Tue, 06 Jun 2023

Islamabad [Pakistan], March 20 (ANI): Pakistan is among the countries with the lowest inclusive growth and the lowest access to education and healthcare, endangering unparalleled demographic dividends. This is due to decades-old policies that give preferential access to state resources to a few sectors and ensure strong government footprints, reported The Express Tribune.

In "Promoting Inclusive Development in the Middle East and North Africa: Challenges and Opportunities in a Post-Pandemic World," a book published by the International Monetary Fund (IMF), the dire economic circumstances in a region of the world that includes Pakistan are described.

According to a report published in The Express Tribune, Yemen, Mauritania, and Pakistan have the lowest ratings for inclusive growth. They fall behind other nations the greatest in the financial inclusion and private sector.

Iran, Jordan, Egypt, Morocco, Lebanon, Pakistan, and other countries fall short of the global average in terms of access to education. The three countries that appear to be having the most difficulty offering the most basic healthcare to their citizens are Yemen, Pakistan, and Mauritania.

In Mauritania, Pakistan, and Yemen, less than 15 per cent of the poorest citizens have bank accounts, and less than 6 per cent have bank loans. Nearby in Iran, 84 per cent of the population uses the internet, 92 per cent of the poorest 40 per cent of the population have bank accounts and 21 per cent borrow money from a financial institution.

These striking contrasts show how Pakistan, which has had numerous wars and insurrections and where the young unemployed population may serve as food for these militant organisations, has continued to experience exceptional economic growth in the area, according to The Express Tribune.

Also, through the Arab Spring, the unsatisfied populace attempted to topple governments, compelling the major players to re-evaluate their strategies. The IMF, which frequently receives criticism for its fiscal stabilisation measures that result in high unemployment and slow economic growth, has now sparked a discussion regarding the interaction between inclusive and sustainable growth.

The global lender is ready to formally introduce its new set of policies in Marrakesh, the economic centre and home to mosques and gardens - at the October 2023 World Bank-IMF Annual Meetings.

At the exact location in 2018, the IMF organised a regional conference. They firmly believed that in order to increase employment, boost growth, and ensure that the advantages of economic progress were shared more widely among their citizens, MENA countries needed to alter their financial models and, in fact, establish a new social contract.

Because of rich-centric policies, which have also recently caught the attention of the IMF, the elite capture is arguably more pronounced in Pakistan than in many other nations in the area.

According to Nathan Porter, IMF Mission Director, there is "fundamentally significant potential in Pakistan for improving economic development and making it more inclusive," he stated last week at a seminar on the country's future economic agenda held at the National University of Sciences and Technology (NUST).

Pakistan has had a low labour force participation rate over the past 20 years, and its investment rate has been at 15 per cent of GDP, significantly below the strongest performers in the area, The Express Tribune reported.

Porter argued that the continued reliance on policies that support subsidies and special treatment for specific industries is not the answer to Pakistan's underinvestment and underdeveloped human capital. We must consider a novel strategy, he continued.

The IMF mission chief explained that achieving inclusive growth and overcoming these obstacles truly depend on Pakistan's investment and labour force participation rates improving over the following ten years.

Porter stated that shrinking the size of the government will give the private sector more breathing room and improve the business climate.

According to the mission chief, the recent approval of a new state-owned enterprises (SOE) law will enhance governance and should lead to more effective use of public funds.

Additionally, he emphasised the need to lessen anti-export prejudices through tariff regulations and export promotion programmes.

The IMF pressured Pakistan during a recent policy dialogue held under the $6.5 billion Extended Fund Facility (EFF) to take the required actions to break the monopoly of a few companies over the resources of the state.

It has reduced the once-too-large disparity between the policy rate and the rates of the export refinancing schemes, which benefited a select few industrialists.

Less than 50 per cent of the country's working-age population is employed as a result of the few business-centric economic policies' low inclusive growth.

According to Porter, subsidies do not promote strong company growth since they only benefit a small number of people and divert scarce resources away from the most productive areas of the economy. The mission commander continued that these subsidies do not aid in the development of sustainable employment prospects or sustainable exports.

There is only one woman and three males in the labour force, hence Pakistan should utilise its female labour. He said that many women work in the farm industry for no pay.

According to Ayesha Javed, the Deputy Secretary of Budget of the Ministry of Finance, the gender gap alone costs Pakistan Rs 500 billion each year, and addressing it may increase GDP by 30 per cent. The IMF mission chief said that in the coming decades, there will be a young demographic dividend to be reaped and that the correct reforms can help lessen poverty and inequality.

According to the IMF's book, MENA countries continue to place a high focus on providing greater and fairer opportunities for all, particularly for young people, women, and entrepreneurs, ten years after the Arab Spring.

The persistent problems of high unemployment and significant inequality in the region are made more difficult by demographic changes, changing climatic circumstances, the impact of automation, and the use of artificial intelligence in the job market.

According to Dr Ashfaque Hasan Khan, Principal of the Social Sciences School and Humanities at NUST, inclusive growth is becoming more of a focus in the region, but that does not mean that macroeconomic stability is no longer a priority. Instead, the IMF is moving towards inclusive growth in a stable macroeconomic environment.

Khan made the case that the IMF's traditional policies need to adapt in order to achieve equitable growth without jeopardising macroeconomic stability. These policies now support stabilisation today and growth later.

Dr Athar Maqsood, a professor at NUST, called for further clarification on the IMF-World Bank policies, citing instances in the past where those policies had worsened inefficiencies in Pakistan's power sector and taxation system.

"It is impossible to create enough jobs in a nation with a population growth rate of 2.5% and an average growth rate of 3 per cent. The demographic dividend has turned into a demographic calamity, and we have the greatest unemployment rate," said Maqsood, The Express Tribune reported. (ANI)

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