After the International Monetary Fund (IMF), the World Bank (WB) has also advised Pakistan to adopt free float exchange rate mechanism and set it free from state control.
The global lender said that doing so will help the domestic economy grow. “The (rupee-dollar) exchange rate should be based on the market system,” said World Bank Group Country Director for Pakistan Patchamuthu Illangovan while addressing an event arranged by C100 Think Tank, one of the largest think tanks in the country.
Illangovan further added that state control over currency limits the export growth that burdens the foreign currency reserves, as these reserves are expended to release international payments for imports and debt repayment, thus creating the balance of payment deficit.
“If you had retailed the 2005 market share of export globally, (then) today you would have been exporting four times more than what you should be today,” said the WB official. “Pakistan’s exports would have been worth over $108 billion today instead of around $25 billion in actual,” he added.
Illangovan also talked about the World Bank’s recently launched report, “[email protected]: Shaping The Future 2047”, which suggests that Pakistan’s economy can reach $2 trillion by 2047 if it works on massive policy making and structural reforms and control population growth rate.
The country director said that Pakistan can achieve the projected economic potential before 2047 if it eliminates gender inequality and encourages its women to play a role in economic development.
“Pakistan’s economy has a potential to grow at 30-35% per annum if gender gap is narrowed close to equal,” he said.
Illangovan said that the targets set out in the report are achievable. However, the private sector needs to pay its part too. He appreciated the country’s efforts regarding the improvement of ease of doing business and poverty alleviation in the past few years.
He underlined that the country needs to make further progress on these fronts.