Statement delivered by Mr. Yaseen Anwar, Governor State Bank of Pakistan
during the Special high-level meeting of the Economic and Social Council (ECOSOC) with the Bretton Woods institutions, the World Trade Organization and the United Nations Conference on Trade and Development on the theme “World economic situation and prospects in the wake of the world financial and economic crisis”
(22 April 2013, New York)
Mr. Secretary General,
Ladies and Gentlemen,
It is a personal pleasure for me to represent Pakistan at this important gathering.
- Pakistan associates itself with the statement made by the distinguished Prime Minister of Fiji, on behalf of the Group of 77 and China.
- I am particularly pleased to note the over-all topic of this conversation with other critical global institutions. This conversation is timely especially following the Spring Meetings of the IMF and the World Bank, which has also given due consideration to drawing lessons from the experience and what more we can do to put the global economy on a stable pathway.
- Today’s conversation is particularly relevant as the UN is embarking on designing a post-2015 Development Agenda and constructing the Sustainable Development Goals (SDGs) as one of the key modalities, which would deliver on the development agenda.
- The world economy, barring some signs of recovery, is still mired in an economic and financial crisis that started in 2008. Even though the world financial and economic crisis did not originate in developing countries, nor did it affect them directly in its immediate aftermath, the developing countries have largely been faced with the worst consequences as the Crisis prolonged.
- I am cognizant that each country has faced a unique set of challenges emerging from this crisis, and likewise, drew its respective lessons. I am going to make a few observations from the perspective of Pakistan - a country, which faces unique economic and political circumstances. On our part and despite several internal and other challenges, we believe the following global and national lessons are noteworthy:
- the global economic and financial crisis demonstrated that the contagion is the flip side of an increasingly globalized world. We cannot solve this crisis by discussing them in limited groupings. As globalization would proceed, deeper the reform both at the global and national level would be necessary to maintain stability. Simply put, global economic stability is a common good and as such requires shared understanding and not simply shared responsibility for its preservation.
- while many could perhaps withstand the intensity and pace of the crisis, shock absorbers in the developing world are either not available or insufficient to say the least. This is demonstrated by the enhanced risk premium on lending and investments - resulting in a surge in external financing costs. Moreover, the global downturn and stress in the international credit markets is restricting private capital inflows and the operations of foreign banks in developing countries’ markets.
- our ability to anticipate economic crisis requires considerable strengthening and reform. Pakistan shares the perspective that overcoming existing global structural and institutional imbalances notably limited regulatory over-sight over financial and technological led innovation in the market, more than necessary faith in efficiency of deregulated markets and underestimation of risk that led to excessive leverage in the years before the crisis would be important.
- while effort are afoot to overcome the crisis, its continuation aggravates the risks of debt distress in vulnerable countries both due to exchange rate depreciation and borrowing at higher interest rates to help offset the impact of the crisis. The decline in reserves particularly poses an additional risk to developing countries’ capacity to service or roll over external debt.
- if not quickly stemmed, the crisis will continue to worsen the budgetary position of many countries due to potential decline of donor assistance i.e. ODA, constraining financing conditions and currency depreciation. Many developing countries already face serious deterioration in balance of payment positions. It will particularly hit hard the public spending on social development and associated infrastructure.
- Let me now outline some issues from the national perspective taking into account the on going discussions on post-2015 development agenda.
- First, distinct circumstances of countries should guide the implementation of global frameworks and agendas. Pakistan faces a unique set of economic and political challenges resulting from regional political dynamics. Apart from more than 180 million Pakistanis, we are also over burdened with more than 4 million Afghan refugees and yet incalculable cost of war on terrorism, which we are facing day in-day out. I am confident that the global community recognizes that Pakistan’s economic prosperity will define the contours of economic and political stability in the region and beyond. Therefore, in tailoring international responses and development agenda, it is important not to ignore such circumstances that countries like Pakistan face.
- Second, while taking into account these unique circumstances, Pakistan also believes that the new development agenda and goals must provide differential treatment to small islands and the least developed countries. The global economic prosperity cannot be distinguished from the economic progress of more than 50 countries facing immense poverty and economic difficulties.
- Thirdly, future development agenda and goals should further create policy and other incentives for countries to evolve homegrown economic plans as well as mobilization of domestic resources. In this regard, addressing systemic issues that bar a country’s effort in implementing national economic policies must be carefully evaluated. The stalled dialogue in the WTO and soft paddling of institutional reforms in the global economic system should not be ignored in this global discourse.
- Fourth, A new global partnership must be centered on the imperative of transformation towards sustainability without compromising the imperative of growth. Promoting self-reliance in countries and exploitation of indigenous resources would be crucial for effective implementation of any global goals. The future agenda should, therefore, incentivize countries to enable them to achieve their economic objectives.
- Fifth, we agree that poverty eradication should remain at the core of global economic discourse and the development agenda implementation. We recognize that poverty is multidimensional and not just a question of increasing the income. It is equally about increasing the opportunity to grow through education, better health facilities and social equity. We hope that the benchmarks of poverty eradication would take into account these critical lessons drawn from the national levels.
- Finally, we believe an urgent and immediate focus is necessary on enhancing modern energy services to billions of people across the globe. To this end, Pakistan has welcomed the UN Secretary General’s initiative to launch Sustainable Energy for All. We believe that enhancing the energy access to people will bring qualitative change and shift in their lives. The future development agenda must lay clear and well thought out emphasis on energy.
- Let me assure you that Pakistan will continue to constructively engage with the global economic discourse here and in other foras for a development agenda that is grounded in the needs and requirements of all countries.
I thank you Mr. President