The World Economic Forum (WEF) has listed the debt crisis as the biggest challenge faced by Pakistan which is followed by extreme weather events, inability to stabilize prices, failure to tighten cyber security, and human-induced environmental damage. These five risks have been categorized in a recently published report titled ‘Global Risks Report 2022’ which is based on the WEF’s Executive Opinion Survey conducted between March and September last year. Each year, the WEF publishes the Global Risks Report which presents the top five risks faced by each country. According to the report, debt crisis, inflation, and unstable commodities prices remain the top risk faced by most countries. With the emergence of new variants in 2021, the Coronavirus pandemic will continue to prevent the countries to embark on a sustained recovery.
The economic challenges induced from the pandemic present a short-term risk to the global economies while climate change poses the biggest long-term risk. As governments across the world will remain engaged to tackle the short-term risks, they are expected to compromise on the measures committed to counter the long-term risks.
Speaking in this regard, Managing Director WEF Saadia Shehzadi said that health and economic challenges in 2021 triggered primarily due to the COVID-19 pandemic worsened the social divide all over the world including Pakistan.
She added that concerted efforts are required from the public and governments to ensure an even and rapid recovery of the global economy. She also called on the international community to cooperate and formulate a multi-prong strategy to tackle the most pressing challenges faced by the world. The rising debt levels have also constricted Pakistan’s ability to grow the economy at a pace needed to create new jobs for 3m people entering the job market each year and cut abject poverty.
A recent World Bank forecast says the country’s economy is likely much slower than the government’s target of 4-5pc and at half the rate required to absorb new labour market entrants. No sooner the government tries to push growth, the economy hits external imbalances, compelling it to return to the IMF for help.
We will do so indeed with the IMF and other multilaterals backing us with their dollars. But is this a sustainable solution? The only way forward for the country is to broaden its tax net and control non-productive civil and military government expenditure.
Simultaneously, we must increase productivity to boost exports and curtail non-essential imports.