Pakistan’s Central Bank Chief Says Current Growth Model Cannot Sustain Country's 250 Million Population

In a stark warning, cash-strapped Pakistan’s central bank chief has said that the current growth model cannot sustain the country's population of about 250 million people and suggested a shift in the economic policy and planning.

Jameel Ahmad, Governor of State Bank of Pakistan's (SBP) comment about Pakistan's economic model and its implications came a day after Planning Minister Ahsan Iqbal blamed the International Monetary Fund (IMF) for the nation's highest unemployment rate in 21 years.

The governor said that economic growth had been on a steadily declining trend, which has slipped from an average of 3.9% over the last 30 years to 3.5% over the last 20 years and to 3.4% over the last five years, reported The Express Tribune.

“Our business cycles are shortening and as such our current growth model simply cannot sustain a country of over 250 million people,” Ahmad said while delivering a keynote address on Wednesday at the opening session of the Pakistan Business Council's (PBC) 'Dialogue on the Economy.'

Pakistan is passing through a prolonged phase of stabilisation, which overburdened people and businesses in the shape of heavy taxation, high energy cost to offset the impact of inefficiencies and no control over growing expenses.

“Continuing with stabilisation policies indefinitely is neither desirable nor sustainable,” Ahmad said.

The unemployment rate has reached a 21-year high of 7.1%, while the World Bank has calculated the poverty rate at 44.7%.

Asserting that there was a need to rethink the economic model and the policymakers and businesses need to take a long-term view of policies, regulations and business strategies, Ahmad advised the policymakers to address structural issues through long-term reforms.

Terming it “imperative,” the SBP governor suggested to the private sector not to compromise long-term gains for the sake of short-term profits.

He said that there was a growing recognition that sustainable growth would remain elusive until policymaking is reoriented towards a long-term vision of achieving socio-economic prosperity for the people, instead of looking for short-term consumption growth spurts.

The latest Labour Force Survey released on Tuesday has revealed that the unemployment rate in Pakistan rose to the highest level in 21 years at 7.1% in the last fiscal year, which Planning Minister Ahsan Iqbal said “increased due to climate disasters and the IMF's stabilisation programme, which constrained economic growth.”