World Bank says reducing distortions in resource allocation a must for Pakistan’s growth 

The seal for the International Monetary Fund is seen near the World Bank headquarters (R) in Washington, DC on January 10, 2022. (Photo courtesy: AFP/FILE)
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Updated 10 February 2023
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World Bank says reducing distortions in resource allocation a must for Pakistan’s growth 

  • The report presents evidence of systematic productivity stagnation across firms and farms 
  • World Bank says productivity is further affected as Pakistan does not tap into all of its talent 

ISLAMABAD: Pakistan’s economy can sustainably grow only if the South Asian country introduces productivity-enhancing reforms that facilitate a better allocation of resources and talent, the World Bank said on Friday, amid a spiraling economic crisis that has raised fears of a default. 

The report, titled “From Swimming in Sand to High and Sustainable Growth,” found that Pakistan’s inability to allocate all its talent and resources to the most productive uses had stunted economic growth. It presented evidence of systematic productivity stagnation across firms and farms. In manufacturing and services, most of the productivity stagnation is related to firms losing efficiency over time. 

The report also showed a systematic decline in agricultural productivity as well as a strong link between elevated temperatures and rainfall variations, presenting a roadmap to reduce distortions in the economy that are currently acting as a deterrent to productivity growth. 

“Pakistan’s economy is at a critical stage. It could be a turning point where long-term structural imbalances that have prevented sustainable growth for too long ought to be addressed urgently. The report puts forward a series of policy recommendations to achieve this in a sequenced way,” said Gonzalo J. Varela, a senior economist who co-authored the report. 

“First, reduce distortions that misallocate resources and talent. Second, support growth of firms through smart interventions, rather than through blanket subsidies. Third, create a positive, dynamic loop between evidence and policymaking, strengthening feasibility analysis of publicly funded projects or programs.” 

Critical reforms suggested by the World Bank to uplift the South Asian country include harmonizing direct taxes across sectors so that more resources flow into dynamic tradable sectors like manufacturing and tradable services, instead of real estate and non-tradables, reducing the anti-export bias of trade policy by lowering import duties, and reversing the anti-diversification bias of export incentives. 

The report said productivity was further affected by the fact that Pakistan did not tap into all of its talent. 

“Women in Pakistan have made progress in educational attainment, but this accumulated human capital is underused because of constraints they face to participate in the labor force,” said Najy Benhassine, the World Bank country director for Pakistan. 

“With only 22 percent of women employed in Pakistan, women’s labor force participation is among the lowest in the world. By closing the female employment gap relative to its peers, Pakistan can accrue GDP gains of up to 23 percent. Successful implementation of policies to address the demand- and supply-side barriers to female labor force participation, can create about 7.3 million new jobs for women.” 

Pakistan, which has been grappling with dwindling forex reserves, more than 27 percent inflation and fast depreciating currency, is in dire need of external financing to avoid a default on its international obligations. 

The $350-billion economy is still reeling from devastating floods last year, and the government estimates rebuilding efforts will cost $16 billion. The heavily indebted nation only has enough foreign reserves to cover less than three weeks of crucial imports, while analysts believe the longer it takes to secure a $1.1 billion bailout from the International Monetary Fund (IMF), the higher the risk of default. 

The World Bank urged Pakistan to maximize positive impact on businesses and productivity across the board by reducing regulatory complexity, harmonizing the general sales tax across provinces, reforming investment laws to attract more foreign direct investment, and upgrading insolvency laws to reduce the costs of liquidating non-viable firms. 

In the meantime, it said, providing safe and affordable mobility especially for women, boosting digital connectivity and digitally enabled jobs, demonstrating the benefits of increased female labor force participation to positively shift entrenched norms, developing skills, and reducing sectoral gender bias were among the top and medium-term recommendations for the South Asian country. 

“Firms in Pakistan struggle to grow large as they grow old. A young formal firm in Pakistan that has been in operation for 10 to 15 years is about the same size as a firm that has been in operation for more than 40 years,” said Zehra Aslam, another co-author of the report. 

“Similarly, an average Pakistani exporter is less than half the size of one in Bangladesh. This shows a lack of dynamism among Pakistani firms, compared to better functioning markets, where firms either grow or exit.” 
 


Pakistani leaders, Saudi envoy laud Kingdom’s efforts to ‘shape’ the future

Updated 6 sec ago
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Pakistani leaders, Saudi envoy laud Kingdom’s efforts to ‘shape’ the future

  • Glittering ceremony held in Islamabad to celebrate Saudi Arabia’s 93rd National Day
  • Senate chairman praises Saudi efforts to promote peace, stability in Middle Easy and beyond

ISLAMABAD: At celebrations to commemorate Saudi Arabia’s 93rd National Day in Islamabad on Monday, Pakistani leaders as well as the Kingdom’s envoy to Pakistan praised the leadership in Riyadh for its efforts to realign Middle East dynamics and open up the Saudi economy and society.

