The World Bank has expressed worries about Pakistan’s existing economic stability, calling for challenging reforms in a number of government agencies, most notably the energy sector, and describing it as unsustainable.
Pakistan’s economic growth rate is expected to be 1.8% this year, much less than the 3.5% projection, according to the World Bank. Furthermore, it is anticipated that inflation would continue to be high at 26%, above the projected rate of 21%.
The World Bank underlined how critical it is to enact reforms in the pension and civil service systems in addition to the energy industry. It stated that growth will reach 2.3% and inflation will drop to 15% in the upcoming fiscal year. It also added that sustained financial stability is a prerequisite for lower interest rates and lower inflation.
“The debt ratio is likely to decrease from 73.1% to 72.3% next year,” the report observed. Furthermore, the World Bank pointed out that subsidies, grants, and loans provided to various government institutions are adversely affecting the economy. Among the 206 government-owned enterprises, 88 commercial enterprises are responsible for 99% of the assets, indicating the need for restructuring and efficiency improvements. The report also highlighted the significant fiscal deficit attributed to government agencies, accounting for 18% of the total deficit. Approximately Rs1.3 trillion were spent on government institutions in 2022. Moving forward, the World Bank emphasized the importance of keeping the primary deficit under control to ensure financial stability. It recommended reducing losses in sectors such as the National Highway Authority (NHA), Pakistan International Airlines (PIA), and the steel mills. In response to these challenges, the World Bank called for concerted efforts to implement difficult but necessary reforms across various sectors to address the underlying issues and pave the way for sustainable economic growth in Pakistan.
