World News | World Bank cuts growth forecast for Pakistan to 0.4%

Islamabad [Pakistan]April 7 (ANI): The World Bank has slashed Pakistan’s current growth forecast from 2% to 0.4%, attributing the change to tightening economic conditions and fiscal space, local daily The Daily Times reported. limited.

Rising interest rates and uncertainty in financial markets further exacerbated the pressure on the cash-strapped economy, and future economic prospects depended heavily on structural reforms. Inflation in Pakistan is at its highest level in 48 years, affecting local businesses and increasing the cost of living. Foreign exchange reserves are only enough to cover one month’s worth of imports.

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Flood damages worth billions of dollars continue, with many people left uncompensated for their losses. According to news reports, bond spreads are widening while the IMF is considering whether to resume aid.

According to World Bank forecasts, Pakistan will achieve a deal with the IMF. However, a $6.5 billion loan is not enough to replenish what Pakistan’s depleted state coffers need, according to the Daily Times. Moreover, in addition to political and economic turmoil, repeated delays in the IMF bailout program are likely to push Pakistan into recession.

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To seal the IMF bailout, Pakistani authorities have raised taxes, cut energy subsidies and raised interest rates to the highest level in 25 years to keep prices down. However, larger structural problems continue to hold Pakistan back, according to news reports.

The inability of successive Pakistani governments to meet IMF conditions has made global banks reluctant to provide additional funding. According to the “Daily Times” report, without foreign intervention, Pakistan is unlikely to achieve a full recovery.

Meanwhile, the World Bank said various economic shocks have pushed nearly 4 million Pakistanis into poverty this fiscal year, the Express Tribune reported. The World Bank also called on Pakistan to immediately arrange new foreign loans to avert a “public debt crisis”.

In its flagship report, “Pakistan Developments Update,” the World Bank warned Pakistan of grave dangers to its economy and debt viability, while forecasting nearly flat economic growth and inflation averaging 29.5 percent for the current fiscal year, according to news reports.

According to the Tribune, Pakistan’s average inflation rate is expected to be 29.5 percent in fiscal 2023 and 18.5 percent next year, suggesting that annual inflation will be much higher.

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The World Bank said implementing the macroeconomic and structural reforms agreed under the IMF program and obtaining external refinancing was important to restore macro stability and confidence and avoid a “public debt crisis”. (Arnie)

(This is an unedited and auto-generated story from a Syndicated News feed, the content body may not have been modified or edited by LatestLY staff)