Imran Ali Kundi
Published Date: Sep 14, 2018
Reforms key to prevent economic crisis: Experts
ISLAMABAD – Economic experts on Thursday noted that Pakistan’s current economic outlook is not very much promising, as the economy is facing serious pressures.
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They emphasised that serious structural reforms at all level are required to prevent economic crisis.
While addressing the National Symposium on State of the Economy, organised by Sustainable Development Policy Institute (SDPI) in collaboration with Beaconhouse National University (BNU), experts said that to ease pressures attributed to current account deficit, the government would need to focus on curtailing non-essential imports, promoting competitiveness of exporting enterprises, attracting foreign direct investment, and encouraging greater remittance inflows.
Sartaj Aziz, former minister & deputy chairman Planning Commission and senior leader of PML-N said that the government in medium term should identify growth areas which are labor intensive and technology oriented. He said, “We should not overlook poverty and other social sectors. We should rather take measures to expand the social safety net for the vulnerable group through the help of technology.” He said that the government should be mindful while choosing those short term measures which should not affect the growth rate. He asked the government to implement Pakistan’s first ever Water Policy which was approved in April 2018 to overcome water sector challenges.
Dr Hafeez A Pasha, former finance minister and professor BNU, said that our revenues are not diverse enough and development expenditures are phenomenally high all the times. He said that the structural problem in last few years is net revenue receipt of the federal government that had actually declined in absolute terms, even though FBR targets grown up which are mainly non tax revenues and non FBR taxes. He said that the problem lies with the revenue projections, which require adjustments.
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He suggested that the incumbent government, in short term, should raise tax exemption limit on income tax to Rs 800 thousand, whereas tariff rates need to be brought down from 30 percent to 25 percent while revising the finance bill 2017. He said that the government should liberalize the economy while bringing down the tariffs on imports. He suggested steps to expand the tax base, such as compulsory filing of returns by the citizen and registered companies etc. Moreover, he called for taking steps to cut the expenditures. He further said that there are three areas that require serious attention in PSDP; water, power distribution and transmission and CPEC which are an engine of growth in the long term.
Dr Abid Qaiym Suler, executive director SDPI, said that it is unfortunate that the economy is such a subject which is being politicized in Pakistan. He said macroeconomic imbalances, if not addressed in time, can also put the newfound economic growth in danger and could threaten the prospects of longer term sustainable development in the country. He said our aim is to provide independent advice to the government on policy issues.
Shahid H Kardar, former governor State Bank of Pakistan and vice chancellor Beaconhouse National University, said that today Pakistan’s economy faces serious challenges of current account deficit and the trade deficit, which have reached exceptionally high levels. He said that the foreign exchange reserves are at a perilously low level and continuously under stress. To check the increasing vulnerability of the rupee the economy has to be stabilized on a, more or less, emergency basis, he added.
Dr Vaqar Ahmed, joint executive director SDPI, said that more such debates around the future strategic direction of Pakistan economy are needed than ever before. He said that the new government is about to announce key changes to the fiscal policy – hence providing evidence-based advice to the government at this stage is extremely important. Reforming tax policy, energy sector, public sector enterprises is key to fiscal sustainability of Pakistan, which will bring down the cost of doing business, he added. Our focus should be on those sectors and areas where revenues can be generated in the short term. Also, tariff structure needs to be amended and adjusted.