World Bank reduces Pakistan's growth forecast to 0.4% as ministers scrap US trip
2 min read . Updated: 07 Apr 2023, 07:15 PM IST
PremiumPakistan's finance minister cancelled a visit to Washington for spring meetings of IMF and World Bank citing domestic political turmoil.
As the economic crisis in Pakistan continues, the World Bank has sharply reduced the country's growth forecast from 2% to 0.4%. Inflation in Pakistan is at a 48-year high, affecting local businesses and increasing the cost of living. Foreign currency reserves are barely enough to manage a month of imports. Against this backdrop, however, Finance Minister Ishaq Dar has reportedly cancelled his visit to the US. The top official had been set to attend the spring meetings of the World Bank and the IMF and hold talks to unlock a much-needed bailout.
The developments come at a time when cash-strapped Pakistan racing to secure a $1.1 billion tranche of funding from the International Monetary Fund. Originally due to be disbursed in November last year, the funds are part of a $6.5 billion bailout package approved in 2019.
Analysts say that the funds are critical if Pakistan is to avoid defaulting on external debt obligations. The IMF programme is slated to expire on June 30 this year and cannot be extended under the set guidelines.
While World Bank projections suggest that Pakistan will realise the deal with the IMF, a $6.5 billion loan falls short of what is needed in Pakistan to replenish its depleted coffers. Pakistani authorities have already increased taxes, reduced energy subsidies and raised interest rates to a 25-year high to tamp down prices in order to secure the bailout package.
Pakistan's Finance Minister had been slated to meet the International Monetary Fund management for the removal of bottlenecks in the staff-level agreement on the revival of the stalled bailout package.
A report by The Express Tribune quoting sources said that Dar would not attend the spring meetings of the World Bank and the IMF that will take place from April 10 to 16 in Washington. Minister for Economic Affairs Sardar Ayaz Sadiq would also not go to the United States due to the prevailing uncertain political conditions. The economic affairs minister always represented Pakistan at the World Bank.
(With inputs from agencies)