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BEIJING, China, May 3 — Pakistan is navigating the challenging process of economic recovery, with the new government making some progress in pushing structural reforms, experts say.
While recent developments were positive, the country still faces an uphill battle as it confronts several challenges, they said.
Mustafa Hyder Sayed, executive director of Pakistan-China Institute in Islamabad, said the economy of Pakistan has been going through a volatile period because of a dip in foreign exchange reserves, circular debt and low exports and high inflation.
“But the new government is undertaking structural economic reform and we have also just finalized an agreement with the International Monetary Fund, which will give us more breathing space,” Sayed said.
In addition, the second phase of the China-Pakistan Economic Corridor, a mega infrastructure project under the Belt and Road Initiative, “will bring significant investment into Pakistan”, he said.
Pakistan just received about $1.1 billion in final tranche from the IMF as part of a total loan of about $3 billion agreed to last year under an economic stabilization program.
In a statement on Monday, the IMF said with the latest disbursement, it has provided a policy anchor to address Pakistan’s domestic and external imbalances as well as a framework for financial support from multilateral and bilateral partners.
Earlier, Pakistani Prime Minister Shehbaz Sharif said his government is diligently pursuing economic reforms to overcome current challenges in the financial sector.
In a meeting of the federal cabinet last week, Sharif said with the collective efforts of all government departments, the country’s economy is on the path of recovery.
The government is also committed to doubling the country’s export volume over the next five years, he said.
Tahir Farooq, editor-in-chief at Daily Ittehad Media Group and Pakistan Economic Net, said: “The government is focusing on several fronts to rejuvenate the economy. Measures such as increasing exports and remittances, combating power theft and advancing privatization are pivotal.”
Promising growth
The IT sector and inward remittances have shown promising growth, suggesting early signs of positive effect from the policies, Farooq said.
Sharif’s approach is “holistic and inclusive, urging the opposition to collaborate rather than confront, emphasizing the importance of national unity in economic reform”, he said.
Shakeel Ahmad Ramay, CEO of the Asian Institute of Eco-civilization Research and Development in Islamabad, mentioned the risks of stagnant growth, higher inflation and further economic troubles.
To resolve the issue, Pakistan has to take immediate steps, Ahmad said, such as prioritizing production enhancement. He also suggested accelerating the implementation of the second phase of the CPEC, unleashing opportunities that could help reverse the economic crisis.
Meanwhile, Pakistan must resist undue pressures from the West and unreasonable demands from the IMF, he said, citing suspicions that “the IMF is following the United States’ agenda” and that the US wants Pakistan to shelve some CPEC projects.
“It is good that the IMF is satisfied with Pakistan’s performance, but the satisfaction has been achieved at the cost of the poor and middle-class Pakistan,” he said.
Of the 250 million people of Pakistan, 60 percent are youth under 35, Sayed said. “It is a huge opportunity for Pakistan as a market for consumer goods, and as a country that has a demographic dividend. The opportunities to grow economically are significant.”
Syed Shujaat Ahmed, an independent economist, said opportunities are there, but realizing them hinges on stability and consistency of the policies in the pipeline and those that have already been drafted.
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