WASHINGTON: Finance Minister Ishaq Dar has urged the World Bank to finance a major project in the Pak-Afghan region, which could greatly enhance intra-regional trade.
The project — Peshawar-Kabul highway — would not only link Peshawar with the Afghan capital but would also be a major commercial link between the South and Central Asian regions.
The finance minister discussed this and other projects with senior officials of the World Bank group in Washington last week on the sidelines of the group’s spring meetings.
Dar says private sector can select CPEC projects of its choice
The Pakistan Embassy, which released the details of these meetings, said the World Bank had agreed in principle to finance the Peshawar-Kabul highway project. Mr Dar also asked the World Bank to consider leading a consortium to finance the Diamer-Bhasha dam project.
In his talks with officials of the World Bank group, the minister underlined the structural changes the government had introduced to encourage sustainable economic development in the country. He pointed out that the changes enabled the country’s stock market to become one of the top five stock markets in the world.
The government was also trying to strengthen the role of the private sector in China-Pakistan Economic Corridor, giving it an opportunity to select projects of its choice, he added.
CPEC focuses heavily on the energy sector. So far projects worth $34 billion have gone to this sector. Projects for around 25,000MW have been identified and are at different stages of implementation. Out of this, 10,000MW will be added to the system by March 2018.
Mr Dar claimed that because of these measures there had been no loadshedding in the industrial sector for three years and the government hoped to completely end loadshedding by early 2018.
The minister also discussed with the World Bank officials the government’s master plan for the energy sector which, he claimed, would give the economy the much-needed jump-start by taking care of the future demands.
For an inclusive and sustainable high growth, the government is also reaching out to the poorer segments of society by extending microfinance facilities to them. This includes tripling the allocation for the Benazir Income Support Programme, which has increased the number of beneficiaries to 5.4 million.
Mr Dar told the World Bank officials that parliament had already passed 24 laws to encourage growth and investment and was working on 10 more.
The World Bank mostly agrees with this upbeat assessment of the Pakistani economy and recently revised the country’s growth rate to 5.2 per cent for 2017 and 5.5pc for 2018. Its previous estimate was 5pc for 2017 and 5.4pc for 2018.
But the bank has warned that the upcoming national elections may force the government to opt for populist policies, which can hurt Pakistan’s economy. The World Bank also identified various risks to the projected positive outlook for Pakistan: slower progress on much-needed structural reforms, lingering uncertainty about the US economic policy, a strong rupee and protracted global economic weakness.
Earlier this year, the International Monetary Fund and the Asian Development Bank had also expressed similar concerns.
Experts warn that slower progress on the structural reforms could weaken growth prospects. They also noted that in early 2017, a stable nominal exchange rate of the rupee versus the US dollar resulted in appreciation of the real effective exchange rate, which was hurting exports.
The World Bank pointed out that Pakistan was also vulnerable to any significant decline in remittance flows, particularly from oil-rich countries that contributed about two-thirds of all remittances. The bank advised the government to take effective measures to reverse imbalances and continue implementing structural reforms to ensure a sustainable growth.
In Washington, Finance Minister Dar also met his Afghan counterpart Eklil Ahmed Hakimi and the two talked about coordinating their policies to enhance bilateral trade and economic ties. They agreed to hold the next meeting of the Pakistan-Afghanistan Joint Economic Commission as soon as possible, said an official statement issued after the meeting.
Published in Dawn, April 24th, 2017