The news that the World Bank has dropped twenty projects in Pakistan in order to shift financing to budgetary support is indicative of a growing problem. At the countrys request, more and more loans and aid is being transferred to current expenditure rather than to developmental projects. This implies that currently, very little infrastructure development is underway.
Furthermore, these loans have do be paid back and the only way to do so is by making room for them in the budget. That the World Bank, with its agenda for development and poverty eradication should accept the request to turn its development loan into a budgetary one, is a disturbing occurrence; if the World Bank is acting like another IMF to Pakistan, this signifies the precarious position the country is getting itself into.
Pakistan is stuck in a vicious cycle as mounting debt would continuously have to be paid back and with no infrastructure development, this amount cannot be gathered through economic means, rather has to be budgeted from the loans being acquired.
If we look at the economies around us, the vast majority is undergoing infrastructure development; and as a result running high fiscal and current account deficits but federal and external stimulus packages are being used to spur development so that growth in the future can be used to close the deficits. In Pakistan, the focus is entirely on our deficits, with developmental agencies, like the World Bank, also shifting focus to current expenditure.
Not to suggest that it is not imperative that the countrys balance of payment and budgetary problems be fixed, it is equally important to invest significantly in development for the future of the country. However, given the current expenditure predicament the country is in, how, exactly, this will be accomplished is still up for debate.
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