Rector, Lahore School of Economics Dr Shahid Amjad Chaudhry said on Wednesday that to address the economic challenges Pakistan needs to introduce measures to boost revenue, contain the current account deficit and revive economic growth.
"Going forward, together with the short-run policy adjustments in the form of monetary tightening, exchange rate adjustment and negotiating a bailout package with IMF to restore market confidence and secure medium to long term funding for balance of payments support", said Dr Shahid while addressing the two day Fifteenth International Conference on Management of the Pakistan Economy organized by Lahore School of Economics with the theme of Economic Challenges in a Changing National and Global Environment. He also stressed on the need of introducing comprehensive reforms to promote macroeconomic stability and foster long term sustainable growth.
Former federal finance minister Dr Hafiz A. Pasha said that four provincial governments of Pakistan together generate revenues equivalent to 1.4 percent of the GDP. This is only 9 percent of national revenues. The remaining 91 percent is generated by the federal government. This is despite the transfer of a relatively large tax, the sales tax on services to the provincial governments in the 7th NFC Award.
The objective of his paper was, first, to assess the size of the tax bases of various progressive Provincial taxes like the agricultural income tax, urban immoveable property tax, stamp duty on property transactions and the sales tax on services. Second, an estimate was made of the revenue potential of these taxes if adequate reforms in tax policy and administration are implemented. Third, the Provincial Governments also have significantly non-tax revenue sources which remain largely unexploited. The paper formulated proposals for higher recovery and for using the water rate as a mechanism for improved water efficiency. Other non-tax sources like highway tolls, fees for higher education charges, etc., were also examined in the paper Professor of Economics and Director, Graduate Institute of Development Studies, Lahore School of Economics Dr Rashid Amjad said that Pakistan needs 8 percent growth rate for economic stability.
In his presentation on "Breaking out of Pakistan's stop-go economic cycles: Does the fiscal deficit hold the key 1999-2019?" he talked about Pakistan's economic performance during 1999-2018 to identify the main growth trends and factors responsible for the overall poor growth performance in the period and to analyse the role of the fiscal deficit as the primary factor in explaining this poor economic performance. The results showed that fiscal deficit has a negative impact on economic growth and is significant in both our models over the time period 2001-18 as well as 1982-2018. The value of the current account deficit is negative and significant during the period 2001-2018 but over the longer period 1982-2018 it signs changes to positive suggesting that the higher the current account deficit the higher the economic growth. The overall conclusion was that economic policy makers in Pakistan must ensure that the fiscal deficit is carefully managed and monitored so that steps can be taken to keep it in check before the economy reaches a point when strong stabilization measures become inevitable. Dr Muhammad Ashfaq Ahmed (Director General (International Taxes), Federal Board of Revenue, Islamabad) and Dr Inayat U. Mangla (Professor of Finance at the Lahore School of Economics) presented their work entitled "Pakistan: The Fiscal Crisis Management 2019-24: The Revenue Perspective". The study provided a political economy perspective on Pakistan's fiscal crisis management during 2019-24 period.
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