In its report titled “Pakistan@100- sharing the future 2047”, the World Bank has estimated that it could become $ 2 trillion economy in next 28 years. But to achieve this milestone Pakistan needs reforms in the economy and to control the population growth.
The World Bank country director Patchamuthu Illangovan while talking to the media said “With sustained reforms, Pakistan could be a $2 trillion economy when it will turn 100 in the next 28 years. The $2 trillion economy means an upper middle-income country where per capita income will be $5,702 but it will have to halve its population growth rate to 1.2% by 2047,” he added.
But country directory warned that if the business as usual continued and governments failed to introduce reforms then that would mean the size of Pakistan’s economy will be only $1 trillion and the per capita income will be just $2110. By 2047, Pakistan’s population will be 376 million at current growth rate. The size of Pakistan’s economy is now only $275 billion.
The report says that the decisions over the next decade will determine Pakistan’s future where it will stand in 2047. Will Pakistan rise to the challenges ahead and transform its economy or will Pakistan continue with the mixed record of reform implementation, failing to address the key constraints to growth, while another generation of Pakistanis sees limited welfare improvements.
The WB recommends broadening the tax net by including the agriculture sector, which accounts for over 20 per cent of the GDP but generates a meager 0.22 per cent of total direct tax revenue. The tax system is also riddled with legal loopholes that facilitate tax evasion and need to be rectified.
Pakistan can boost its growth by investing in people, improving productivity, reforming institutions and protecting the natural environment,” said the WB Group Vice President South Asian Region Hartwig Schafer.
Pakistan’s high birthrate, the highest among neighbouring countries, also threatens to overwhelm education and health services that are already overstretched.
The WB also notes that Pakistan’s macroeconomic challenges are structural in nature, unlike the impression given that these are cyclical problems.
These structural problems are that the revenue system is unable to meet the government’s financing needs and consumption-led growth is putting pressure on external sector.
The economic growth has declined because the country is not investing enough in either physical or human capital, and because misguided economic policies mean that limited resources are not used in the most productive way.
The limited fiscal space, the result of rigid current expenditures and low revenue mobilisation, has given rise to low public investment levels. The low tax revenues and high current expenditures leave limited space for public investments. The WB says the current expenditures exhibit structural rigidities due to high debt-servicing costs, high defense expenditures, and significant subsidies, salaries, and wages.
The WB also emphasises opening of Pakistan’s economy. It says the well-connected industries and firms are often protected from foreign and domestic competition in a variety of ways, limiting the positive impact that increased competition has on productivity.
The report further said that “Productivity is also affected by weak public services delivery whether it is energy, livable cities, a healthy and educated population, or security. ”
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25 April, 2019