Pakistan facing grave economic crisis: Burki
By Khalid Hasan
WASHINGTON: The gravity of the economic crisis facing Pakistan has not been sufficiently recognised, considering that the country’s 2009 gross domestic product (GDP) will decline to 2.5 percent and there will be a sharp fall in its rate of growth, former World Bank economist and ex-Pakistani finance minister Shahid Javed Burki told a community meeting organised by the Pakistani ambassador on Saturday.
Burki said there was going to be a drastic reduction in the national growth rate – with high inflation, galloping urban unemployment and a sharp increase in poverty. He said a new Asian Development Bank report had forecast that there would be a two-three percent fall in Pakistan’s rate of economic growth. While countries like China and India – with high growth rates – could absorb the shock, it was going to be very hard for Pakistan to do so.
He said, “We should prepare ourselves for the coming setback.” While noting that Pakistan has already received $2.5 billion of the $7.6 billion International Monetary Fund loan, Burki warned that these infusions might provide temporary relief, but they would not help in the long run.
He said Pakistan is the only large Asian economy that is out of step with other Asian economies. While other Asian countries have introduced stimulation packages to generate growth, Pakistan has done no such thing. Pakistan is being advised, in fact, to cut expenditure when it needs to invest in employment generating projects. Pakistan needs a comprehensive economic programme, he suggested, which it should present to a group of donors, but that has been a route not taken. On the other hand, there is fiscal retrenchment and an increase in interest rates. What Pakistan needs is a fundamental economic restructuring. Burki found it alarming that six to seven percent times more was being spent on the non-development sector than on development.
Burki said immediate action is required to create more employment in urban areas and a more serious view of the situation to be taken. At the present rate, only high growth in poverty can be expected. Burki said the North American Pakistani diaspora is an asset that has not been taken into account. There are 800,000 to a million Pakistanis living in the US and Canada, with a total annual income ranging between $50 billion and $60 billion.