Pakistan’s economy would benefit from improvement in road and transportation infrastructure under the Belt and Road Initiative (BRI), the SBP’s former governor said on Thursday. “Although the global economy is picking up, the world will never be the same again,” Yaseen Anwar, ex-governor of the State Bank of Pakistan said during a seminar organised by English Speaking Union of Pakistan. “The global economy will revolve around the $2 trillion BRI, climate change and fintech space,” he said.
BRI would encompass 65 percent of the world population, 40 percent of global trade and linking over 100 countries through road infrastructure. “Lack of quality infrastructure and transportation hampered the development that many BRI linked countries direly need,” Anwar said. “Pakistan too would benefit as the quantity of edibles that used to perish would find international markets.”
He said China has become more attractive because of its resilience, availability of resources and response to COVID-19. He said policymakers were faced with very challenging and unprecedented circumstances. “Collective and coordinated measures are needed to push the fragile economies and ensure flow of credit to the real economic sectors.”
He said even before the birth of COVID-19, the world was heading towards an economic recession, and the pandemic only expedited the pace. The United States, China, UAE posted negative growth in the first five months of the pandemic, while supply chain disruptions and slower demand impacted international trade.
Anwar advocated promotion of intraregional trade as this would provide impetus to regional economies. He said climate change is at the heart of BRI. China’s largest lender issued its first green bonds focusing on belt and road interbank regular cooperation last November in its latest bid to support the initiative’s development.
“The issuance of the bond aims to support the development of green projects under the BRI and boost the interbank regular cooperation in the region,” he said. “Green investment principles for the BRI renewed focus on driving new green investments, and offered an opportunity to invest in green projects.”“Countries including Pakistan would have to comply with the provisions of the Paris climate agreement,” he said.
“Various studies have shown that 1.7 billion people globally are excluded from accessing basic financial services such as payments. Studies by the Asian Development Bank have shown that 85 per cent of the adult population in South Asia does not have access to basic financial services. Small businesses have been hit hard and fintech companies will fill up this space more and more. Getting a better handle on cash on hand and the returns are essential for avoiding government handouts. Technology innovation in the payments space is good for consumers and central banks must keep pace with the risk landscape without compromising financial inclusion. To manage it, they must devote attention first to their domestic markets and establish appropriate regulations and national payments councils that many emerging markets don’t have,” he said.
“The challenges of regulating crypto currency and other similar payments need to be carefully assessed before we are forced to confront unintended consequences. Cash in circulation has been regulated in a controlled environment by central banks. Digital currencies, meanwhile, may not necessarily be completely under the control of central banks. National payments councils that include all stakeholders aside from the central banks need to be all encompassing in assessing the inherent risks with clear regulations before they launch crypto currencies and potentially weaken our trust in the international monetary system again,” he said.
“We must ensure policymakers consider all these issues and work in a collective and coordinated manner towards global economy and growth in a multipolar world that uniformly benefits the planet,” he concluded.
He said oil prices fell below $20/barrel, which benefited the countries observing the current account deficit including Pakistan.“However, international forces pushed the oil prices through cutting supplies to $50/barrel. Protectionism is hurting international trade.”
In end I wish to thank ESU for giving me the opportunity of addressing such a prestigious audience. After this talk, I hope you can walk away with even a small piece of information that you were unaware of before. Thank you.
