Pakistan joins rank of poorest nations: World Bank

WASHINGTON, : The economies of Pakistan and Ukraine have declined so much during the past decade that they are now among the world's poorest nations, while China has surged out of the lowest-income category , according to the World Bank.

But Pakistan has said it has no plans to seek extraordinary debt relief under the World Bank-run Heavily Indebted Poor Countries Initiative, the Bloomberg news service said on Friday in a despatch based on the World Bank report that was released on April 10 (partly published in Dawn on April 11).

If Pakistan agrees to be declared as a poor country, it will lose access to the capital market and will become dependent on concessional loans.

But, Bloomberg says, Pakistan also wants to obtain new credits at below-market rates, and quotes the economics minister at the Pakistan embassy here as saying: "It's very important that in this short-term, critical period Pakistan should be given additional concessional funding. We need it."

In the World Bank's estimation, Pakistan joins countries like Rwanda and Nicaragua, which are so impoverished they are eligible to have hundreds of millions of dollars in loans forgiven by the World Bank and other creditors.

How to resolve the dilemma of being poor and yet seeking not to be formally declared as such so that Pakistan does not lose its eligibility for international loans confronts the country's economic decision-makers with their biggest challenge.

Pakistan's $26-billion debt burden reflects what World Bank chief economist Nicholas Stern has called the country's "lost decade" of the 1990s, when, according to him, poor policies, political instability and corruption stalled the economy.

CHINA: China, which averaged more than 10 per cent growth annually during the past 20 years, has now moved out of the lowest-income category, the bank report says.

Chinese officials say they worry that the higher status may mean they will have a harder time getting new loans from the World Bank. Even as the percentage of people living on $1 a day fell from 80 per cent two decades ago to 12% today.