The Saudi government, in an effort led by Crown Prince Mohammed Bin Salman, has made remarkable changes in recent years under a vast economic transformation plan, the Vision 2030, to diversify away from oil and open the Kingdom to business and tourism amid rising regional competition. The Kingdom has also gone into diplomatic overdrive, restoring relations with Iran and agreeing to a rapprochement with Syria in its quest to rebuild regional alliances, instead of leaning entirely on the United States, its long-time big power ally. It has also recently joined the Shanghai Cooperation Organization as parts of Riyadh’s attempts to build a long-term partnership with China.

“Under the ideal leadership, Saudi Arabia is not just addressing the future, it is actively shaping it,” Chairman Senate Muhammad Sadiq Sanjrani said at a ceremony to celebrate Saudi National Day, which the Kingdom is marking this year with the slogan, “We dream and we achieve.”

The Senate chairman lauded steps taken by Saudi Arabia to promote peace and stability in the region.

“Dialogue and mutual respect are the bedrock on which lasting peace is made,” he said. “We are confident that Saudi efforts will open doors to various opportunities, including trade, the sharing of initiatives, and collaboration between leaders and their followers, not only for the region but for the entire world.”

Pakistan and Saudi Arabia are close allies and share strong economic, security and cultural ties. Saudi Arabia is also home to more than two million Pakistani expatriates, making it the largest contributor to remittance inflows.

This year, Pakistan received $2 billion in financial support from Saudi Arabia in July, a day before the International Monetary Fund’s board gave the final approval for a $3 billion bailout deal. Saudi Arabia’s continued economic and investment support is key for Pakistan, as economic stabilization is a major challenge, with the $350 billion economy on a narrow recovery path after the IMF bailout averted a sovereign debt default. Economic reforms have already fueled historic inflation and interest rates.

“Pakistan is grateful for all the support extended by the Kingdom in the difficult times,” Sanjrani said, adding that Pakistan had also provided “unwavering and never-ending” support to the Kingdom on the diplomatic and security fronts.

Speaking at the ceremony, which was organized by the Saudi embassy, Ambassador Nawaf bin Said Al-Malki called on Pakistan and the world to “support all development plans and initiatives taken for the progress and prosperity of the Kingdom.”

“At the forefront of these successful initiatives is the Kingdom’s Vision 2030,” the ambassador said, “which represents a new stage leading the country to a bright future.”


PM puts Pakistan in diplomatic overdrive, pitches investments in stopover visit to the UK

Updated 16 min 4 sec ago
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PM puts Pakistan in diplomatic overdrive, pitches investments in stopover visit to the UK

  • Kakar meets senior leaders of London’s capital and financial markets, prominent British-Pakistani business heads
  • Discusses “multifaceted bilateral relations and resumption of PIA flights” with British foreign secretary

ISLAMABAD: Caretaker Prime Minister Anwaar-ul-Haq Kakar on Monday met the UK’s foreign secretary as well as financial and capital market leaders and top British-Pakistani and other business groups on a stopover visit to London on his way back from New York to attend the UN General Assembly.

Pakistan in June set up a Special Investment Facilitation Council (SIFC) — a civil-military hybrid forum — to fast-track decision making and promote investment from foreign nations. The council has identified five sectors as priority for seeking investment, namely agriculture, mining, information technology, defense production and energy, as the South Asian country deals with a balance of payments crisis and requires billions of dollars in foreign exchange to finance its trade deficit and repay its international debts in the current financial year.

Last week, Kakar used his visit to New York for the UN General Assembly as an opportunity to meet business and thought leaders and stakeholders and make the case for improved business climate in Pakistan and its potential for foreign direct investment in a range of sectors.

On Monday, senior leaders of London’s capital and financial markets called on Kakar in London and expressed “keen interest in exploring promising investment opportunities in the financial and capital market of Pakistan, reflecting a growing mutual interest in expanding economic collaboration,” the PM’s Office said in a statement released after his meeting with notable investment firms, including Fidelity International Limited (FIL), Wellington Management, Ashmore, Jefferies International, Redwheel Capital, Switex Industrial SA, Oxford Frontier Capital, GuarantCo, JP Morgan, Kalrock Capital, and UBL UK.

“Prime Minister Kakar informed the delegation about Pakistan’s current economic landscape, highlighting government measures for external account improvement,” the PM office said.

“He said that recent administrative actions strengthened the Pakistani rupee against the US dollar, fostering optimism for stability. He said positive indicators, including inflows from the World Bank, Asian Development Bank, and friendly nations, contributed to reduced inflation, stabilized reserves, and revival of industrial growth.”

