ISLAMABAD: Comprehensive economic reform strategy should be on top of the agenda of the new coalition government, former finance minister Dr Hafeez A. Pasha said on Saturday.
“For the first time, we have such a broad-based national consensus government. An opportunity has presented itself to correct the economy and rationalise the taxation system,” Dr Pasha said. He was delivering a speech at a roundtable meeting on ‘Immediate economic priorities of Pakistan’ jointly organised by the Sustainable Development Policy Institute (SDPI) and Friedrich Ebert Stiftung (FES).
Dr Pasha highlighted that the current account deficit of Pakistan in the first eight months of the current fiscal year had reached $12 billion and could touch $19bn by June 30, 2022. There would be a need for $30bn to $32bn of financing every year to manage transactions with the rest of the world.
“Pakistan has been able to arrange $18bn of financing in the first nine months of the current fiscal year, whereas $15bn to $16bn would have to be managed in the remaining three months,” Dr Pasha projected, while adding that about a $5.5bn decline in the foreign exchange reserves in the month of March 2022, further added to the economic woes.
He suggested that while entering the negotiations with the IMF, leaders should ensure they are pursuing a comprehensive reform strategy. The relief package should be targeted while all indirect taxes on basic food items, including ghee, sugar, spices, vegetables, and tea, should be withdrawn.
SDPI Executive Director Dr Abid Qaiyum Suleri highlighted that after the Covid-19 pandemic, the Russian-Ukraine crisis had again triggered a global recession and the issue of food security crisis.
He said, “The issues that Pakistan is facing, especially pertaining to high inflation, are linked to the global scenario.” Dr Suleri highlighted that political instability would remain a threat to the Pakistani economy.
Economist Ashfaq Tola, on the occasion, asserted the need for streamlining the taxation system in Pakistan. “We have to correct the fractured system of taxation. The new government should take care of the inequity of taxes.”
Dr Aliya Hashmi who is also an economist, was of the view that Pakistan should look into the issues of the country from a global perspective rather than a domestic one.
Dr Vaqar Ahmed, Joint Executive Director, SDPI, highlighted that circular debt in both the power and gas sectors, was one of the key contributors to the fiscal seepages.
Published in Dawn, April 24th, 2022