‘Govt needs to come up with economic reforms strategy’
Former finance minister Dr Hafeez A Pasha said the agenda of comprehensive economic reforms strategy should be the top priority for the new coalition government.
“It is for the first time that we are having such a broad-based national consensus government and, thus, it needs to be taken as a golden opportunity to correct the economy and rationalize our taxation system” he said while delivering a keynote speech at the roundtable meeting on ‘Immediate economic priorities of Pakistan’ jointly organised by Sustainable Development Policy Institute (SDPI) and Friedrich Ebert Stiftung (FES)
Dr Pasha highlighted that the current account deficit of Pakistan in the first 8 months of the current fiscal year has reached 12-billion-dollar and could touch 18 to 19 billion dollars by June 30, 2022. Thus, we would be needing 30 to 32 billion dollars of financing every year to manage our transactions with the rest of the world.
“Pakistan has been able to arrange 18 billion dollars of financing in the first nine months of the current fiscal year whereas 15 to 16 billion dollars will have to be managed in the remaining 3 months,” Dr Pasha projected while adding that about 5.5 billion dollars decline in the foreign exchange reserves in the month of March 2022 has added further into our economic woes.
He suggested that while entering the negotiations with the IMF, we should ensure the IMF that we are going to pursue a comprehensive reforms' 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be targeted while all indirect taxes on basic food items including ghee, sugar, spices, vegetables, and tea, should be withdrawn.
Dr Pasha said, ‘long-term capital gains exemption should be withdrawn on property and shares while fuel adjustment charges should be removed only for the small consumers.” Besides, taxation should be on comprehensive income along with progressive taxation.
Dr Abid Qaiyum Suleri Dr Abid Qaiyum Suleri highlighted that after COVID-19, the Russian-Ukraine Crisis has again triggered a global recession and the issue of a food security crisis.
He said, “the Issues that Pakistan is facing, especially pertaining to high inflation are linked with the global scenario.”
Dr Suleri highlighted that the political instability would still remain a threat to our economy. He suggested that the new government should try to strengthen social safety nets instead of unrealistic promises of reducing inflation.
Renowned economist Ashfaq Tola asserted that to streamline the taxation system in Pakistan, we have to correct the fractured system of taxation. He said that the new government should take care of the inequity of taxes.
Published in The Express Tribune, April 25th, 2022.