World Bank fears Pakistan crisis
Pakistan must take immediate action to prevent its economy from collapse,
the World Bank has warned.It said that “painful adjustments” would be needed to prevent a crisis
sparked by high oil and food prices.Under President Pervez Musharraf, the country’s economy flourished. The
United Nations predicts 2008 growth at 6.5% despite its political troubles.

But there are fears that growth, which has been led by consumer spending,
could be hit by imported inflation.

“This is not yet a crisis, but the economic picture for Pakistan is not
good,” said World Bank vice president Praful Patel.

The World Bank warned that the rising budget deficit, higher inflation, a
growing current account deficit and sinking foreign exchange reserves could
all threaten Pakistan’s economy unless the new government took urgent
action.

‘Painful adjustments’

“Growth can only continue if Pakistan adjusts to the new global reality,
which includes high prices for oil, commodities and foodstuffs such as
wheat,” Mr Patel said.

The comments came after Bank officials met with representatives of new Prime
Minister Yusuf Gilani, who is the leader of the coalition government opposed
to President Musharraf, in a three-day visit.

The Bank noted that there were some positive areas in the economy, as
foreign investment remained strong and the stock market had posted gains.

 

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