Abdul Rasheed Azad
Published Date: Sep 14, 2018
Serious structural reforms needed to tackle economic mess: speakers
While discussing Pakistan’s current economic outlook, speakers at a seminar said that it is not much promising as economy is facing serious pressures on all accounts. They said to deal with the fiscal, monetary and balance of trade issues, serious structural reforms at all level are requisite to prevent economic crisis.
While addressing the ‘National Symposium on State of the Economy,’ organized by the Sustainable Development Policy Institute (SDPI) in collaboration with Beacon House National University (BNU) here on Thursday, the experts said that to ease pressure attributed to current account deficit, the government needs to focus on curtailing non-essential imports, promoting competitiveness of exporting enterprises, attracting foreign direct investment and encouraging greater remittance inflows.
They said that more discussions and debates around the future strategic direction of Pakistan economy are needed than ever before. Reforming tax policy, energy sector, and public sector enterprises are a key to fiscal sustainability of Pakistan to bring down the cost of doing business, they added. "Our focus should be on those sectors and areas where revenues can be generated in the short-term. We also need to adjust and amend tariff structure," they suggested.
Speaking on the occasion, former Minister & Deputy Chairman Planning Commission Sartaj Aziz said that the government in medium-term should identify growth areas which are labor-intensive and technology-oriented for sustained growth. 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," Aziz suggested.
He said that the government should be mindful while choosing those short-term measures which should not affect the growth rate. He stressed the government to implement Pakistan’s first ever Water Policy which was approved in April 2018 to overcome water related challenges.
Former Finance Minister Dr Hafeez A Pasha said that Pakistan’s revenues are not diverse enough while development expenditure phenomenally is all the times high. 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 the Federal Board of Revenue (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.
He suggested that the incumbent government in short-term should raise tax exemption limit on income tax to Rs 800,000, whereas tariff rates need to be brought down from 30 percent to 25 percent by 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 citizens and registered companies, etc. Moreover, he suggested the program for rightsizing to cut the expenditures. He further said that there are three areas that require serious attention in the Public Sector Development Program (PSDP): water, power distribution and transmission and China-Pakistan Economic Corridor (CPEC), which are an engine of growth in the long-term.
Former Governor State Bank of Pakistan and Vice Chancellor Beacon House National University, Shahid H Kardar said that Pakistan’s economy is facing 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.
Executive Director SDPI, Dr Abid Qaiyum said that it is unfortunate that the economy is such a subject which is being politicized in Pakistan. He said that macroeconomic imbalances, if not addressed in time, can also put the newfound economic growth in danger and can threaten the prospects of long-term sustainable development in the country. He said that their aim is to provide independent advice to the government on policy issues.