ARTICLE: The real challenge is progress on the economic reforms at the micro level. These long delayed reforms are critical for Pakistan's economic development and prosperity but are intrinsically intertwined with the accountability process and hence very difficult to implement. Fierce political resistance from the status quo forces slows down the accountability process and hurts the credibility of the reform effort.
Fortunately, in PM Imran Khan the country has found a leader who has the needed perseverance and unflinching determination to wipe out the cancer of corruption in economic decision-making at the highest level of governance. He firmly believes that a system distorted by corrupt practices is at the root of Pakistan's debt crisis and economic difficulties; furthermore, he is convinced that regulatory and decision-making processes have been undermined, distorted and compromised to facilitate rent seeking, kickbacks, money laundering and tax evasion. To liberate the economy, supply chains have to be deregulated, processes simplified and competition has to be enforced. Cartelization of the economy will not be allowed. An entrenched corrupt system was fatal for Pakistan and had put it on a path of destruction. Reforming the system was thus a lynchpin of his commitment to the people of Pakistan.
The first step in this direction was the assignment of Dr. Ishrat Hussain to undertake major administrative and civil service reforms that will usher in for the first time a 21st century performance-oriented public administration system needed to modernize Pakistan and improve the service delivery to people. . Frequent cabinet meetings are held with ministers both at the federal and provincial levels with strict reform and performance targets working overtime to deliver.
The PM has commissioned several economic, administrative and criminal investigations on a number of burning issues involving public debt, power tariffs, sugar and wheat crises. The objective was to get answers, break the nexus between corruption and decision making, assign responsibility and most importantly, recover the loss to the national treasury and prosecution of the offenders, if any. While action is continuing reports have been made public without fear or favor.
ANALYSIS
On the revenue generation front, FBR has succeeded in expanding the tax net and boosted tax collections but reforming FBR and tax administration has been a tough nut to crack. The IMF program requires rapid transformation of the informal economy into a formal economy, requiring unpopular tough reforms to document the economy and create a new tax culture in Pakistan. Creating a new technically savvy, professional FBR able to develop the trust of the taxpayer is even more difficult.
The Government has embarked on this mission with determination and faced tough resistance from the traders class which created disruptions in the markets. However, there is increasing realization that the government, the traders assisted by trade associations and business community with their chambers must continue intensive negotiations and implement a suitable tax system in Pakistan which is fair, equitable and can finance the development of the country.
When Covid-19 pandemic hit the world and reached Pakistan by March 2020 it severely disrupted the urban economy in Pakistan. Manufacturing and Services supply chains faced shutdowns. The government moved decisively to create NCOC, mobilized machinery to equip and strengthen health facilities across the country, and digitally provided billions of rupees of direct cash transfers to millions of affected poor families. By instituting a policy of smart lockdowns, with effective test and track arrangements it has managed to cushion the economic impact of disruptions and market shutdowns. By the grace of God, Pakistan is on its way to emerge from the pandemic in a much better shape than the dire predictions of the pundits and much better compared to the rest of the world.
To further cushion the economic fallout of corona, the PM was able to arrange debt relief from the G7 countries and has taken the lead in developing global consensus for debt restructuring and relief for developing countries on a larger scale. The corona adversity also accelerated the pace of reforms needed to boost employment generation.
In a move to create massive employment opportunities to compensate for the job losses, the Government has incentivized the construction and housing value chains in the country. Under the personal leadership of the PM weekly meetings are held to remove the regulatory burden on the Construction industry. As a result, it has seen more ease of doing business reforms and deregulation in past five weeks than in the last fifty years. These reforms have been institutionalized all across the value chain from urban master planning and unlocking of land banks to digitalizing systems for quick and automatic approvals, to rejuvenating sustainable systems for construction finance and mortgage finance by the SBP, to streamlining availability of utilities for development sites, reviving REITs' financing and tax rationalization, and to creating incentives for low-cost housing and facilitating home ownership across the country.
This model of applying fast track reforms under the leadership of the prime minister's office and involving administrative machineries of both the federal and the provincial governments is all set to roll out across major value chains involving, manufacturing, services, agriculture and knowledge economy. Background home work has been completed and reforms packages are ready for implementation by mobilizing the government machinery and public private partnerships.
The aim is to rapidly promote the attractiveness of major value chains across the country by removing regulatory hurdles, reducing cost of doing business and facilitating investments to create jobs for the youth bulge of the country. Pakistan can benefit from the current global opportunities of relocation of production centers by being competitive with other regional countries. The Prime Minister is in a hurry, to boost Pakistan's image and international rankings in Investment, productivity and competitiveness from the bottom quartile to the top quartile in the next three years and place Pakistan on a sustainable path to become a major high value added agriculture, manufacturing and services hub of the region.-Concluded
Copyright Business Recorder, 2020