Reforms then help, not the other way round

Pakistan Development Forum concludes with not much in pledges.

KARACHI: The country’s lawmakers were not able to seal a substantial amount of support from donor agencies or bilateral sources at the two-day Pakistan Development Forum where emphasis was more on Reformed General Sales Tax (RGST) and electricity reforms.

Funding pledged should help finance the budget deficit and post-flood rehabilitation and reconstruction activities, but bulk of the concessions will only be realised when the country fulfills its commitment to implementing the RGST and power reforms, said JS Global Capital senior economist Muzammil Aslam.

Life with RGST

The capital market will remain relatively immune to the RGST as a bulk of the finance and insurance sectors are already paying Federal Excise Duty (FED) on services, hence, there will likely be no new taxes on the capital market, said Aslam in a research report. The retail, wholesale and transport sectors would likely be added to the RGST net, which will inflate prices of a few commodities by around two to three per cent.

Published in The Express Tribune, November 20^th, 2010.