Pak­istan econ­omy grow­ing... but is it enough?

Kuwait Times - - INTERNATIONAL -

Shah Nawaz walks Karachi’s dusty streets, one of thou­sands in the fi­nan­cial hub who are be­ing fed by char­i­ties as Pak­istan’s econ­omy picks up pace-but, some say, not fast enough for its poverty-stricken mil­lions. Con­fi­dence in Pak­istan is grow­ing, with the In­ter­na­tional Mone­tary Fund claim­ing in Oc­to­ber that the coun­try has emerged from cri­sis and sta­bi­lized its econ­omy after com­plet­ing a bailout pro­gram.

Its credit rat­ing has im­proved, while there are en­cour­ag­ing signs of for­eign in­vest­ment, such as a mas­sive Chi­nese in­fras­truc­ture pro­ject of­fi­cials rou­tinely call a “gamechanger”. But all this glit­ter­ing prom­ise has yet to feed mil­lions like Nawaz. The 14-year-old stands wait­ing with more than 100 oth­ers out­side the Say­lani Wel­fare build­ing to re­ceive free meals twice a day for his fam­ily. He dropped out of school four years ago, when Pak­istan’s GDP still hov­ered around a weak three per­cent, as his fam­ily strug­gled to sur­vive on his fa­ther’s mea­gre part-time wage of 250 ru­pees ($2.30) a day. “I have im­mense pas­sion for my stud­ies and want to be­come a pros­per­ous man, but I can’t,” he said. His de­spair res­onates through­out Pak­istan, where a new cen­tral bank re­port says 60.6 per­cent of the pop­u­la­tion do not have ac­cess to cook­ing fuel, half of all chil­dren are de­prived of a ba­sic ed­u­ca­tion, and a third of Pak­ista­nis have no ac­cess to a pri­mary med­i­cal fa­cil­ity. “The num­ber of peo­ple com­ing to our cen­ters is grow­ing, and they are not beg­gars but poor peo­ple who are not able to make ends meet,” Aamir Say­lani, one of the char­ity’s of­fi­cials said. Prime Min­is­ter Nawaz Sharif vowed to boost the long-de­pressed econ­omy after win­ning a third term in 2013.

The key chal­lenge Sharif faced was a chronic en­ergy cri­sis, as power out­ages shut down fac­to­ries and bring busi­nesses to a vir­tual stand­still daily. He ap­proved more than a dozen coal, hy­dro, gas and com­bined cy­cle power generation plants, most due to be­gin gen­er­at­ing elec­tric­ity by mid-2017. Mean­while his ad­vis­ers ne­go­ti­ated a three­year ex­tended fund fa­cil­ity with the IMF to raise $6.4 bil­lion. That, cou­pled with re­mit­tances from Pak­ista­nis over­seas, have taken for­eign ex­change re­serves to an es­ti­mated $22 bil­lion, from $3 bil­lion in 2008. In the 2015/2016 fis­cal year the econ­omy grew 4.7 per­cent, while in­fla­tion was at a low of 3.8 per­cent and in­ter­est rates down at 5.75 per­cent. En­cour­aged-and un­de­terred by do­mes­tic debt of $182 bil­lion-Is­lam­abad set an am­bi­tious yearly growth tar­get of 5.7 per­cent for 2016/2017. The World Bank pre­dicted 5.4 per­cent growth by 2018.

But in­de­pen­dent econ­o­mists doubt the growth is sus­tain­able. “You were on ar­ti­fi­cial sup­port, and it will be a real lit­mus test for the govern­ment once the IMF fa­cil­ity is over,” said Abid Su­leri, who heads the Sus­tain­able Devel­op­ment Pol­icy In­sti­tute in Is­lam­abad. It would take sus­tained growth of around six per­cent for five suc­ces­sive years to make a real dent in poverty, said Mo­ham­mad Sabir, a se­nior econ­o­mist at the So­cial Pol­icy and Devel­op­ment Cen­tre (SPDC) in Karachi. Hopes are pinned on the China-Pak­istan Eco­nomic Cor­ri­dor (CPEC), a $46 bil­lion ini­tia­tive by Bei­jing that aims to link the Asian su­per­power’s Xin­jiang re­gion with the Ara­bian Sea through Pak­istan. The plan en­com­passes a se­ries of in­fras­truc­ture, power and trans­port up­grades that Is­lam­abad hopes will kick­start the econ­omy.

But ex­perts say the deal is opaque, and much more trans­parency is needed be­fore they can as­sess any im­pact for Pak­istan­in­clud­ing, for ex­am­ple, whether the $46 bil­lion is an in­vest­ment or a loan. “If it is a loan, it would se­verely ham­per the fu­ture for­eign pay­ment ca­pa­bil­ity of the coun­try,” warned Sabir. For­eign debt re­mains around $73 bil­lion, just over a quar­ter of GDP, the cen­tral bank says. Werner Liepach, Pak­istan coun­try di­rec­tor for the Asian Devel­op­ment Bank said it was “much too early to tell” what ef­fect CPEC would have.

How­ever given the chal­leng­ing global con­text, “con­trary to what many believe, Pak­istan is ac­tu­ally do­ing quite well”, he said. “The ben­e­fits of growth in Pak­istan are ac­tu­ally more widespread... as com­pared to many other de­vel­op­ing coun­tries that may show higher lev­els of growth, but with greater in­equal­ity.” Nev­er­the­less there is room to im­prove, he added. Mean­while, Pak­ista­nis like Shah Nawaz still strug­gle. Days after speak­ing to AFP, the build­ing hous­ing the char­ity pro­vid­ing food for his fam­ily was flat­tened in an op­er­a­tion tar­get­ing il­le­gal set­tle­ments on govern­ment land.—AFP

MANILA: Philip­pine Na­tional Po­lice (PNP) chief Di­rec­tor Gen­eral Ron­ald dela Rosa (right) points to the nose of Ker­win Espinosa, son of the late mayor Rolando Espinosa, as he is pre­sented to mem­bers of the me­dia at the po­lice head­quar­ters in Manila, shortly after ar­riv­ing from United Arab Emi­rates. Ker­win was ar­rested in the United Arab Emi­rates last month and will face drug traf­fick­ing charges. — AFP

KARACHI: Pak­istani res­i­dents visit a do­na­tion cen­tre to re­ceive food in Karachi. — AFP

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