The World Bank on Saturday warned that the Panama Papers issue has “enhanced political risks in Pakistan” and created “some policy uncertainty” in its biannual ‘Pakistan Development Update”. While the government is surely wave the report around as vindication for the stance that the political furore of the Panama scandal has hurt the economy it is worth noting that the report is written by the World Bank for the benefit of investors, and priorities shift when the perspectives are different.

On the face of it the content of the report is neither controversial nor counter-intuitive when it comes to the Panama Papers scandal. It notes that in a country like Pakistan, which is vulnerable to external shocks to the system, a scandal such as this which threatens to drastically change the governance system and the collateral reform agenda puts investors on notice. They enter a cautious mode to determine the stability of the government before investing.

With a Joint Investigation Team (JIT) formed by the Supreme Court investigating the Prime Minister, it is undoubted that the government is on unstable footing. The stock market – usually the first to respond to political movements was the most active during the period the verdict of the hearings was announced and has remained like this during the defining moments of this saga.

However as we have noted that this report is meant to give information to investors – not guide policy in Pakistan; it also notes that the upcoming elections might have a negative effect on macroeconomic policies. While instability is one factor, the underlying perception of state corruption is also a significant factor in investor deliberations, and while confidence may take a hit in the immediate future by such scandals, in the long run they help the country’s perception – provided they are used to make positive changes to the government structure.

The report might sound like a vindication of the government stance however, it is anything but. Instead of decrying the scandal, the government should focus on making sure that one like it never emerges again by tightening oversight methods and eliminating the underlying problems. Once that is achieved the projections for the economy are solid. According to the report, the country’s growth rate will continue to accelerate, reaching 5.5pc in FY2017-18 and 5.8pc in 2018-19.

If Pakistan manages to address the areas where it is vulnerable to external shock – natural disasters, political events and terrorism – the economy growth will accelerate even further.