While growth continues to remain sluggish worldwide, owing to a host of factors such as slump in manufacturing, low consumer confidence, brewing trade and tariff wars and energy supply constraints, the IMF still believes that global growth shall remain unchanged at 3.3 percentage points for current and next year. However, the Washington-based lender is a little sceptical on Pakistan where it has lowered the country’s growth estimate to 3% from its own earlier projected horizon of 3.2%. This revision incidentally has come weeks before the cash-strapped country was supposed to hit the table with the IMF on its $7 billion bailout programme. The fact that the donor is exercising a stringent scrutiny on promises made by Pakistan in introducing structural reforms and goes on to hold back tranches of funds makes it a troublesome proposition.
It is an established fact that Pakistan is mired in a serious balance of payments crisis, and has slashed its developmental budget as it struggles to meet the tax generation targets. The IMF has also pointed out that lower than estimated cotton output and a decline in industrial production are key reasons behind substantial revenue shortfalls. Thus, it is no surprise that the Fund has revised down the growth target by 0.2%, but at the same time has ushered confidence by keeping its growth forecast for next fiscal year unchanged at 4%.
This can be conveniently read with the confidence that donors have in Pakistan, as recently the World Bank has agreed to funnel in $20 billion in social strata mushrooming, and a matching $20 billion liquidity for fostering the private sector. All that they look for is reforms and an economy that is on its own by broadening the tax net and plugging loopholes that make it go wayward. Pakistan has a telling tale of resilience as it successfully overcome pandemic constraints and has kept the economy afloat by avoiding a default. By focusing on sustained growth, exports-driven produce and slashing of energy tariffs, the economy can surely bounce back.
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