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Rising growth rate vindicates stabilisation policy for Pakistan: ADB

Rising growth rate vindicates stabilisation policy for Pakistan: ADB

FRANKFURT: The Asian Development Bank (ADB) and Asian Infrastructure Investment Bank (AIIB) signed a Memorandum of Understanding (MoU) on Monday to co-finance mutually-agreed projects. Both the lenders have selected Pakistan as the destination for a $300 million collective project to construct a road in Punjab from Shorkot to Khanewal.

AIIB’s contribution to the project will be $100 million and the remaining will be provided by the ADB, other donors and the Government of Pakistan.

“Pakistan’s road project was more mature so it was selected first. The project is a symbolic proof of our common commitment to improve connectivity in the region,” said ADB President Takehiko Nakao at the opening press conference of the three-day 49th annual meeting of the bank here on Monday.

To a query by Dawn on the policy thrust of ‘growth-stifling stabilisation’ in developing Asia at a time when Europe is debating helicopter money, Mr Nakao’s response was something to the effect of ‘to each according to their need’.

“The low level of local resource mobilisation in countries such as Pakistan necessitates it. The baseline such as balance of payments and trade has to be fixed to financially empower the government to increase social spending to materialise the vision of inclusive sustainable growth,” he said.

He said the strategy seems to be delivering in Pakistan as security and macroeconomic stability have improved and growth rate is picking up.

“The country has turned a corner as from the verge of balance of payment meltdown three years ago, it is poised to register a decade-high growth rate in 2016 which is expected to further escalate,” he said.

To another question related to the decision of moving the ADB’s annual meetings outside Asia, he hammered the benefits of engaging with Europe for achieving shared development goals. “In the past, ADB did organise meetings at different venues in and outside Asia”.

Earlier, Asian Development Bank (ADB) President Takehiko Nakao and Asian Infrastructure Investment Bank (AIIB) President Jin Liqun signed the memorandum of understanding (MoU) for mutual cooperation. “I am very pleased to have this framework of collaboration with a new and strong partner in Asia,” said Mr Nakao.

Pakistan’s path to prosperity

In an exclusive interview with Dawn on the sidelines of the ADB’s annual meetings, Arjun Goswanmi, Adviser on Regional Cooperation and Integration, said it would be misleading to judge Pakistan’s efforts for regional integration through the lens of progress on its commercial relations with India as the country is actively pursuing several programmes and projects to bring together other countries in the region to capitalise on the economic potential for the benefit of the people.

Pakistan is involved in several initiatives in Central and East Asia, but development partners are looking at the progress of the Tajikistan-Afghanistan-Pakistan-India (TAPI) pipeline project with particular interest.

The country must render support to small and medium enterprises (SMEs) to plug into the global production network for inclusive growth and development. ADB is considering advising the Pakistani government to introduce property, inheritance and gift tax to address disparities in income and asset distribution, now recognised as major impediments to sustainable development.

Juzhong Zhuang, Deputy Chief Economist and Deputy Director-General Economic Research and Regional Development, was optimistic about the country’s economic prospects and considered low revenue generation a management issue and not necessarily a policy crisis.

“We expect the growth rate to pick up as macro-economic indicators stabilise and the security situation improves. Projects aimed at closing the infrastructure and logistic gaps will help improve the business environment leading to higher private sector investment, delivering higher growth. The projects under CPEC are expected to lend speed to movement on the path to progress in Pakistan,” he told Dawn.

Published in Dawn, May 3rd , 2016

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