Shahnawaz Akhter
KARACHI: Pakistan, hard-pressed by a slowdown in economy and rising poverty, needs massive structural reforms and an equitable system to ensure sustainable growth, prominent economists, experts and analysts said on Tuesday.
While speaking at a seminar on ‘Pakistan: Challenges and Aspirations: Taking Stock,’ organised by the Overseas Investors Chamber of Commerce and Industry (OICCI), they said that the system should not be geared to benefit just the ruling elite, but also ensure
well being and progress of the masses.
The country should explore its untapped resources and reduce dependency on external sources, they said.
Pakistan should improve relations in the region particularly with India, which would help boost its GDP growth as regional cooperation usually benefits the smaller country, they said.
They said that the country, where borrowing from both external and internal sources reached limits. The participants suggested that the country should focus on revenue collection measures. Sectors not contributing towards the economy should be brought into the tax net.
They also suggested that the agriculture income tax should be levied in true spirit.
Around Rs800 billion additional revenues could be collected by taking measures within the existing policy, they said.
The speakers also stressed upon investment in social sectors because without improving education and health the high growth rate would be a dream.
The seminal mainly focused on Pakistan’s economy and challenges faced by the country including fiscal deficit, high external borrowing, lower revenue collection against potential and Pakistan’s relation with international donors.
Dr Ishrat Hussain, former governor State Bank of Pakistan (SBP) and dean of the Institute of Business Administration (IBA), spoke about the economic stabilisation. He said that stabilisation programme should depend on internal resources, including improving agriculture, manufacturing sectors besides revenue generation.
The floods caused devastation, but provided fertile land to the country, he said. “The authorities should make this disaster an opportunity.”
He said that inflation should be controlled. He highlighted the balance of payment position, which was improved on substantial inflows of remittances sent home by overseas Pakistanis and export receipts.
The former SBP governor, however, said that budget deficit which is estimated at 5.5 percent would jump up at 7 percent.
Paul Ross, the representative of the International Monetary Fund (IMF) in Pakistan, said that Pakistan remained under an IMF programme for around 25 years out of the 30 years relations with the global lending agency.
He said Pakistan remains in an “awkward position” because the recent floods dented its economy and the country remains stuck up in low-growth cycle.
“The challenge remains how to push Pakistan in the high growth trajectory,” he said. “The country needs equitable system to unlock potential.”
Gareth Aicken, a former representative of UK DFID, presented issues about bilateral aid to Pakistan. He said that international perception about Pakistan regarding lending has been changed. “The country now should design growth oriented programs its own to win international attention,” he added.
The panelists, including Abdullah Yusuf, former Chairman Federal Board of Revenue (FBR), and Shabbar Zaidi, the tax expert, portrayed the revenue collection scenario in the country, which was far behind then its actual potential.
“The country has around Rs800 billion revenue collection gap,” Abdullah Yusuf said. He defined that several sectors are not contributing their share toward exchequer. He said that agriculture sector, which contributes over 20 percent towards GDP, hardly pay less than one percent tax.
He suggested that the inequality in the system should be removed and in this regard the government should make sure implementation of tax policies. “The government should also take policy decision in a transparent way,” he added.
Shabbar Zaidi in his presentation said that the country could generate around Rs750 billion from the existing system.
He stressed upon the documentation of the economy and said that the undocumented economy was around 40 percent of the GDP.
Dr. Akmal Hussain, an economist, said the policies framed in Pakistan were systemically designed for elites to provide incentives to this class. “This country would not have bright future if it is monopolised for rich,” he added.
He supported the participation of lower segment of the society in growth-oriented policies.
‘Overseas investors concerned over socio-economic development’
our correspondent Wednesday, April 20, 2011
Addressing a seminar on the subject of challenges faced by Pakistan, she said, “We believe the OICCI must play a role in examining these issues and propose solutions to them.”
Saiyid said that the OICCI’s objective in organising the seminar is to push the debate on basic economic policies on fiscal deficit, the state of education, energy crisis, widening of the tax base, and documentation of the economy to a consensus. “We need to raise awareness through pro-active advocacy and an outreach campaign via the media to the civil society,” she added.
Saiyid said that the OICCI wish to support the government in formulating policies and promoting investments in the country and work closely with the government on expanding business opportunities for existing and potential investors.
The issues discussed at the seminar affect all of us, and, above all, they affect Pakistan, the people and the future of Pakistan, she said. “Needless to say, this is of great concern for all of us.”
She was confident that the country would meet the challenges and come out stronger. “Pakistan has to confront and navigate multiple challenges but it has potential and promise,” she said.
The OICCI seminar was divided into three segments. The external environment was the first segment which covered Pakistan and its immediate neighbours, the US and NATO.
The second segment highlighted sectoral issues, including social sector and energy crisis faced by the country. The last segment focused on Pakistan economy and its challenges especially foreign funding, high borrowings and lower revenue collection, and rising inflation. —SA
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