Kakar also spoke about the potential for foreign direct investment in Pakistan’s key sectors and the positive impact of a Stand-By Arrangement (SBA) with the IMF, agreed in June. He highlighted economic improvements such as reduced inflation and improved trade after the removal of restrictions on imports and fiscal measures for monetary support and medium-term inflation targets.

“Furthermore, the Prime Minister highlighted Pakistan’s pro-investment efforts, introducing the Special Investment Facilitation Council,” the PMO said. “This initiative, led by the Prime Minister himself, streamlines investment processes, attracts investments in key sectors, and fosters long-term growth by simplifying the business landscape.”

Kakar separately met prominent British-Pakistani businessmen in London and highlighted positive economic indicators resulting from reforms pursued by his government, including a strengthening of the rupee, reduced inflation, and expected economic growth.

 “The Prime Minister spoke about Pakistan’s investment-friendly approach, mentioning incentives and ease-of-business reforms,” the PMO said. “He introduced the Special Investment Facilitation Council, chaired by himself, to streamline investment in key sectors through a single-window platform. This initiative aims to enhance ease of doing business, remove bureaucratic hurdles, and create a long-term investment roadmap.”

Kakar also shared the government’s resolve and commitment to privatize loss-making state-owned enterprises and urged overseas Pakistanis to take advantage of the opportunities for investment in Pakistan. He invited diaspora business leaders “to invest, especially in Special Economic Zones, to contribute to Pakistan’s economic recovery.”

The PMO said the business leaders “conveyed their strong interest in expanding their business operations in Pakistan while actively seeking to increase their investments in the country.”

Abdullah Kamani, a leading British businessman and the co-founder and executive chairman of Boohoo Group, separately called on Kakar. Boohoo Group plc is a British online fashion retailer, aimed at 16–30-year-olds. The business was founded in 2006, and had sales in 2019 of £856.9 million. It specializes in own brand fashion clothing.

“Kamani expressed keen interest in establishing long-term buying linkages with Pakistan and the ambition to create a comprehensive supply chain in the country, encompassing organic cotton to apparel production,” the PM’s office said. “They also hoped for improved Pakistan-UK air connectivity to facilitate increased imports from Pakistan.”

Kakar conveyed Pakistan’s commitment to facilitating investment and offered support in establishing manufacturing facilities within the country, particularly within Special Economic Zones (SEZs). He urged Boohoo Group to consider opening buying houses in Pakistan and invited the company to send a buying delegation to Pakistan.

Kakar also met UK’s Foreign Secretary James Cleverly on Monday and discussed “all areas of mutual interest, including multifaceted bilateral relations, and resumption of PIA flights.”


Pakistan condemns latest desecration of Qur’an in the Netherlands

Updated 25 September 2023
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Pakistan condemns latest desecration of Qur’an in the Netherlands

  • Anti-Islam activists have burnt, damaged several copies of Muslim holy book in recent months
  • Desecrations have enraged Muslims, unleashed demands governments ban such acts 

ISLAMABAD: Pakistan on Monday condemned the latest “senseless” act of desecration of the Qur’an in the Netherlands in front of a number of embassies of Muslim countries.
Anti-Islam activists have burnt and damaged several copies of the Muslim holy book in recent months, prompting outrage in the Muslim world and demands the nations’ governments ban such acts.
Intentionally burning the Qur’an is seen by Muslims as a blasphemous and insulting act worthy of severe punishment. 
“Pakistan condemns in the strongest terms the latest senseless and deeply offensive act of desecration of the Holy Qur’an that took place in The Hague, the Netherlands in front of some embassies of OIC member countries including Pakistan,” the Pakistani foreign office said.
“It is a deliberately provocative and Islamophobic act that has hurt the sentiments of Muslims around the world. Such acts cannot be condoned under the guise of freedom of expression, opinion and protest.”
The foreign office said Pakistan believed freedom of expression came with responsibilities and governments should actively prevent racist and Islamophobic acts that incite religious hatred.
“Pakistan’s concerns have been conveyed to the Dutch authorities. We urge them to be mindful of the sentiments of the people of Pakistan and Muslims around the world and take active steps to prevent such hateful and Islamophobic acts.”
Last month the United Nations Human Rights Council approved a disputed resolution on religious hatred in the wake of the burning of a Qur’an in Sweden, prompting concern by Western states who say it challenges long-held practices in rights protection.


Pakistan gets visas for Cricket World Cup in India after expressing concerns to ICC 

Updated 25 September 2023
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Pakistan gets visas for Cricket World Cup in India after expressing concerns to ICC 

  • Team is scheduled to leave for Hyderabad via Dubai in the early hours of Wednesday 
  • Eighteen Pakistan players and 15 support staff are due to travel to India after visa delays 

ISLAMABAD: Pakistan has received its visas for next month’s World Cup in India after expressing concerns to the International Cricket Council over delays and complaining about “inequitable treatment”. 

