Pakistan’s hike in interest rate may entail financial problems: WB

Projects 3.4% growth rate: Suggests to bring financial stability in energy sector: Predicts inflation will rise: Cautions early election expenditures may raise fiscal deficit to 7.1% in 2023

By: News Desk
Published: 02:34 PM, 7 Oct, 2021
Pakistan’s hike in interest rate may entail financial problems: WB
Caption: Representational image.
Stay tuned with 24 News HD Android App
Get it on Google Play

The World Bank has predicted that Pakistan will confront the financial problems during current fiscal owing to its central bank decision which has raised policy rate by 0.25% in Sept edging up the interest rate to 7.25%, reported 24NewsHD TV channel.

The World Bank on Thursday released its report on Pakistan economy predicting that the country would face fiscal problems during FY2021-22. 

The report suggested that Government of Pakistan must focus on measures to reduce external pressure and financial challenges. 

The World Bank projected 3.4% economic growth for Pakistan. It further estimated that country’s rate of growth would reach 4% in 2023. It stressed the government to concentrate on steps to improve the economic stability. 

It suggested to bring improvement in the financial stability in the energy sector. 

According to the bank, with the increase in prices of electricity, petroleum products and other items, it is expected that the inflation will surge in the year 2022.

The bank expected that country’s current account deficit with ratio to GDP would rise to 2.5% in 2023. It warned that the current account deficit could increase due to rising imports and hike in oil prices. 

The WB hoped that after an initial slump, the exports will surge tremendously in 2022. 

The bank observed that despite Covid-19 pandemic, there was a considerable increase in the remittances. 

It anticipated that during current fiscal year, the country’s fiscal deficit is expected to hover high at 7% with ratio to the GDP. 

It also cautioned that that early elections expenditures could raise the fiscal deficit to 7.1% in 2023.

The World Bank expected that government would refrain from obtaining loans in mid-term. 

The bank believed that the IMF loan programme would keep going on track. 

Reporter Ashraf Khan