KARACHI, April 10: Speakers at a seminar have forewarned the government that inequality and rapidly rising poverty are threatening the sovereignty of the country and it should be immediately checked by enhancing development expenditures in the next budget.
The coming budget, speakers said, will be unique in two ways as it will be the first budget of the newly-elected government and, secondly, it will be after US invasion of Iraq which is going to have far reaching consequences on the country’s economy.
Looking at the emerging geo-political changes in the world it was stressed that economic and political sovereignty should be the objective of the long-, medium- and short-term policies of the government.
Giving economic outline of the budget at a pre-budget seminar 2003-2004, organized by the Institute of Chartered Accountants of Pakistan (ICAP) on Wednesday evening, Dr Qazi Masood Ahmad of IBA said in 1988 the poverty level in the country stood at 17 per cent but the same has risen at an alarming level of 48 per cent.
He said the present reform towards stability has been expensive for the poor and was highly critical of the methods the government has adopted in achieving macroeconomic stability.
Dr Masood Ahmad said instead of increasing revenue receipts and cutting on non-development expenditure the government reduced development budget to 2.4 per cent which was at one time at 10 per cent of the GDP.
He further said that unemployment in the country has also risen at very high rate and during last 10 years it rose to 7.5 per cent from 6 per cent which means that during last three years the net impact on unemployment stood at 42 per cent.
He suggested that instead of vigorously pursuing stabilization policy of last three years the government should go for growth-oriented budget which may reduce unemployment and poverty.
Dr Masood said that judicious distribution of resources was even more important as disparities and inequality threaten economic sovereignty of a country. Therefore, available monetary and fiscal space must be used to promote equitable growth, enhance employment and reduce poverty.
Citing an example, he said out of 20 prosperous districts of the country, in Sindh province, Karachi is the only district which appears in this list. It is very important that inter-regional disparity be reduced to ensure economic sovereignty of the country.
Similarly, he said that the emerging geo-political conditions compel us to enhance our defence budget to ensure our political sovereignty. However, Dr Qazi was quick to say that the defence budget should be reshuffled and instead of spending on salaries expenditure he is in favour of more hi-tech weapons purchases.
Nevertheless, there was a big question that how the government would finance such compelling priorities which could not be ignored at this point of history, he added and said if we look at economic figures of last six months there looks to be some space which should be used to finance these sectors.
There was also greater need to achieve higher growth rate as up to 80’s the country was recorded 6 per cent growth which has now come down to 3 per cent, Dr Qazi said.