The team is scheduled to leave for Hyderabad, via Dubai, in the early hours of Wednesday and Pakistan Cricket Board spokesperson Umar Farooq said his organization had received confirmation from the Indian High Commission in Islamabad late on Monday to collect their passports. 

Eighteen Pakistan players and 15 support staff are due to travel to India. 

Earlier, the PCB had expressed its disappointment with the ICC over the delays. 

“It’s a matter of disappointment the Pakistan team has to go through this uncertainty ahead of the major tournament,” Farooq said in a statement. 

“There has been an extraordinary delay in getting clearance and securing Indian visas … we have written to the ICC raising our concerns about inequitable treatment toward Pakistan and reminding them of these obligations toward the World Cup.” 

Farooq said Pakistan had reminded the ICC governing body for three years about its obligations but it “has all come down to the last two days”. 

The PCB was forced to cancel its original plan to organize a team-building process in Dubai on the way to India. “We had to rework our plan and book new flights,” Farooq said. 

Pakistan is due to play New Zealand in Hyderabad on Friday before taking on Australia in another warm-up on Oct. 3. 

It launches its World Cup campaign against the Netherlands on Oct. 6. 


Pakistan bans using injections of Avastin after patients go blind, launches investigation

Updated 25 September 2023
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Pakistan bans using injections of Avastin after patients go blind, launches investigation

  • Cancer drug Avastin in smaller doses is similar to eye drug Lucentis, used as low-cost option to treat blindness-causing conditions
  • Some 68 people from various districts of Punjab province have been hospitalized with blindness after receiving injections of Avastin

KARACHI: Pakistan’s interim health minister Nadeem Jan said on Monday the government had imposed an interim ban on using injections of Avastin cancer drug across the country after a number of patients injected with the drug lost vision.

Some 68 people from various districts of Punjab province have been hospitalized with blindness after receiving injections of Avastin, a medication primarily used for the treatment of cancer patients but also prescribed off-label in Pakistan for diabetic retinopathy-related edema. 

Health officials say the medication is registered with the Drug Regulatory Authority of Pakistan (DRAP) for the treatment of colon carcinoma only.

The regulator said in a statement on Monday incidents of “loss of vision in diabetic patients have been reported following treatment with Altered/Dispensed/Diluted Avastin injection.” 

DRAP instructed the drug’s importer to recall suspected batches of Avastin 100mg injection, which it said had been created illegally.

“The sale/distribution of registered Avastin Injection has been put on halt till verification of its quality through sampling and laboratory testing to safeguard public health,” DRAP said in a statement on its website.

“We have established a clear strategy in response to this situation,” the health minister told Arab News. “The supply of this medication [in injection form], whether from Roche or Genius pharmaceutical, has been halted, and both Punjab and other provinces have been instructed to cease its sale and purchase until the investigation report is released.”

Jan said a five-member committee had been established to investigate “whether the problem was caused by the medicine itself, issues in its supply chain, the skill level of the administering doctors, or the sterilization process.” 

Two people associated with distribution of Genius Pharmaceuticals had been identified, and a First Information Report (FIR) had been filed against them, the minister said: 

“Two suspects have been identified and charged, but they have gone underground to evade arrest. They will be apprehended soon.” 

The affected patients had used Avastin doses distributed by Genius Pharmaceuticals.

“Once the report is ready, it will be made public, and the culprits will be dealt with according to the law. They will be punished, setting an example for others and deterring them from committing such acts driven by self-greed,” Jan added.

On its website, Roche said Avastin was approved in more than 130 countries, including the United States, to treat several types of cancer. Roche’s Pakistan has not yet commented. 

Avastin was used as an eye treatment off-label, meaning outside of the approved use. Cancer drug Avastin, when used at much lower doses, is similar to eye drug Lucentis, and is used in many countries as a low-cost option to treat certain blindness-causing conditions.

Speaking to Arab News, Javed Akram, Punjab’s Minister for Specialized Health, said the injections seemed to be okay when they were dispatched from the company but problems likely arose when they were converted into smaller doses.

“It is being transferred into small syringes from large vials for cost-cutting and profit-making, which goes against good clinical practices,” Akram said, adding that the technical committee would determine the real cause. 

Akram said a majority of the affected patients from central Punjab had been admitted to Mayo Hospital, Lahore, while those from the province’s southern districts had been shifted to Nishtar Hospital, Multan.

Jan said the government had instructed provincial authorities to ensure patients received free and high-quality treatment.

“Eighty percent of the patients show improvement with proper treatment. The government is committed to ensuring the full recovery of all patients,” he said, adding that though the cases had so far only occurred in Punjab, other provinces had also been adviced to suspend the use of this medication for two weeks as a precaution.