World Bank's Benhassine praises Pakistan's economic transformation
Bold New Horizons for Pakistan's Economy: Najy Benhassine's Farewell Praise
Najy Benhassine, the departing World Bank honcho for Pakistan, showered praises on the country's groundbreaking economic metamorphosis, branding it a radical overhaul. Such accolades came during a farewell meeting with Prime Minister Shehbaz Sharif, as detailed in a PMO statement last Thursday.
"This revolutionary transformation, stability, and progress in Pakistan's economy under your leadership is nothing short of impressive," said Benhassine, emphasizing that the country avoided a crippling sovereign default and set sail on a course of financial stability.
"Pakistan's economic team has expertly maneuvered the economy from stability to growth," he continued.
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Simultaneously, Prime Minister Shehbaz chimed in, lauding Benhassine for cementing the Pakistan-World Bank bond. "For we are truly grateful," the PM was quoted, adding that the collaboration with Benhassine on the Country Partnership Framework left a lasting, positive impression.
Shehbaz extended his best wishes and blessings for Najy Benhassine's health and future triumphs.
The get-together included the World Bank's Operations Manager for Pakistan, Gailius Draugelis, Deputy Prime Minister and Foreign Minister Muhammad Ishaq Dar, Federal Ministers Ahsan Iqbal, Muhammad Aurangzeb, and other senior officials.
New Dawn for Pakistan: An In-depth Look
Pakistan's economic breakthrough stems from several key factors, indicating progress towards macroeconomic stability and fiscal consolidation.
Macroeconomic Stability
Pakistan's economy resurgence has been visible, with growth rebounding to 2.68% in FY2025 from a 0.2% dip in the previous year, signaling a return to macroeconomic stability despite not meeting the initial 3.6% growth target. This stabilization is evident in a reduced current account deficit, moderated inflation, and increased foreign exchange reserves.
Fiscal Consolidation and IMF Support
The government's fiscal discipline under the IMF's Extended Fund Facility (EFF) has been vital. Pakistan's fiscal deficit is projected to narrow to 3.9% of GDP in FY2026, thanks to lower interest costs and higher tax revenues. Fiscal consolidation measures included reduced subsidies, adjustments in utility pricing, and IMF tranche releases reinforcing financial stability.
Structural Reforms and Privatization
Structural reforms have focused on the privatization of state-owned enterprises and boosting sectors like IT exports and services. The "Uraan Pakistan" plan aims to propel IT exports to $10 billion, exploiting the sector's diverse global client base. These reforms help diversify the economy and foster new growth avenues beyond traditional sectors.
Improved Investment Climate and Policy Environment
Centering on prudent public debt management, monetary discipline, and navigating geopolitical and macroeconomic challenges, efforts to boost investor confidence have been significant, although risks persist. The government's recognition of fiscal and macroeconomic risks, such as inflation, slow GDP growth, and climate-related perils, underscores a strategic approach to sustaining this growth trajectory.
In essence, Najy Benhassine's applause underscores Pakistan's successful macroeconomic stabilization, adherence to IMF-supported fiscal reforms, strategic structural reforms, including privatization, and a burgeoning IT export sector. These concerted efforts establish a foundation for durable economic recovery and growth despite ongoing challenges.
"As Najy Benhassine commended Pakistan's economic transformation, he pointed out that the country has not only achieved macroeconomic stability but also shifted its focus from simple stability to growth, showcasing business acumen in steering Pakistan's economy."
"Moreover, Benhassine highlighted that the potential risks in the economy, such as inflation, slow GDP growth, and climate-related threats, have been recognized and addressed as part of a strategic approach towards sustaining this growth trajectory in the financial realm."
