Country cannot prosper with stopgap financing, says Pasha

State minister calls for undertaking mega structural reforms to spur economic growth

LAHORE:

Minister of State for Finance Dr Aisha Ghaus Pasha has said that Pakistan needs to undergo some mega structural reforms as the country cannot prosper both economically and intellectually with stopgap financing arrangements.

“Since 1988, we are in the 23rd International Monetary Fund (IMF) programme, which tells that something is really wrong with Pakistan; this is not my fault and neither that of previous governments,” remarked Pasha.

She was speaking at a conference titled “Evolution of social, economic, political order – past, present and future of Pakistan and its impact on creation of enabling business environment”, organised by the Lahore Chamber of Commerce and Industry (LCCI) on Tuesday.

Pasha said that adverse events were happening due to the pending essential measures aimed at embracing structural reforms, which had not been undertaken for years.

“We are a country which regularly goes through boom and bust, this is because we are not growing and we always put ourselves in a balance of payments crisis whenever we reach 6% growth rate,” she said.

“We are the 10th largest country in terms of receiving remittances but this amount, which is now touching $31 billion, along with exports is unable to meet our import bill, as a result we are now in a habit to live on a year-to-year basis by managing our external financing needs.”

Pasha pointed out that the country’s spending was higher than its income, exports were low and imports were high. Therefore, there should be measures to overcome the shortcomings.

She stressed the need for increasing exports and reducing imports to bridge the huge gap and also called for the development of agriculture sector.

She also urged all segments of society to join hands to help those devastated by the recent floods.

Catastrophic floods have dented the economy, causing losses to the tune of $30 billion, including 8.5 million acres of standing crops, over 2 million houses and one million livestock.

Speaking at the conference, former Federal Board of Revenue chairman Shabbar Zaidi said “we have to first admit that our economy is bankrupt. We cannot put our economy back on track without realising this reality”.

“We collect $40 billion in taxes, which is only 10% of our $375 billion economy. In contrast, India’s tax-to-GDP ratio is 17% and its government has added 35 million taxpayers over the last five years. Our total taxpayers are merely 3 million,” he pointed out.

The ex-FBR chief elaborated that only 400 corporate taxpayers were contributing 60% of the total taxes. Of the total taxes, 54% has been collected at the import stage, 30% in withholding tax and 10% voluntarily.

“FBR collects only 1% of the total tax, and the department needs only 5,000 employees whereas it is employing 23,000,” Zaidi said.

Published in The Express Tribune, September 21^st, 2022.

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