KARACHI: Putting its weight behind what the country has achieved in the past year, the Asian Development Bank (ADB) – like the other lenders – was looking at macroeconomic indicators and Pakistan’s economic growth rate as “a glass half-full”.
Most economists, analysts and the media have questioned the government’s speed in implementing structural reforms across all sectors – especially the crisis-ridden power sector.
With over a 50% reduction in global crude prices in the past year, analysts have argued that the time is ripe for Pakistan to take advantage of the falling import bill and use the ‘savings’ for infrastructure development and cure an ailing power sector. But, analysts argue, Pakistan has been unable to fully exploit the opportunity and improved macroeconomic indicators are a by-product of the fall in global crude prices.
The ADB, however, was pleased with the progress the country has made. “We see visible progress in macroeconomic stability and structural reforms,” said ADB Vice-President Wencai Zhang in a press briefing to a select bunch of journalists on Friday.
“But, there are many remaining challenges in the coming years. The forecasts show GDP growth to register a slight increase. We hope the momentum can be maintained.”
While stressing on the ADB’s country partnership with Pakistan – which, if approved, will see the Manila-based lender provide a $6-billion loan to help build up the country’s dilapidated power network and other key infrastructure in the next five years – Wencai said the support would not just be for the power sector.
Additionally, he said, financial inclusion, road and transport networks and access to finance for the SME sector would be focused on as well.
“The next 5-10 years are critical for the country to improve the standard of living and bring people out of the poverty line.”
Meanwhile, commenting on the quality of official data – regarding employment, GDP and other indicators – the government provides to international lenders, Wencai said the ADB was willing to help if the country needed help in improving its data-collection methods. “But, we feel comfortable with the data we have got.”
Adding to this, ADB Country Head Werner Liepach said methods to improve data-collection was a long-term effort. “As I understand, the government has agreed to conduct a census next year and that will be a comprehensive overhaul of the database, which would be a much-needed assessment of the fundamentals.
“We believe this is a step in the right direction.”
Taking advantage of the fall in crude prices
On a separate note, Liepach said the fall in prices has both positive and negative impacts. “The reduction will benefit the economy as a whole. But, there has been a shortfall in revenue for the government that was budgeted at higher prices of oil.
“Overall, however, this has more of a positive impact.”
Refraining to comment on the World Bank’s twice-a-year South Asia Economic Focus report – that projected Afghanistan (5%) to have a higher GDP growth rate than Pakistan (4.6%) in fiscal year 2016 – Liepach said the figures from Pakistan will undergo a lot of scrutiny from the IMF, World Bank and the ADB. “I can’t comment on the Afghanistan numbers and I haven’t looked at the report. But, I know Pakistan numbers will go through a lot of scrutiny and I think they will be quite credible.”
Published in The Express Tribune, May 16th, 2015.
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