Updated December 28th, 2023 at 16:37 IST
Pakistan’s current economic model is not working, says World Bank's Benhassine
The World Bank official acknowledged the historical challenges associated with reform efforts, anticipating potential resistance.
The World Bank's Country Director, Najy Benhassine, has declared that Pakistan's existing economic model is proving ineffective and demands a significant overhaul. In a Policy Vision article published in the UNDP's quarterly Development Advocate Pakistan, Benhassine underscored the urgency for policy shifts, citing the country's lagging behind its peers and a reversal in poverty reduction progress. He stressed that the skewed distribution of growth benefits, primarily favouring a select elite.
Benhassine's assessment identified critical sectors requiring attention, with a spotlight on agriculture and energy. In agriculture, he urged reforms to dismantle subsidies and price restrictions, which perpetuate a low-value farming system and encourage environmentally harmful practices. Similarly, he called for advancements in the energy sector to ensure financial sustainability, enhance distribution company efficiency through increased private participation, and tackle high electricity generation costs by promoting renewable energy sources.
Climate change resilience was another pressing concern, given Pakistan's vulnerability to climate shocks and natural disasters. Benhassine advocated for comprehensive reforms in fiscal management, stressing the unsustainability of current debt servicing costs and domestic revenue mobilisation levels. He highlighted the need to allocate sufficient resources for human development, infrastructure, economic challenges, and climate adaptation.
The World Bank official acknowledged the historical challenges associated with reform efforts, anticipating potential resistance. He challenged those in power to seize the opportunity presented by the current crisis, emphasising the collective responsibility to shape a more prosperous and sustainable future for Pakistan.
Furthermore, Benhassine underscored the imperative for improved fiscal management, advocating for a reduction in regressive and distortionary subsidies, enhanced revenue collection from the affluent through progressive taxation, and a focus on better quality government spending.
In broader economic terms, he advocated for a more dynamic and open economy, emphasising the reduction of protectionist measures and taxation distortions that hinder exports. Additionally, Benhassine stressed the need to create a more favourable business environment, particularly for smaller firms, by cutting red tape and minimising discretionary practices in government dealings with businesses.
The Country Director of the Asian Development Bank in Pakistan, Yong Ye, echoed the sentiments, emphasising the importance of consistent policies and uninterrupted reform momentum for sustained long-term growth and effective development outcomes in the country. The Asian Development Bank expressed its commitment to supporting Pakistan's development, aligning with its vision to promote prosperity, inclusiveness, resilience, and sustainability.
(With PTI inputs)
Published December 28th, 2023 at 16:28 IST