The World Bank has recently included Pakistan in its list of countries facing economic challenges due to high levels of debt.
According to the World Bank, Pakistan’s debt is projected to increase to 89.3% of its Gross Domestic Product (GDP) by the year 2027.
World Bank officials have expressed concerns about the significant influence that various Pakistani government officials, including members of parliament, cabinet members, finance ministers, and committee members, have in shaping the country’s tax policies. They believe that this influence has hindered much-needed reforms.
To address these economic challenges, it is recommended that Pakistan takes measures to reduce subsidies and cut down on its expenditures, aiming to decrease the annual fiscal deficit, which currently stands at Rs 2,723 billion.
The World Bank also emphasizes that Pakistan’s economic outlook is uncertain and largely depends on several factors, including the successful implementation of reforms, the current fiscal year’s budget, an agreement with the International Monetary Fund (IMF), and the adoption of market-based currency valuation. Effective execution of monetary and fiscal policies is seen as crucial for achieving economic stability and reducing both macroeconomic and political uncertainties.
Furthermore, Pakistan faces various risks, including a high liquidity risk, low foreign exchange reserves, an unstable political environment, and external shocks affecting its trade balance, according to the World Bank.