The World Bank warns of continuous slow growth and high inflation rates for Pakistan, urging the country to enact strong fiscal adjustments and adopt broad-based reforms per the International Monetary Fund’s recommendations. The bank’s “Pakistan Development Update: Restoring Fiscal Sustainability” predicts real GDP growth of 1.7% for FY24 and 2.4% for FY25. Concurrently, inflation is estimated to remain high, resulting in over 12.5 million people living below the international poverty line. The WB’s projections are more conservative than the government’s and the Asian Development Bank’s recent forecasts.
Fiscal Reforms and Consolidation
The World Bank has presented a fiscal consolidation plan worth Rs2.723 trillion, suggesting savings through fiscal expenditure reforms, reduced debt servicing costs, and revenue-enhancing reforms. Adopting a Treasury Single Account is highlighted, with potential annual savings of over Rs400bn. There’s an emphasis on rationalizing government allowances and revisiting retirement age policies. Meanwhile, the revenue collection remains below the South Asian average, with a narrowing tax base. The World Bank stresses the need for Pakistan to expand its tax net by integrating key sectors like agriculture, real estate, and retail.