WB revises real GDP growth projection downward to 1.1 percent

The World Bank (WB) has revised the real GDP growth projection massively for Pakistan to 1.1 percent from an earlier projection of 2.4 percent for 2020 and 0.9 percent for 2021 from the earlier three percent on account of steep decline in economic activity since March.
This was stated by WB Program Leader for Equitable Growth Shabih Ali Mohib during media briefing through video link, which was also attended by Illango Patchamuthu, World Bank country director for Pakistan, here on Friday.
The country director said that the WB was exploring options for providing $650 million to $1 billion more assistance for enabling Islamabad to combat COVID-19. "We are looking at options to divert resources from existing resource envelop, and efforts are also underway to allocate resources from additional resources. We are exploring options to provide $650 million to $1 billion but it will take some time for getting approval from the bank's forums," Patchamuthu said.
He said that there was portfolio of $9 billion, out of which, major chunk of $6.5 billion remained un-disbursed, so Pakistan approached the bank for diversion of these available resource envelop towards getting funding to fight COVID-19.
The World Bank's board of directors in its meeting held at Washington DC had approved $200 million for Pakistan under Pandemic Response Effectiveness Project (PREP) for which both sides here on Friday signed financing agreement.
Mohib said that due to the steep decline in economic activity since March 2020, the WB was revising real GDP growth projection to 1.1 percent from an earlier projection of 2.4 percent.
"The drivers for this slowdown are the services and the manufacturing sectors that both contribute about 80 percent in Pakistan's GDP growth," he added.
He further said that the WB was expecting that the COVID-19 pandemic would abate over the next six months and a gradual recovery thereafter over the rest of the year.
"Therefore, we have revised our projection of GDP growth for fiscal 2021 to 0.9 percent from the earlier three percent," he maintained.
The WB official said that the slowdown of the economy would result into fall in revenue collection and would add up expenditure side, so the World Bank also projected upward revision of two percent of the GDP into the budget deficit target for the current fiscal year.
When asked how transparency would be ensured for providing monthly stipends to the affected people, the WB's official on social protection, Amjad Ali, said that the government was committed to providing $525 million for giving Rs3,000 a month to the daily-wage workers for four months.
He said that the BISP data was old but now the government with the help of NADRA placed certain filters for exclusion of certain individuals, so that transparency could be ensured.
To another query on debt restructuring/waive-off from multilateral creditors, the country director said that different proposals would be considered on the occasion of upcoming virtual annual meeting of the IMF/World Bank and advised to refrain from plunging into any speculation until something concrete was firmed up.
When asked about the precedent of Highly Indebt Poor Countries (HIPC) and any possibility to replicate it for providing debt relief to the COVID-19 virus-hit countries, the WB official said that it would depend upon certain criteria as tax-to-GDP ratio and other criterion could be considered but it would depend upon creation of required funding to move ahead.