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75 years after independence, 40% of Pakistanis live below the poverty line; and its economic model is not working

Pakistan’s economic model is ineffective in reducing poverty, warns World Bank.

It has been 75 years since Pakistan got its independence from British rule on August 14, 1947. (Representative image: Pixabay)

As Pakistan grapples with an ongoing economic crisis, the World Bank has issued a stark warning: the country’s current economic model is no longer effective in reducing poverty. In a recently published report titled ‘Time to Decide’, the World Bank argues that Pakistan needs urgent economic reforms.

This advice comes amidst alarming indicators like skyrocketing inflation, dwindling foreign exchange reserves and a population where 40% live below the poverty line. And, it has been 75 years since the country got its independence from British rule on August 14, 1947.

Najy Banhassine, the World Bank’s Country Director for Pakistan, pointed out that the nation’s policy decisions are heavily swayed by a coalition of strong vested interests. These include political, military and business elites. According to Banhassine, unless Pakistan changes its course, it risks becoming a perpetual laggard, hamstrung by elite capture and policy decisions that favour a few.

“It is also facing a ‘silent’ human capital crisis: abnormally high child stunting rates, low learning outcomes, and high child mortality,” ANI quoted Banhassine as saying.

With economic hardship mounting, the Pakistani Rupee touched a record low against the dollar, sliding to ₹299.64 in the interbank market. Analysts attribute this to easing import restrictions, which have increased demand for the US dollar. These conditions were stipulated in a $3 billion loan programme from the International Monetary Fund (IMF).

The World Bank has stated that Pakistan’s real per capita growth rate was a mere 1.7% between 2000 and 2020. This is less than half the average growth rate for South Asian countries over the same period.

Equally troubling is the human development crisis the country faces, particularly high rates of child stunting and poor learning outcomes.

Source: https://www.livemint.com/news/world/75-years-after-independence-40-of-pakistanis-live-below-the-poverty-line-and-its-economic-model-is-not-working-11695528712845.html

China accuses US of trying to block its development and demands that technology curbs be repealed

China accused Washington on Thursday of trying to block its development after President Joe Biden stepped up a feud over technology and security by tightening controls on U.S. investments that might help Beijing develop its military.

The Foreign Ministry accused the Biden administration of pursuing “technology hegemony” and demanded Washington “immediately revoke its erroneous decision.” It warned that the latest restrictions in a spreading conflict over Beijing’s industrial development would hurt global supply chains.

An order signed by Biden on Wednesday targets advanced computer chips, micro electronics, quantum information technologies and artificial intelligence. The order says it wants to limit U.S. investment in industries that might help develop the ruling Communist Party’s military wing.

The order adds to restrictions that limit Chinese access to U.S. processor chips used in smartphones, artificial intelligence and other technology on security grounds. Dozens of Chinese companies that Washington says are linked to military modernization are barred from American financial markets.

Washington’s “true purpose is to deprive China of its development rights and maintain its own hegemony,” the Foreign Ministry said.

China will “resolutely safeguard its own rights and interests,” the Ministry of Commerce said in a separate statement, but it gave no indication of possible retaliation. Beijing has made similar comments after previous U.S. trade restrictions but usually takes no action.

At a fundraiser for his reelection campaign in Utah on Thursday, Biden mentioned the issue, saying “we have China to deal with” and calling that country “a ticking time bomb in many cases” while also making it clear he wasn’t looking for a fight.

“They’ve got some problems,” Biden said. “And that’s not good because when bad folks have problems they do bad things.”

He did not elaborate.

The Biden administration has imposed sanctions while trying to revive U.S.-Chinese relations that are at their lowest level in decades due to disputes over security, human rights, technology, Taiwan and Beijing’s treatment of Hong Kong.

Treasury Secretary Janet Yellen visited Beijing in July and said communication would increase but announced no agreements on disputes. Chinese leaders have demanded the United States change its policies on Taiwan and other issues but have given no indication they might change trade and other policies that irk Washington and China’s Asian neighbors.

Chinese leader Xi Jinping’s government has announced only small steps to retaliate for Western tech restrictions, possibly to avoid disrupting a multibillion-dollar campaign to create its own processor chip, artificial intelligence and other technology industries.

Chinese rules that took effect Aug. 1 require exporters of gallium and germanium, two metals used in computer chips and solar cells, to obtain government licenses. The announcement rattled Japanese and South Korean electronics manufacturers.

Source: https://apnews.com/article/china-united-states-biden-technology-investment-0874812b489913de74b76128a37cb66c

UAE approves additional $1 billion funding to Pakistan: Finance Minister Ishaq Dhar

Finance Minister Dar said the Gulf nation has confirmed its commitment to the International Monetary Fund, paving way for the staff-level agreement to unlock a $1.1 billion loan by the global lender.

Pakistan’s Finance Minister Ishaq Dhar on April 4 announced that the UAE has approved $1 billion in financial support, taking the cash-strapped nation a step closer to unlocking the crucial IMF bailout.

Pakistan is tackling a major economic crisis as it awaits a much-needed $1.1 billion tranche of funding from the Washington-based International Monetary Fund, part of a $6.5 billion bailout package the IMF approved in 2019.

Finance Minister Dar said the Gulf nation has confirmed its commitment to the International Monetary Fund, paving way for the staff-level agreement to unlock a $1.1 billion loan by the global lender.

“UAE authorities have confirmed to IMF for their bilateral support of $1 billion to Pakistan,” Mr. Dar said in a tweet, adding that the State Bank of Pakistan (SBP) was now “engaged for needful documentation for taking the said deposit from UAE authorities”.

The UAE rolled over its deposits of $2 billion in January this year too, providing critical support to cash-starved Pakistan’s depleting foreign exchange reserves.

In another tweet, Mr. Dar announced that the apex bank is getting the third and last disbursement from the Industrial and Commercial Bank of China (ICBC), worth $300 million, out of its $1.3 billion loan.

“Out of Chinese bank’s ICBC approved facility of $1.3bn (which was earlier repaid by Pakistan), State Bank of Pakistan would receive back third and last disbursement today in its account amounting to $300mn,” the Finance Minister tweeted.

The ICBC approved a rollover of a $1.3 billion loan for Pakistan on March 3 and made the first payment of $500 million on the same day, while the second payment of the same amount was made on March 17.

The IMF lowered its forecast for Pakistan’s economic growth rate days ago from 2% to just 0.5% for the current fiscal year amid high inflation and a growing unemployment rate in the cash-strapped country.

The new development brought debt-struck Pakistan closer to signing the staff-level agreement with the IMF and getting access to multilateral loans.

Source: https://www.thehindu.com/news/international/uae-approves-additional-1-billion-funding-to-pakistan-finance-minister-ishaq-dhar/article66737215.ece