ADB warns Pakistan's economy could suffer from political impasse

Dar warns growth target will be missed owing to floods. Project agreement on Hassanabdal-Havelian expressway signed.

ISLAMABAD: Asian Development Bank President Takehiko Nakao warned on Wednesday that the ongoing political impasse could damage the country’s recently stabilised economy, as Finance Minister Ishaq Dar said Islamabad would miss its growth target due to recent floods.

Speaking at a joint press conference, Nakao and finance minister Ishaq Dar credited Sharif government policies for improvement in macro-economic outlook.

"Today we are seeing the growth rate is picking up, the inflation rate is becoming more managed, and foreign reserve (has picked up) - and the exchange rate is becoming stabilised so it is really a remarkable achievement by the government," he said.

"What is important is the...continuation of democracy. I am so glad to see the peaceful and democratic transition of government last year," Nakao continued.

Protesters led by opposition leader Imran Khan and Dr Tahirul Qadri have camped outside parliament have threatened to disrupt that with their month long protest and the demand for Sharif resign.

The government has said the crisis has cost the exchequer billions of rupees (millions of dollars) and deterred foreign investment after ratings agency Moody's upgraded the country's outlook from negative to stable.

Speaking to AFP, Nakao said: "It's a very difficult to tell what should be the impact of this political impasse. We don't have any estimate about it. If it prolongs there is more damage and if it is solved quickly the damage will be more managed."

Nakao added that the bank, which is set to provide $5 billion to Pakistan over the next five years in assistance particularly in energy and infrastructure sector, would extend flood relief to the country after an assessment report was completed.

At least 318 people have died in this years flooding, which has also damaged over 2.2 million acres of farmland in the breadbasket.

Dar said the damage would affect Pakistan's growth target of five per cent for the fiscal. "It will have a bearing on our GDP, we have a major agricultural loss in Punjab. We have budgeted for and projected (growth) at five per cent," he said.

A project agreement on Hassanabdal-Havelian expressway was signed between the government and ADB on Wednesday which was overseen by the prime minister.