ISLAMABAD: Experts on Monday said the South Asian economies despite convincing growth trajectory were vulnerable to economic debacle due to their denial of economic crises emerging amid inaction towards intersectoral gaps.

They were speaking at a plenary titled ‘Economic Resilience amidst Turbulent Times’ during the 27th Sustainable Development Conference.

The session was attended by speakers including heads of World Bank, United Nations Development Programme (UNDP), International Monetary Fund (IMF) and Institute of Policy Studies (IPS), Sri Lanka.

Professor Dr Shantayanan Devarajan from Georgetown University, Washington, D.C., USA, who participated virtually, juxtaposed economic and political turmoil in Sri Lanka and Bangladesh as a case study for the South Asian countries that had a perplexing situation amid spiking growth rate since their progress in the 1990s.

Dr Shanta underlined that despite per capita income having doubled along with rapidly increasing secondary education enrolment and child mortality rate plummeting, countries like Bangladesh and Sri Lanka faced widespread public protests against the democratically-elected governments and ousted the popular leaders.

He added that the Sri Lankan crisis was primarily due to denial of economic crises brewing out of sitting government’s short-run growth-focused decision and reluctance to restructure its debts with the IMF increased pressure on all sectors feeding into the economic outlook.

The protests, Dr Shanta said only focused on the administration and governance in those countries whereas Bangladesh was consistently a strong performer in terms of growth and manufacturing, poverty, reduction, education and health. However, persistent high levels of corruption, bad governance and cost of denial in Bangladesh downgraded its growth rate, he added.

Executive Director, Institute of Policy Studies of Sri Lanka (IPS), Dr Dushni Weerakoon said the political capital in Sri Lanka could not be ignored while dealing with its economic crises.

She said the then prime minister of Sri Lanka despite the fact that the country was coming from an IMF programme that led to the increase in taxes, the Sri Lankan npremier decided to lower the taxes to embrace increased economic outlook.

Dr Weerakoon said the political leadership of Sri Lanka lost its political capital in the 2022 polls after implementing the IMF recommendations in the programme. However, the economic revival in Sri Lanka was beyond expectations as the government embraced above business as usual approach to address the crises.    

Dr Najy Benhassine from the World Bank said that Pakistan was not a country in denial. “This is a country that keeps going through ‘boom and bust’ cycles. We already know the causes behind those cycles for Pakistan but we cannot seem to get out of them,” he said, adding that, “the problem for me is that Pakistan keeps going back to the same thing”.

“I have no hesitation to say that yes the current government is on the right track. There are energy and fiscal reforms in place. But will the recovery stay in track once these reforms is the big question,” he added.

International Monetary Fund (IMF) Resident Representative in Pakistan Esther Perez Ruiz said over the last year, we have seen a remarkable return to macroeconomic stability.

Agreeing with Dr Benhassine, Ms Ruiz said the latest reforms are likely to push Pakistan away from ‘boom and bust’ cycles and put in place a macroeconomic model of sustainable growth.

She said the energy sector reforms aimed at making the energy sector sustainable by making energy more affordable, as well as collecting taxes from sectors that previously did not pay taxes were the focus of the current EFF programme.

“One thing that will put the country on a sustainable path this time is the sense of ownership, which was missing in the 2013 and 2019 programmes,” she added.

Dr Samuel Rizk, resident representative of the UNDP, said a country that had multidimensional challenges needed multidimensional solutions.

“Short termism in Pakistan leads to quick optimism and that becomes the problem that repeats the ‘boom and bust’ cycle,” Dr Rizk said.

He said even when you talk about resilience, Pakistan needs to decide where to put its resilience.

“The 2022 floods caused $30 billion losses. So Pakistan needs to decide what sort of resilience is needed in the face of the next disaster. Where is the money going to come from? Funding, financing, investment or insurance,” Dr Rizk said.

He said: “Without disposable income in people’s pockets, you cannot pay for health, education and even insurance.”