Islamabad, Apr 3 : Owing to its political uncertainty, and higher global oil and commodity prices, the Asian Development Bank (ADB) has raised doubts about long-term sustainability of growth patterns for Pakistan.
The Bank also lowered down Pakistan's GDP growth forecast to 6.3 per cent against the actual target of 7 per cent, due to its continuous energy crisis, while the revised upward inflations touched 8 per cent against the envisaged annual target of 6.5 per cent for the current fiscal year.
"Issues of long-term sustainability therefore, arise, especially in the context of high global oil and commodity prices and domestic political uncertainties," The News quoted the Asian Development Outlook (ADO-2008) as saying.
The report also outlined twin deficits - current account deficit and fiscal deficit, as major challenges for Pakistan in the future line of action. External debt rose by another 2.5 billion dollars in the first half of FY2008 as a consequence of the rising current account and fiscal deficits, while foreign currency reserves were also depleting.
According to the paper, despite tight monetary conditions and moderating growth, inflation is expected to overshoot (State Bank of Pakistan) SBP's target of 6.5 per cent and reach 8 per cent, reflecting continued pressure on food prices and the pass-through of some higher global oil prices.
Yet, inflation pressures have persisted, with food prices rising to 11.6 per cent in January 2008 (based on a 12-month moving average), compared to the 8.5 per cent, a year earlier. The fiscal deficit is likely to exceed the Government's target of 4 per cent of GDP for the FY 2008, mainly on higher interest payments and a rise in development expenditures, added the paper.