Pakistan can grow by 8-9% per annum, says SCB CEO

Standard Chartered Bank (SCB) Group CEO, Bill Winters, has expressed optimism about Pakistan’s economic trajectory, stating that the country has the potential to grow by up to 8-9% per annum. He noted that Pakistan’s debt remains manageable, although the nation is still navigating through challenging times and must assess whether the 2024-25 budget includes the necessary structural reforms.

Speaking at a round table conference last week, Winters said, “We (Pakistan) are clearly still in the woods. We need to review the recent budget that the government passed and assess whether it meets all the criteria (structural reforms) necessary for a healthy resumption of growth.”

Winters acknowledged that economic reforms are difficult for any country to implement, but emphasised that Pakistan is on the right track. “Good improvement, but only some of the way through the hard part of the process,” he added.

Under the ongoing economic reforms, the government has increased energy prices and tax rates, aiming to expand the tax net to include more sectors such as agriculture, real estate, wholesalers, and retailers. These measures are expected to boost tax collection and create fiscal space to support economic activities. Additionally, the government aims to privatise state-owned entities to stop financial losses.

Winters pointed out that Pakistan has faced growth challenges for several years. “If Pakistan can get to half of the level of its potential growth, it could be growing at 6, 8, or 9% per annum. It’s not easy for any country, but Pakistan could achieve this given its natural resources, talent, rule of law, and technical foundations. That’s a good aspiration, and I know this government has that aspiration.”

He explained that achieving such growth involves several difficult steps, often beginning with a crisis. The changes required are painful for businesses, individuals, the country, and governments. However, as improvement is seen and confidence builds, people stop trying to move their money out of the country and start investing in businesses and jobs within the country.

“Our mission as a bank is to support those investments in the country, whether they come from local money or offshore,” Winters said.

He believes Pakistan’s debt burden is manageable, but the challenge lies in the imbalance between imports and exports. Winters commended Pakistan for not restructuring its local and foreign debt, attributing this to the exceptional management of currency inflows and outflows by the State Bank of Pakistan (SBP).

“The government put appropriate stabilising measures in place and made the right changes to secure the first round of support from the International Monetary Fund (IMF). They are now working on a second IMF round (new loan programme), which has all contributed to Pakistan’s improving trend,” he added.

Winters visited Pakistan last week to celebrate Standard Chartered’s 160th anniversary in the country. During his visit, he met with President Asif Ali Zardari and SBP Governor Jameel Ahmad.

Accompanying Winters at the round table conference was Standard Chartered Bank Pakistan CEO, Rehan Shaikh, who noted that the COVID-19 pandemic and subsequent floods had continued to impact the economy post-2020, even before the economic crisis. “The way the government has taken the right measures and the central bank has implemented the right steps shows the commitment, resilience, and financial management in place,” said Shaikh.