The International Monetary Fund, the global lender has published its flagship biannual survey – World Economic Outlook yesterday. This is the first report under the newly appointed Indian American IMF chief economist- Gita Gopinath. The document forecasts global and national economic growth in near and medium context. The document is generally published in the month of October and March and policymakers in more 180 countries eagerly wait for this report. The report brought bad news for Pakistan which expects an IMF bailout by the end of this month. The delegation will attend the spring meetings (April 9 – 14) of Bank-Fund and finalize the bailout deal of the sidelines.
As the country looks for a ray of hope from the IMF, the forecast report by the institution painted a very gloomy picture of its economy. Pakistan’s economic growth was 5.2 percent in 2018 but it will moderate to 2.9 and 2.8 percent in 2020 and 2021 respectively. Pakistan’s GDP growth rate has now fallen behind the GDP growth rate of Maldives and Nepal. These two countries will witness a GDP growth rate of 6.5 percent while Pakistan grew at 5.2 percent in 2018. Inflation which was 3.9 percent in 2018 will increase to 7.6 percent in 2019 and 7 percent in 2020. High inflation and low GDP growth clearly indicates that Pakistan’s economy is not on track. The mid-term growth prospects for the debt ridden country remain subdued at 2.5 percent by 2024. Pakistan’s performance on other macroeconomic indicators like Current Account Deficit (CAD), fiscal deficit is not very encouraging. The unemployment rate is above 6 percent and expected to increase in next year.
Pakistan has been categorized under Middle East, North Africa, Afghanistan, and Pakistan (MENAP) region which has a very depressing economic scenario. The region’s economy is heavily dependent on fuel and the slump of commodity prices is proving to be a huge drag. “In Pakistan, in the absence of further adjustment policies, growth is projected to remain subdued at about 2.5pc, with continued external and fiscal imbalances weighing on confidence”, the IMF said.
External debt and liabilities are around 100 billion dollars. The external debtto GDP ratio of Pakistan is 36 percent against 20 percent of India. Pakistan has only few friends left in the international arena to help the country. China, the all-weather ally has become bailout god for Pakistan, it has given 4.2 billion dollars since July last year. However, the money coming from China is not enough to pull the country out of debt and the country is seeking expensive commercial loans. Global lending institutions like World Bank, Asian Development Bank and IMF have been apprehensive to bail out Pakistan.
The poor economic condition of Pakistan due to its corrupt political leadership, Imran Khan who was elected in August last year raised hope for economic reforms. However, in last three quarters, the economy of Pakistan deteriorated further and country was on verge of default when I was helped by China, Saudi Arabia and UAE. The current IMF bailout which is 13th in last three decades would not improve economic conditions given the precedent that all the previous ones failed.