Pakistan may fail to sustain 6-8 percent growth: World Bank

The World Bank (WB) feared that Pakistan might fail to sustain 6-8 percent growth due to inadequate infrastructure services and power generation along with a wide gap between public and private sectors share in infrastructure investment.
World Bank Country Director John Wall expressed the concern, while addressing the concluding session of two-day Pakistan Development Forum (PDF) here on Thursday.
John Wall said, "Sustained rapid growth takes us a long way, though we have to still worry about droughts and other natural phenomena; and worry about the equity of rapid growth."
He said, "Reforming the power sector has proved to be full of political constraints and is moving very slowly and requires very large public subsidies."
Currently, the government is financing power sector by providing about Rs 100 billion subsidy annually, which the bank wants to be reduced to relieve national kitty of unnecessary burden.
When the bank inquired that how the government plans to finance the power subsidy, Water and Power Minister Liaquat Ali Jatoi explained that the government is phasing it out through power sector privatisation.
He said that Pakistan has nine power distribution companies, out of which about 73 percent of Karachi Electric Supply Corporation (KESC) had already been privatised. Besides, the Faisalabad Electric Supply Company (Fesco) and the Jamshoro Electric Supply Corporation (Jesco) were ready for privatisation.
He also said that currently Pakistan faces higher quality problems, the problem of success. Demand has risen faster than supply, which has shown up in high inflation and a zooming trade deficit.
The "tight fiscal, easy money" formula to get growth going needs to be "tight fiscal, tight money and credit" to sustain rapid growth, he said.
Idle domestic production capacity allowed rising demand to be accommodated by rising capacity utilisation in cement, steel, fertiliser, textiles, automobiles and motorcycles.
He also said that capacity is more than fully utilised, resulting in backlogs and imports.
He said, "The problem I see is not comparing last year and this year; my horizon is first looking back over the last three-four years and then looking ahead to the coming three-four years. What I see is a macro imbalance that, unless rectified, will prove to be unsustainable in terms of foreign trade, inflation, exchange rate stability and foreign exchange reserves."