adb-report-signals-troubling-times-ahead-for-pakistan-s-economy

Pakistan is grappling with severe economic challenges, according to a recent report by the Asian Development Bank (ADB), positioning the nation as among Asia's worst in handling its economic downturn.

 

The report highlights Pakistan's soaring living costs, with an alarming inflation rate of at least 25 percent, making it the most expensive country in Asia.

 

The ADB forecasts a sluggish economic growth rate of 1.9 percent for the current fiscal year, placing Pakistan fourth from the bottom, just above Myanmar, Azerbaijan, and Nauru.

 

The projection for the next fiscal year is equally grim, with inflation expected to hover around 15 percent and growth at a modest 2.8 percent, ranking Pakistan the highest in both inflation and the fifth lowest in growth among 46 countries in the region.

 

This dire economic scenario exacerbates the ongoing recession, propelling millions of Pakistanis below the poverty line. The World Bank estimates that 98 million people are already living in poverty, with another 10 million at risk of falling into the poverty trap.

 

Despite Pakistan's efforts to implement macroeconomic policies, the ADB report underscores persistent challenges from external financing requirements and existing debt burdens. Political uncertainty further complicates the situation, posing a significant risk to stabilization and reform efforts.

 

The report underscores the importance of IMF support for a medium-term reform agenda to improve market sentiment and facilitate affordable external financing.

 

Federal Finance Minister Muhammad Aurangzeb's upcoming meeting with IMF Managing Director Kristalina Georgieva in Washington aims to secure a new bailout package. However, pre-conditions set by the IMF present additional hurdles to be addressed.

 

Kristalina Georgieva emphasized the need for fundamental reforms in Pakistan, including expanding the tax base, enhancing contributions from the affluent sector, improving public spending transparency, and fostering a more conducive environment for economic growth.

 

The ADB report's alarming findings should prompt urgent action from stakeholders as Pakistan grapples with its most severe economic crisis, requiring concerted efforts to stabilize and revive the economy.