WEF identifies five issues putting Pakistan at risk of default: Report

By Sanniah Hassan Last updated Jan 14, 2023, 9:37 pm 38 0

Identifying the top five risks impacting an already economically unsteady, crisis-hit state, the World Economic Forum (WEF) determined Pakistan continues to be threatened by a seemingly inevitable default.

According to The Global Risks Report 2023, the WEF explored that the world continues to face a set of risks that feel “both wholly new and eerily familiar”. The report argues that some of the most severe risks are yet to come over the decade as the global community stands on edge tackling a “low-growth and low-cooperation era” alongside climate change, human development, and resilience, respectively.

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In its 2023 global risks report, the WEF has identified the top five risks currently pushing Pakistan toward default. In its report, the WEF highlighted that the debt crisis, rising inflation, the collapse of the state, little to no focus on digital power, and failure to implement measures to ensure better cyber security are some of the most potent risks threatening growth and development in Pakistan. Similar risks were highlighted in a January 12 report by Dawn News.

The WEF said that Pakistan which is struggling to rehabilitate its crisis-hit, displaced population, is greatly impacted by a threat of hunger and distress alongside an inexcusable cost-of-living crisis. It argued that the living cost crisis will continue to be aggravated due to a combination of extreme weather events. It stated, “extreme weather events and constrained supply could lead the current cost-of-living crisis into a catastrophic scenario of hunger and distress for millions in import-dependent countries or turn the energy crisis towards a humanitarian crisis in the poorest emerging markets”.

The report continued to point out that affordability and availability of necessities could result in further instability especially as far as the socio-political future is concerned. It argued that this instability will not just impact Pakistan but also countries like Tunisia, Ghana, Lebanon, and Egypt, which are also facing similar situations.

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Meanwhile, according to Geo News reports on Thursday, Amir Jahangir, who is the CEO (Chief Executive Officer) of Mishal Pakistan, the Partners Institute for New Economy and Societies Platforms of the World Economic Forum said that while insecurity and instability will continue to impact Pakistan, simultaneously aggravating the food and debt crises, forcing the need for a technocracy-based leadership focused on a decision-making framework.

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The 2023 Global Risks Report, further identified that the cost-of-living crisis is the biggest short-term risk while the lack of climate mitigation or failure to adapt to the growing climate crisis is the largest long-term risk threatening Pakistan. In this respect, the report argued that the rising concern of water shortage in Pakistan is a situation greatly impacting women and young girls who are tasked with the collection of water, as it not only affects their health but also their education.

The report came at a time when the current Prime Minister and senior PML-N leader, Shehbaz Sharif was looking toward receiving economic support from our ally United Arab Emirates (UAE), during his official two-visit to the gulf state. On the other hand, the Kingdom of Saudi Arabia (KSA) has also agreed to facilitate Pakistan by expanding its investments to nearly $10 billion in Islamabad, as well as taking its deposits in the State Bank of Pakistan (SBP) to $5 billion, respectively.

Not only this but international donors including the World Bank (WB), European Union (EU), and Islamic Development Bank (IDB) are reportedly committed to providing financial assistance of up to $9 billion to help Pakistan in its efforts of rehabilitation against the devastating floods that killed thousands and displaced millions. According to Pakistan’s National Disaster Management Authority (NDMA), the flooding damaged nearly 950,000 houses and destroyed 287,000, with 800,000 people now living in relief camps.

Sharing the report on Twitter, Saadia Zahidi of the WEF wrote that the report “points to a fragile, volatile landscape: a potential new era of “polycrisis””. Zahidi added that 2023 is a make-it-or-break-it moment for leaders to “invest in resilience, growth & cooperation”.

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The Global Risks Report 2023 points to a fragile, volatile landscape: a potential new era of “polycrisis”. 2023 is a make or break moment for leaders to invest in resilience, growth & cooperation to manage known risks and prepare for future shocks. @wef⁩ ⁦@borgebrende⁩ pic.twitter.com/YdkGAk4pun
— Saadia Zahidi (@zahidi) January 11, 2023

Referring to the report, Zahidi said: “It is a call to action, to collectively prepare for the next crisis the world may face and, in doing so, shape a pathway to a more stable, resilient world.”

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Sherry Rehman, a senior member of the Pakistan People’s Party (PPP) shared the report writing that the risks will continue to multiply as resources gradually dwindle unless “collective action” is taken. Rehman added, “Pakistan is investing in resilience but the journey is just beginning”.

Countries with least preparedness and high vulnerability are hit the worst by such an era of polycrisis. The risks multiply and the resources to act diminish if collective action is not taken @zahidi @wef Pakistan is investing in resilience but the journey is just beginning. https://t.co/RVl6qF2gXJ
— SenatorSherryRehman (@sherryrehman) January 12, 2023