Pakistan Development Update, October 2014
For 2013 progress in Pakistan was significant and supported by a solid economic reform program of the Government of Pakistan. An IMF Extended Fund Facility (EFF) and two World Bank Development Policy Credits with a focus to restructure the energy s...
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| Format: | Economic Updates and Modeling |
| Language: | English en_US |
| Published: |
Washington, DC
2015
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2014/10/23838550/pakistan-development-update http://hdl.handle.net/10986/21315 |
| Summary: | For 2013 progress in Pakistan was
significant and supported by a solid economic reform program
of the Government of Pakistan. An IMF Extended Fund Facility
(EFF) and two World Bank Development Policy Credits with a
focus to restructure the energy sector, foster private and
financial sector developments and improve social protection
and revenue mobilization reinforced the reform program. The
risk of a balance of payment crisis was minimized with a
significant strengthening of the international reserves
position. This mainly resulted from strong remittances and
significant foreign capital inflows, which also brought
stability in the foreign exchange market. A strong fiscal
consolidation was achieved; the fiscal deficit was contained
at around 5.5 percent of GDP - due to improved tax
collection, high non-tax revenues, and restricted (current
and development) expenditures. Price stabilization followed
with average inflation remaining in single digits. This
environment favored growth recovery, with the GDP growth
rate above 4 percent for the first time in seven years -
driven by dynamic manufacturing and service sectors
supported by better energy availability and improved
investors' expectations. As a result, performance under
the IMF program remained satisfactory, with the Third Review
concluded on June 27. However, since mid-August, the ongoing
political uncertainty has negatively affected the
macroeconomic stance and may modify the pace and depth of
reforms. Some salient features of FY2013/14 economic
performance were: growth re-emerged; increased remittances,
capital and financial inflows supported a buildup of
reserves; a significant correction of a previously loose
fiscal stance took place; fiscal consolidation and
improvement in business confidence produced a strong
recovery in credit to the private sector, after five years
of muted growth; price stability - with CPI inflation in
single digit - was preserved; and progress on the structural
reform agenda was promising. The political events following
the mid-August Long-March and Sit-in may have affected the
economy, and it also remains to be determined how much the
pro-reform momentum, so carefully gathered during the past
fiscal year and entering a decisive second year, will be
affected by the civil unrest, but new investors'
confidence-building measures will have to be nurtured to
reinvigorate the reform agenda. |
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