LAHORE: In a recent article featured in the latest UNDP publication, World Bank Country Director for Pakistan, Najy Benhassine, highlighted the shortcomings of Pakistan’s current economic model.
Benhassine emphasized that the country has lagged behind its peers, experiencing a reversal in poverty reduction and witnessing the concentration of growth benefits among a select elite.
The World Bank official underscored Pakistan’s vulnerability to climate change, with the detrimental impacts of climate shocks and natural disasters already evident.
A consensus is emerging that a shift in policies is imperative to rectify longstanding developmental issues, reduce inequality, and foster more stable and robust growth.
Benhassine drew parallels with other nations, such as Indonesia, Thailand, India, and Vietnam, which successfully emerged from economic crises by implementing deep and sustained policy changes.
He emphasized the need for major policy shifts in Pakistan, focusing on key areas.
Benhassine stressed the urgency of improving the persistently low quality of basic services for human development in Pakistan.
He pointed out that 40% of children under five suffer from stunted growth, emphasizing the necessity for a coordinated effort to address the core drivers, including access to water, waste, sanitation services, and basic health and nutrition during the first 1000 days of life.
Education reform is also crucial, given that 79% of ten-year-old children cannot read.
Drastic Improvement in Fiscal Management:
The World Bank official highlighted the unsustainable levels of debt servicing costs and domestic revenue mobilization, leaving inadequate resources for investment in human development and infrastructure.
Benhassine called for reforms to enhance government spending quality, including cutting regressive subsidies and reducing losses from inefficient state-owned enterprises, particularly in the energy sector.
Building a More Dynamic and Open Economy:
To improve living standards, Benhassine advocated for a stronger and more dynamic economy.
He called for reductions in protectionism for inward-oriented sectors, addressing distortions in taxation favoring non-tradable, and improving the overall business environment, especially for smaller firms. Addressing structural macroeconomic imbalances, particularly on the fiscal front, is seen as a prerequisite to attracting investors.
Addressing Failures in Agrifood and Energy Sectors:
Benhassine pointed out the need to address policy failures and distortions in the critical agrifood and energy sectors.
In agriculture, he recommended reforms to unwind subsidies and price restrictions that hinder smallholder farmers.
In the energy sector, consolidation towards financial sustainability, increased private participation, and addressing high electricity generation costs through renewable sources is crucial.
Overcoming Opposition to Reform:
The article concluded with the acknowledgment that reform efforts will face contestation and opposition. The question raised is whether those with power and influence will seize the opportunity presented by the current crisis to enact necessary changes.
Benhassine emphasized the urgency for Pakistan to unite in the pursuit of a brighter, more prosperous, and sustainable future.
