The World Bank also improved Pakistan’s GDP growth prospects up to 4.3 per cent from the earlier projection of 3.4 for the current fiscal year and 4 per cent for the next fiscal year 2022-23.
“Indicators of ability to pay, such as the ratio of public external debt service to exports and remittances, is the highest in Pakistan and Sri Lanka. The situation is especially worrisome in Sri Lanka, where heightened fiscal and external risks led to a series of sovereign credit rating downgrades, preventing market-based refinancing,” the World Bank’s report titled ‘The South Asia Economic Focus, Reshaping Norms: A New Way Forward’ stated which was launched on Wednesday.
Hans Timmer, World Bank’s Chief Economist for South Asia, in an online briefing told reporters that Pakistan would have to curtail its yawning budget deficit and current account deficit for achieving consolidation of the economy. Pakistan’s debt repayment capacity is not vulnerable but medium to long-term, Islamabad would have to narrow down its twin deficits, Hans Timmer added, The News reported.
While some countries experience a solid rebound in GDP growth, Afghanistan faces a humanitarian crisis, Pakistan a political crisis, and Sri Lanka a balance-of-payments crisis. While high-skilled workers retained jobs during the pandemic, or found new opportunities, only some unskilled migrant workers have returned to jobs in the cities. Moreover, men have been able to find new job opportunities more quickly than women.
“Energy subsidies as a percent of GDP are the highest in Pakistan, which means that the price increase in international markets potentially poses a tough fiscal challenge,” the World Bank report added.
