KARACHI, Jan 11: Pakistan’s economic growth with back-breaking inflation, sharpening income inequalities, growing regional imbalances, expanding gap in external sector and low ratios of tax, investment and savings is absolutely worthless and without any meaning, asserted Aftab Ahmad Khan, a retired civil servant at a seminar on Thursday.

The seminar was organised by the Management Association of Pakistan (MAP) on the subject of mid-term review of current fiscal year’s economy. None of the two main speakers — Dr Salman Shah, Prime Minister’s Advisor on Finance and State Bank of Pakistan Governor Dr Shamshad Akhtar - turned up.

Instead, Dr Ashfaq Hasan Khan, a government advisor in finance ministry, was the main speaker who was extremely unhappy with the “drawing room critics and television commentators,” who he blamed were spreading cynicism and despondency in the country by projecting dark side of the picture.

“Just imagine, the Central Board of Revenue (CBR) has mopped up a record Rs100 billion taxes in a single month of December,” the government advisor informed a gathering of business executives while reminding them it was the same CBR that a few years ago had been constantly failing every successive year to meet targeted tax collection. For last four or five years, the CBR has been showing an impressive growth in its tax collection.

He, however, conceded that tax-to-GDP ratio was still 11 or 12 per cent which was too low and it should be 16 or 17 per cent. “We have to cover a lot of ground,” he said while stating that it was a big challenge for the government to explore areas like agriculture, services for tax collection. Tax collection improvement, he said, should be with justice and equity by collecting from all potential segments of society.

Similarly, he said that the investment-to-GDP ratio stood at 20.5 per cent was also on the lower side as Pakistan needed substantial finances to maintain an annual growth rate of 6 to 7 per cent a year. “For generation of every additional rupee in the GDP, we need to invest Rs3,” he pointed out, adding “with good governance and improvement in capital efficiency, one additional rupee in GDP can be generated with investment of Rs2.5. This is another challenge”.

For this investment, Dr Ashfaq’s prescription was to improve savings which too at present as a ratio with GDP was too small. He also expressed his dissatisfaction on existing trade-to-GDP ratio which was hardly 35 to 40 per cent of the GDP in sharp contrast to 70 and 80 per cent maintained by the developed countries. “We have to produce a lot to meet our market demands and also for the global markets”.

For achieving these goals, he said that the government was now well set to enforce second generation reforms in the economy. Nonetheless, the achievements made in last seven years when average growth rate was between six and seven per cent, the ratio of domestic and external debt burden with GDP had been brought down from 100 per cent to 56 per cent was because of the “immense sacrifices of our people”.

He recalled that seven years ago Pakistan’s debt burden was almost equal to that of the total economy. The government set a target of bringing down this ratio to 60 per cent by 2012-13 when Fiscal Responsibility and Debt Management Law was passed by the parliament.

“With 56 per cent debt-to-GDP ratio, the government has already exceeded the target and we now want to reduce this ratio to further 52 per cent in the current fiscal year”. He hoped that Pakistan’s debt to GDP burden will come down to 40 per cent in next few years that will give government enough fiscal space to address to the social sectors.

The public sector development programme has already been increased to Rs435 billion as against allocation of less than Rs100 billion in the budget a few years ago. He said that government was investing heavily in physical and human infra structure. The result of this investment will be visible in next few years.

Aftab Ahmad Khan who was introduced as “doyen of Pakistan’s civil service” described destruction of Pakistan’s civil service and removal of constitutional safeguards for civil servants as one single factor that had brought about deterioration in the country’s governing system and retarded economic growth.

He endorsed Dr Ashfaq’s assertions on achievements of the government but spoke on the growing income inequalities, regional imbalances, a high population growth rate and diminishing opportunities for educated young people.

He reminded the audience that World Bank declared Pakistan as a model economy during Ayub Khan which was pushed out of power by angry people. “In drawing rooms and on television channels there is some criticism but the real angry man is on the street where he has been robbed off his mobile and purse,” he said.

He also spoke on the opportunities being given to stock brokers and real estate dealers to earn unlimited income and there were many such stories on fabulous wealth of some people which was being talked about in drawing rooms and also on the streets.