The report presents the role and impact of international lending on economy of Pakistan. The relation between better condition of health and economic growth and development has been established. Healthy population shapes the national human capital that further enhances the economic production.
The role of international Monetary Fund and World Bank as biggest and most authentic source of capital or funding is of crucial importance. These institutions provide lending to the government of poor and growing economies to empower the basic structure of the economy through consolidating health, education, water and electricity services and environmental protection (Atique & malik, 2012).
These lenders provide loans based on the policies they formulate which further has deeper social, political and economic impact on the countries who are accountable to them for taking the assistance. The basic loan conditionalities imposed by IMF and World Bank to Pakistan are in form of liberalization in trade, investment and financial sector, application of privatization and deregulation in the nationalized industries (Jalil & feridun, 2011). Some general impact of both the lending institution on economy of Pakistan is:
As per IMF the growing economic turmoil in Pakistan is caused by increasing non-compliance of the nation with the policies and programs of IMF. In reality, it is the adverse impact of IMF programs that has fallen heavy on the national economy of Pakistan in form of higher prices and charges of electricity, gas, petrol and telecommunication. Following the conditions of IMF loan policies has resulted into cut in the tariff rates and imposition tax on the sales. This has not only influenced the income of the poor and middle class income earners but also increased the gap between them leading to increased inequality (Rais & anwar, 2012). This exacerbates the social development of nation evident in in increased absolute level of poverty and promotion of anti-social activities. Reduction of fiscal and trade deficit through reduction of oil import and payment of more taxes can turn the economic degradation toward improvement.
The nation receives huge funding approximately US$350 billion from World bank that provides enormous support t o the nation’s growth of investment as well as employment creation. The implication of the capital provided by the institution to Pakistan is huge in following ways.
It provides funding to Pakistan Poverty Alleviation Fund PPAF to empower rural and urban destitute while reducing poverty as a whole. World Bank provides substantial support to nation in order to strengthen the primary and secondary education by bringing enough reforms in the sector. Moreover, it serves the poor and backward communities both under-served and un-served along with providing care for the victims of Earthquake (Rais & anwar, 2012). It’s funding plays important role in lowering cost of trade and transportation, preventing the nation the spread of HIV and AIDS.
Health has two-way impact on economic condition of a nation. It exerts direct impact on the present economic condition through the implication of healthy population that takes care of the prevalent health care system in the country as well as condition of health of mass. On the other hand health has greater impact on consolidating the human capital of a society. Role of human capital in ensuring sustainable economic growth is enormous. Status of heath has bigger implication on shaping up the human capital that further kinks to the economic growth.
Human capital is the broader skill sets defining ability of people in acquiring and absorbing proper education, health training and enhancing other talents they have. Collectively these abilities help in defining and shaping potent of a nation. The relation between health and social development and economic growth lie upon the role human capital play as proxy for the different health related indicators like Primary enrolment, crude birth rate, infant mortality rate, morbidity rate (Ejaz, Shaikh & Rizvi, 2011). Higher the conditions and performance of the indicators, greater is the health condition of the nation that has direct and indirect implication on escalated economic activities. Improved health increases the configuration of human capital as well which further reflects into increased gross domestic production of Pakistan.
Higher birth rate and lower mortality rate especially infant mortality rate refers to the fact that population increases so does the human capital. Lower infant mortality rate also indicates improved health condition in the nation. Healthy population ensures productivity that combined with accumulation of resources and changes in technology brings out higher economic growth (Mengal, 2014). Better health condition of Pakistan reflected by healthy population indicates technical changes, which enhances labor. Improved life expectancy in form of reduce morbidity rate is derived from economic development that ensures greater nutrition, sanitation and innovative medical facilities.
The World Development Report depicts that in 2016 the average birth rate as well life expectancy for Pakistan rose from 51 to 66 years in less than 50 years. Pakistan ranked 113 out of 124 countries dropping from 109 in terms of human capital index as revealed in the Human Capital report of 2014-2015 and further indicates alarming attention required by the nation (Mengal, 2014).
Even though the health system in Pakistan in not developed and required much of the foreign funding to consolidate the health care system, it has witnessed significant decrease in the foreign aid lowered by one fifth in 2015. The amount became increasingly high in the last decade and from 2012, it started falling. This has imposed severe challenge to the health condition of Pakistan which spends one unit of income out of every 100 unit of income. The nation experiences 66% of the new born out of 1000 people are dying with 170 mothers dying out of 100,000 childbearing mothers (Babar et al., 2011). Millions of people are deprived of access to basic as well as premium health services as result of reduced foreign aid and insufficient public expenditure made in this sector.
It is to conclude that the international lending on one hand has imposed severe impact on the social, political and economic impact and on the other hand reduction of such funding has been found to exacerbate the health care system in Pakistan that require much of the public expenditure in order to improve it to standardized level.
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