US-based index provider Morgan Stanley Capital International (MSCI) plans to consider upgrading Pakistan from frontier to emerging-market status next year.
Citing “a number of positive developments over the course of the past 12 to 18 months,” MSCI said it would include Pakistan on its 2016 review list, the Wall Street Journal (WSJ) reported on Thursday.
It said that the news of Pakistan being considered for inclusion in the MSCI emerging markets index would be seized upon by a government desperate for international recognition of what it says are its achievements in stabilising the economy.
The government of PM Nawaz Sharif inherited low growth, high inflation, a foreign-exchange reserve crisis and crippling electricity shortages. Since then, inflation has dropped sharply and foreign exchange reserves are more comfortable.
The government is now on a mission to boost economic growth from the anemic 3% that it inherited to around 7% by the end of its five-year term. The IMF expects GDP growth to hit 4.3% this year and rise to 4.7% in 2016. Pakistan has already achieved recognition among frontier- markets analysts, including Renaissance Capital, which describes the country as “the best undiscovered investment opportunity in emerging or frontier markets.”
However, according to the article, considerable challenges remain. The country is short of electricity, for example, while plans to seriously boost the tax revenues are also yet to come to fruition. Tax revenues currently stand at around 10% of GDP.
Published in The Express Tribune, June 12th, 2015.
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