Quake cost will not dent economic growth: WB
* WB official says foreign donors will cover most of cost
* Says annual growth sustainable if major macro-economic indicators kept in check
* Pakistan will get most of pledged money at donors’ conference
By Mohammed Rizwan
LAHORE: The earthquake that struck northern Pakistan on October 8, causing an approximate $5.2 billion loss, will have little impact on Pakistan’s annual growth rate as most of the cost will be covered by foreign donors, Praful Patel, the World Bank vice president for the South Asian region, told Daily Times on Saturday.
Patel said Pakistan was likely to sustain its annual growth of 7 percent provided that major macro-economic indicators were kept in check.
“Much of the impact of the damage will be sustained by bilateral and multi-lateral donors over a period of a few years and in all probability Pakistan will not have to divert its public sector funding for reconstruction,” he said, adding, “The damage to the economy will not be more than 0.3 to 0.4 percent and it is not going to dent the growth rate much.”
Patel said the November 19 donors’ conference in Islamabad would set the tone for reconstruction. “I am confident that the money needed for reconstruction in the first year will be on the table during this conference. I am sure that apart from multi-lateral commitments, bi-lateral commitments will also be honoured,” he added.
Pakistan has complained that the world’s response to the earthquake has not been good enough and pledges are taking too much time to be converted into cash. The international community pledged about $2 billion in bilateral assistance on top of $580 million in relief assistance appealed by the UN. The World Bank’s share in the pledge is about $1 billion in soft loan to be matured over a period of 40 years with a grace period of 10 years. The total World Bank portfolio for Pakistan stands at $10 billion with an annual assistance of $1.5 billion.
Patel said that in order to achieve meaningful economic progress, Pakistan would have to sustain a 7 percent growth rate over a period of 10 to 15 years. “The bank is confident that Pakistan can get there if major macro-economic indicators such as inflation are managed,” he added.
“I visited the quake-hit areas and the nature of the tragedy and losses is serious. I think the government and aid agencies should review their relief strategy, as the homeless are going to need shelter for a year or so and not till the end of March as is being planned at the moment,” he said.
Patel met Prime Minister Shaukat Aziz and his Adviser on Finance Dr Salman Shah in Islamabad before calling on Punjab Chief Minister Pervaiz Elahi in Lahore.
Patel praised the economic growth and resilience shown by the Punjab, but warned that other provinces would have to be taken on board to achieve maximum national growth. “At the moment, the Punjab is the engine and model for growth in Pakistan and all credit goes to its economic managers, but the government will have to take along the comparatively under-developed provinces to realise the maximum potential of growth,” he added. “The gap between the lesser developed provinces and the Punjab will have to be narrowed,” he said.
The World Bank is currently involved with several projects involving infrastructure development, education and health with the NWFP and Sindh governments.
Patel said the inefficient transport network and trade infrastructure in the North-South (Peshawar-Karachi) corridor of the country was the largest impediment in the way of Pakistan’s economic growth. “The transport network, roads, customs clearance have to improve if Pakistan wants to progress fast,” he added.
Patel left for India later on Saturday.