ISLAMABAD: The second day of the three-day International SustainableDevelopment Conference, organised by the Sustainable Development PolicyInstitute*,* saw some statistical, practical, and policy-orientedsuggestions being presented for the improvement of Pakistan’s economy.
In the keynote address for the session titled “Pakistan Economy:Stabilisation with a Human Face”, former finance minister Dr Hafeez A Pashapresented a five-pronged strategy to bring Pakistan out of its viciouscycle of economic deterioration.
He started his address by pointing out the findings of the InternationalMonetary Fund (IMF) regarding Pakistan’s economy, the policy frameworkbeing seen in today’s time from the authorities, as well as underreportingof the actual intensity of the poverty and economic issues by organizationslike Pakistan Bureau of Statistics (PBS). He said in order to bringimprovement to the current deplorable state of the economy, the tax to GDPneeds to go up from 11 to 17pc.
“Our public debt is exceeding at an alarmingly fast pace even though thelaw dictates that it should not be more than 60pc. However, the realdeterminant of the economy will be external debt.”
He said from $106 billion in June 2019, the external debt of Pakistan isexpected to reach $135 billion by the end of June 2020, which means theratio of external debt to GDP will go from around 30-35pc to 40-45pc.
“I don’t know how these figures come up and with all respect to the financeministry, one might have had difficulty in signing up for a programme thatafter such stringent corrective measures still increases your debt by suchhigh percentage,” he said. “Even after paying so much for these measures,we will still end up with 40-45pc poverty.” He said, “The key taxableproducts are undertaxed and under collected and at the same time we taxsmaller things, utility items like shampoos etc. while the likes ofproperty taxes remain undertaxed and under collected.
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He accentuated that Pakistan has to go for a fast-tracked privatizationprogramme. “The government keeps talking about it but doesn’t come aroundto actually doing something about it. And for God’s sake focus on foodprices. PBS reported 7pc increase in tomato prices when it had actuallyincreased by 230pc. We have to have a policy of stabilizing food prices,”he said.
Showing frustration at the state of affairs, Dr Pasha passionatelyremarked, “Economize on the size of the federal government. 42 departments.More than 200 added bodies. After 18th amendment we do not need that.”
He said that the current determinants of Pakistan’s market hints that wewill go up to 42pc poverty by the end of this year, but if the suggestedmeasures are implemented, it can be reversed down to 39pc.
Summing up his suggestions, he said, “Reduce indirect taxing. Discount rateshould be reduced by at least 3pc. External debt has to be prioritized. AndFood prices need to be managed.”
