Pakistan may end up taking aid from Bangladesh in 2030: former World Bank adviser
Abid Hasan, a former adviser to the World Bank for the Pakistan Programme, has praised Bangladesh's economic growth while highlighting how Pakistan has gone around the world with a "begging bowl" with a possibility of taking aid from Bangladesh in a decade.
"It was unthinkable, 20 years back, that Bangladesh's GDP per-capita in 2020 would be almost twice that of Pakistan. Bangladesh could be an economic powerhouse in 2030 if it grows at the same rate as in the past," he wrote in an article titled "Aid from Bangladesh".
The article, appearing on The News on Monday, also reads: "If Pakistan continues its dismal performance, it is in the realm of possibility that we could be seeking aid from Bangladesh in 2030."
Abid Hasan, former member of Pakistan Economic Advisory Committee and Federal Board of Revenue Tax Reforms Group, said if they continue with a "business as usual" policy, Pakistan could end up taking aid from Bangladesh in a decade.
In order to establish an economically strong Pakistan, it is imperative for the PTI to reach out to all political parties to develop a national consensus on the fundamental reforms necessary to accelerate inclusive growth and at the same time lower debt, said the former WB adviser.
At the beginning of his article, Hasan said every government in Pakistan, including the current one, has gone around the world with a "begging bowl".
"We're now drowning in debt and stuck in an anemic growth orbit, and will continue to be this way since no government has pursued the deep reforms necessary to establish an economically strong Pakistan," he mentioned.
Hasan said Pakistan's poor performance is their own fault, but their leaders conveniently blame their rivals and the IMF and the World Bank.
There is no doubt that the IMF/WB have often peddled "poorly thought out and one-size-fits-all" policies and bad loans but the deep hole that Pakistan is in is largely its own doing, he wrote.
While corruption and the economic impact of terrorism have a role in the mess, for the most part the poor performance is a result of pursuing irresponsible, inappropriate and unpredictable policies, and half-hearted reforms, he added.
The two most glaring examples of reckless policies, according to him, were: excessive overspending by the government, financed by domestic and foreign debt; and imports far exceeding exports leading to unsustainable external debt.
"In just two decades, Bangladesh has overtaken Pakistan on key economic indicators. Over the last 20 years, Bangladesh's GDP per-capita increased 500 percent, two and a half times that of Pakistan. How did Bangladesh become a miracle story and Pakistan a disaster tale?" -- Hasan wrote.
Bangladesh encouraged savings over consumption. Its savings rate is around 30 percent of GDP, compared to 15-20 percent for Pakistan. Pakistan's irresponsible and impulsive policies encouraged public spending and import consumption way beyond what the country could afford, he mentioned.
In 2000, Pakistan's exports were 50 percent more than Bangladesh.
Since then, Bangladesh's exports increased 700 percent, almost three and half times that of Pakistan.
In 2020, Bangladesh's exports were almost twice that of Pakistan.
As a result of irresponsible fiscal and trade policies: (i) Pakistan's public debt is now close to 600 percent of government revenues, twice that of Bangladesh; (ii) bank lending to the private sector is 200 percent in Bangladesh and 80 percent in Pakistan; credit to the private sector is very restricted in Pakistan because of excessive government borrowings; and (iii) Pakistan's external debt is 400 percent of exports, four times that of Bangladesh, Hasan said.
"It will hurt our national ego, but the only sure way for Pakistan to accelerate growth and reduce debt, and avoid seeking aid from Bangladesh, is to emulate Bangladesh. There is no shortcut to success, except to follow prudent fiscal and monetary policies," the article reads.