The World Bank’s recent report emphasizes the imperative for Pakistan to adopt a comprehensive economic reform plan to stimulate robust recovery and combat poverty.
Despite the monetary policy’s forecast of nearly 3% growth, Pakistan’s economy is projected to grow modestly by 1.8% in the current fiscal year.
This subdued growth is attributed to tight monetary and fiscal policies, continued import management measures, and weak economic activity amid low confidence levels.
While some sectors, notably agriculture, have shown improvement, growth remains insufficient to uplift the population, with 40% still living below the poverty line.
Urging structural reforms, Najy Benhassine, World Bank Country Director for Pakistan, stresses the need for an ambitious and credible implementation plan to restore confidence.
The report underscores the importance of better fiscal management to address inflation, narrow the current account deficit, stabilize the financial sector, and enhance credit to the private sector.
Key recommendations include a prudent macroeconomic policy mix, broadening the tax base, reducing regulatory barriers, and addressing energy sector challenges.
Sayed Murtaza Muzaffari, the lead author, cautions about economic risks and financial sector vulnerabilities. Moreover, the report highlights the fiscal burden from state-owned enterprises (SOEs) and calls for expediting privatization, restructuring, and divestment plans.
As Pakistan aims for economic recovery, comprehensive reforms are essential for sustainable growth and poverty reduction.
However, significant challenges remain, particularly in energy sector reform and inflation control. Implementing these recommendations will be crucial, albeit challenging, for Pakistan’s economic trajectory.