World Bank warns of sluggish growth, high inflation
Projecting a persisting mix of sluggish growth rate and high inflationary trends with significant downside risks, the World Bank on Tuesday advocated Pakistan for a sharp fiscal adjustment of about 4pc of GDP and decisive implementation of broad-based reforms committed to the International Monetary Fund (IMF) to get out of the fiscal and macroeconomic quagmire. “Predicated on the robust implementation of the IMF Standby Arrangement (SBA), new external financing and continued fiscal restraint, real GDP growth is projected to recover to 1.7pc in FY24 and 2.4pc in FY25”, said the World Bank’s latest “Pakistan Development Update: Restoring Fiscal Sustainability” released on Tuesday. It estimated the rate of inflation at 26.5pc for the current fiscal year and 17pc for FY25. The WB officials in Islamabad said the massive depreciation, high exchange rates and resultant heavy bank borrowing to finance record fiscal deficits and debt servicing fuelled the spiralling multi-decade high inflation rates. As a consequence, more than 12.5 million people are estimated to have fallen below the international poverty line ($3.65 per day) from the vulnerable stage or 39.4pc of the population under the poverty line FY23 — down from 34.2pc in FY22.