There has been a lot of speculation about Pakistan’s inclusion in the terror financing list issued by the Financial Action Task Force (FATF). During recent days, many media outlets reported that Pakistan hasn’t been included in the grey-list of the FATF while others reported the opposite.
Pakistan did manage to remain out of the list of terror-financing economies initially. China, Saudi Arabia and Turkey supported Pakistan and opposed the bill that aimed to put Pakistan in the grey-list. However, the United States pressed on its anti-Pakistan agenda and managed to get an unprecedented re-vote on the bill by lobbying countries against Pakistan.
On the second vote, China and Saudi Arabia decided to remain silent. Turkey, however, did stand by Pakistan’s side and opposed the bill again. Saudi Arabia backed out first, followed by Beijing. Clearly, China’s eventual decision to withdraw its support was partially motivated by Islamabad’s inaction against terror groups operating in the country. China, which has previously preferred to deal with Pakistan regarding the latter’s questionable policy on terrorism behind closed doors, has now started to use regional and international public forums to indicate its seriousness to the Pakistani authorities. Pakistan’s economy will be adversely impacted following the decision by the Financial Action Task Force (FATF) to put the country in the ‘grey list’ for failing to fulfill obligations to prevent terror financing. The country may also risk a downgrade by multilateral lenders such as IMF, World Bank, ADB and also a reduction in risk-rating by Moody’s, S&P and Fitch, according to an expert on Pakistan economy
It must also be considered that the economy of Pakistan has not only said to have revived but the country has been put on the road to a sustained development. This reality has also been acknowledged by a number of international rating agencies like Moody’s, MCI and global lending institutions including IMF, World Bank and ADB besides internationally renowned media like The Economist and Wall Street Journal have also from time to time been acknowledging the turnaround in the Pakistan economy, triggered by sound management.
Management of the economy in Pakistan is undoubtedly an arduous task due to international linkages, developments on the global level as well as internal economic, social and political situation. When the PML (N) government was installed in 2013, the economy was in shambles with the GDP growth rate hovering around 3%. Fiscal deficit stood at 8.8% and inflation was in double digits, foreign exchange reserves were at $ 6.008 billion. The country faced a debilitating energy crisis.
The energy crisis that is attributable to the negligence and criminal indifference of the government to the growing energy needs of the country is hampering progress in the industrial and agricultural sectors in addition to causing difficulties for millions of households across the country. The government must give top priority to the development of infrastructure. The fact is that all modern growth models invariably rely on development of infrastructure, which is considered as an indispensable ingredient of industrialization and economic growth. The phenomenal economic prosperity and industrial development in Asian countries such as China, South Korea, Singapore and Malaysia during the last three decades is testimony of this modern reality. The establishment of Asian Infrastructure Investment Bank by China with the objective of development of infrastructure in the Asian countries to spur economic growth is a pointer to that fundamental reality.
Unfortunately Pakistan has failed to achieve rapid industrialization due to wrong approaches and policies of the government. It seems to be divorced from the emerging economic compulsions and variables. What is needed is a pragmatic and visionary approach to economic development through building of necessary infrastructure. When that happens, it will surely act as catalyst to nudging economic growth and bringing about national integration.
Pakistan must have an improved infrastructure and communication network. The CPEC is also about building infrastructure which holds the promise of enabling Pakistan not only to make up for the lost opportunities but also to become an economic power house in the next two decades. The country has a bright economic future and it is to be hoped that by 2030 it would join the prestigious club of G-20 provided the political situation remains stable.