u2019s \u2018big picture issues\u2019 through reforms aimed at improving larger business climate, taxation and human capital.
\nThe \u201ccreation of a new institution is no quick fix\u201d to bring investment without improving the taxation system, competitive market conditions and state-owned entities, Martin Raiser, the World Bank\u2019s regional vice president for South Asia, said at a news conference.
\nHe said the government\u2019s objective in creating the Special Investment Facilitation Council (SIFC) might be good and such steps could help once or twice, but it was no solution to Pakistan\u2019s challenges, which could only be addressed by improving the business climate, providing a level playing field and removing distortions and tax exemptions.
\nEarlier, the International Monetary Fund (IMF) had also advised the government against creating a group of preferred investors and suggested transparency and accountability should be above board, even in SIFC-led investments.
\nResponding to a question, Mr Raiser also said international experience suggested that domestic debt reprofiling did not always work unless associated with sharp and sustained structural reforms supported by the IMF to reduce the debt burden.
\nHe said when such restructuring was done, the banks could become insolvent, which ultimately affected growth.
\nThis has to be part of the macroeconomic improvement so as to reduce interest rates and therefore such a move should be \u201ccarefully considered\u201d.
\nNajy Benhassine, World Bank\u2019s country director for Paki\u00adstan, said in reply to a question that he hoped his institution could disburse up to $2 billion to the country during the current fiscal year, provided elections were held on time and the present and new governments remain committed to reforms and deliver on promised efforts.
\nThis \u201cneeds a lot of joint effort\u201d by Pakistani authorities and the World Bank, but this would become clear by the end of the second quarter. He hoped the World Bank\u2019s board of directors would approve the $350 million RISE programme loan by the end of December.
\nMr Raiser said that unlike past failures, the World Bank had this time engaged with all the major political parties, including PTI, PML-N, PPP and MQM-P, before rolling out the reform notes for the next elected government, and individually all of them had a similar understanding of the challenges the country faced and their solutions.
\nHe said unless they address the longstanding challenges through upfront reforms in a sustained manner, this could have implications on programme loans. He said the low taxation on agriculture and real estate had been responsible for low agriculture productivity because this hampered investment in irrigation, quality seed and other inputs.
\nMr Raiser also launched a series of policy notes that outline critical policy shifts required for a productive, sustainable, resilient, and healthy Pakistan.
\nThese pieces of advice focus on child stunting, fiscal sustainability, private sector growth, energy, rising poverty, agriculture, and climate change through bold reforms for a brighter future at a critical turning point for Pakistan to build political and social support ahead of the upcoming elections.
\n\u201cPakistan\u2019s economy is stuck in a low-growth trap with poor human development outcomes and increasing poverty. Econ\u00adomic conditions leave Pakistan highly vulnerable to climate shocks, with insufficient public resources to finance development and climate adaptation,\u201d Mr Raiser said.<\/p>\n
\u201cIt is now time for Pakistan to decide whether to maintain the patterns of the past or take difficult but crucial steps towards a brighter future,\u201d he said.<\/p>\n
The policy notes suggest Pakistan address its acute human capital crisis, including the high prevalence of stunting and learning poverty, by adopting a coordinated and coherent cross-sectoral approach to basic services involving both provincial and federal governments.<\/p>\n
Mr Raiser advocated for major policy shifts in five areas, starting with measures to address the \u201cacute human capital crisis\u201d that affected a large proportion of the population and undermined the potential of Pakistan tomorrow.<\/p>\n
For example, 40pc of children under five suffer from stunted growth. \u201cThis is a shocking statistic\u201d because this meant a large part of Pakistan\u2019s population was not reaching their physical and cognitive potential due to lack of access to clean water and sanitation, lack of birth spacing, poor nutrition, and insufficient access to health services, he said.<\/p>\n
He said the reforms in spending and revenue expansion suggested by the World Bank could produce 7pc to 9pc of GDP worth of additional resources that could be sufficient to address some of the major challenges identified to improve human capital and ensure sustained 5pc to 6pc economic growth over a decade with structural reforms and fiscal adjustments.<\/p>\n","protected":false},"excerpt":{"rendered":"
ISLAMABAD The World Bank on Tuesday cautioned Pakistan against short-term measures like domestic debt restructuring and attracting one-time investment through a new civil-military initiative, without addressing the country\u2019s \u2018big picture issues\u2019 through reforms aimed at improving larger business climate, taxation and human capital. The \u201ccreation of a new institution is no quick fix\u201d to bring […]<\/p>\n","protected":false},"author":2,"featured_media":371244,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-371227","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"yoast_head":"\n