PAKISTAN is at a critical point. Inconsistent and poor economic policies of the past have had an adverse impact on living standards, businesses and the environment. Resistance from the ruling elite to reform has exacerbated the situation for ordinary citizens, with recurring crises hitting them harder than ever before. No wonder the country has fallen far behind its peers in recent years. The World Bank, which has committed $20bn in lending to Pakistan over the next 10 years to focus on development issues such as the impact of climate change and private sector growth, wants the government to implement wide-ranging economic reforms to rectify matters. During an exclusive conversation with Dawn last week, the bank’s vice president for South Asia Martin Raiser attributed many of Pakistan’s long-standing challenges to the country’s failure to carry out energy, water and revenue reforms over the past decades. In his view, it is crucial to implement reforms to address the myriad challenges the country faces in order to ensure improved economic development and prosperity for its citizens.

The World Bank is not the only creditor that consistently emphasises the urgent need to execute policy reforms to correct the deep-seated structural imbalances in the economy, which are impeding growth. Other multilateral agencies and bilateral creditors, too, have urged Islamabad to course correct. The reforms suggested by Mr Raiser — who was at the launch of the bank’s Country Partnership Framework under which $14bn have been committed in concessional loans and $6bn at higher rates — are not new or unique. He has basically argued in favour of major policy shifts to put the economy on the path to growth by improving public services and helping the poor through social protection programmes, improving fiscal management to reduce the burgeoning budget deficit and address distortions in economic, trade, energy and farm policies. Many countries, including Indonesia, India and Vietnam, have previously leveraged their economic crises to pursue reforms to achieve large private foreign investments and higher growth rates to substantially cut poverty and improve living standards. If they can do it, why can’t Pakistan? It is time our politicians and policymakers listened to the world and took the decision to jettison past patterns and move towards a new economic policy paradigm. Ambivalence is not likely to get us anywhere.

Published in Dawn, January 27th, 2025