ISLAMABAD: The World Bank on Tuesday said Pakistan’s economy enjoyed a strong recovery and grew 5.6 percent in Fiscal Year 2021 (FY21) due to the government’s measures to mitigate the adverse socio-economic impacts of the COVID-19 pandemic.
Prime Minister Shehbaz Sharif’s new administration of in Pakistan has decided to start engaging the International Monetary Fund (IMF) for the completion of a seventh review of the $6 billion loan program signed between the two sides in July 2019 to overcome economic hardships.
Sharif, who was elected on April 1, faces the daunting task of managing a stuttering economy with huge deficits.
But the World Bank, in its Pakistan Development Update on Tuesday, said the economic activity maintained its momentum during July-December 2021 in Pakistan.
“Pakistan’s economic recovery after the COVID-19 crisis indicates that the country has enormous potential to overcome challenging economic situations,” said Najy Benhassine, the World Bank country director for Pakistan.
“However, sustaining the economic recovery requires addressing long-standing structural weaknesses of the economy and boosting private sector investment, exports and productivity.”
The World Bank report highlighted with “economic recovery and improved labor market conditions, poverty — measured at the lower middle-income class poverty line of $3.20 Purchasing Power Parity 2011 per day — declined from 37 percent in FY20 to 34 percent in FY21.”
It said macroeconomic risks remain very high for the South Asian country. These include tighter global financing conditions, potential further increases in world energy prices, and the possible risk of a return of stringent COVID-19-related mobility restrictions.
Domestically, the report said, political uncertainty and policy reform slippages could also lead to protracted macroeconomic imbalances.
“To mitigate immediate macroeconomic risks, the government should focus on containing the fiscal deficit at a level which ensures debt sustainability, closely coordinate fiscal and monetary policy, and retain exchange rate flexibility,” said Zehra Aslam, the lead author of the report.
Pakistan economy enjoys strong recovery after COVID-19 crisis – World Bank
https://arab.news/2qdn4
Pakistan economy enjoys strong recovery after COVID-19 crisis – World Bank
- The recovery indicates Pakistan has enormous potential to overcome economic situations, says World Bank report
- Government should focus on containing the fiscal deficit to mitigate immediate macroeconomic risks, it suggests
Pakistan says Panda bond launch to diversify funding, avoid overreliance on dollar
- Pakistan has said it plans to issue its first-ever yuan-denominated Panda bond in January 2026
- Pakistan minister identifies agriculture, minerals, AI as key areas to attract Chinese investment
ISLAMABAD: Pakistan’s Finance Minister Muhammad Aurangzeb said on Tuesday that launching its first-ever Panda bond would allow Islamabad to diversify its external financing sources away from overreliance on the US dollar, the Finance Division said.
Pakistan has said it aims to launch the Panda bond— a yuan-denominated bond issued in China’s domestic market— by January next year. This highlights Pakistan’s efforts to find alternatives to dollar-denominated borrowing as global financial conditions tighten and Islamabad looks to escape a prolonged macroeconomic crisis.
Panda bonds are renminbi-denominated instruments sold to Chinese investors by foreign governments or companies, offering issuers access to China’s deep domestic capital markets while reducing exposure to foreign-exchange volatility.
“He said the [Panda bond] issuance would allow Pakistan to tap into the second-largest and second-deepest capital market in the world, helping diversify funding sources away from overreliance on the US dollar by complementing existing access to euro and sukuk markets,” the Finance Division said.
Aurangzeb was speaking to the state-owned China Global Television Network (CGTN), the Finance Division said.
The finance minister acknowledged Pakistan had “previously underutilized” the opportunity to take advantage of the Panda bond, expressing optimism about investor interest in the Chinese market.
He said Pakistan remains hopeful of launching the bond ahead of the Chinese New Year, calling it a “landmark development” in the country’s external financing strategy.
In response to a question about Pakistan’s economic priorities, Aurangzeb identified agriculture, minerals and mining, artificial intelligence and digital economy as key areas where Islamabad could attract Chinese investment.
“He emphasized that beyond capital flows, this phase of cooperation places strong emphasis on knowledge transfer and technical support,” the Finance Division said.
