ISLAMABAD: Economists at a seminar while expressing serious concern over the present state of national economy have stressed the government to take viable and consensus-based long-term economic measures to bail the country out from the worst economic challenges of the country’s history. At a roundtable meeting titled, “Immediate Economic Priorities for Pakistan” organised by the Sustainable Development Policy Institute (SDPI) here on Friday, speakers including Dr Hafeez A Pasha, Ashfaq
32121 Tola, Dr Aliya Hashmi Khan, Dr Abid Qaiyum Suleri, and others were unanimous that at present, the country was facing the worst financial challenges and the government needs to introduce and implement tough economic measures to deal with the situation.
Former Finance Minister Dr Hafeez Pasha in his keynote speech said, “We do have a making of a national coalition government who represents 70 percent of the country. Today, we have to bring a new economic reforms agenda through a “Charter of Economy”.” He said that at present, the country was facing serious balance of payment-related problems, rapidly depleting foreign reserves and high inflation issues. The government has to take serious taxation-related measures, saying one percent big farmers of the country were holding 22 percent of the agriculture land and annually earning Rs800 billion but are just paying Rs2 billion as taxes. This practice has to be changed and they must be brought under the tax net.
Moreover, in big cities, housing units owned by the rich class are generating Rs460 billion per annum as rent for the owners but they are paying just Rs6 billion in taxes, this is also nothing. The authorities have to take correct taxation measures. He further said that the government must also introduce Value Added Tax (VAT) for the traders.
While criticizing the previous government for not passing on the impact of the fuel prices to the end consumers, Pasha said that this decision of the previous government is going to cost the country Rs400 billion, saying that this relief is of no use for the common people as major chunk of the benefits have been taken by the rich people having own vehicles. He said that instead of providing across the board relief on fuel prices, the government should have prioritized by giving relief on High Speed Diesel Oil (HSDO) as it is being used by the public transport and the goods carrying vehicles, but providing relief on petrol and other fuels coupled with reducing electricity price by Rs5 per unit have only benefited the rich people and not the poor. To benefit the poor people, the government must focus on targeted subsidies, Dr Pasha said. He said that the current account deficit is the major challenge for the present coalition government in the weeks ahead and there is an urgent need to reduce imports by taking appropriate measures to avert balance of payment crisis. Pasha further stated that there was no further space in the monetary policy to curb imports as maximum use had already been made following an increase in 250 basis points in the policy rate on 8 March, adding there was some positive impact of an increase in discount rate was evident on the exchange rate.
He also pointed out that increase in regulatory duties and cash margin failed to yield the desired result notably to reduce imports; therefore, the only option left was to bring about changes in the basic structure of non-health, non-education, and non-food duties to reduce imports.
He added that the massive circular debt, huge amount to be spent on debt repayments, and high inflation are the other serious issues the government has to tackle, adding that there is a need of total unity to face all the problems.
He said that in the next three months, the country needs at least $12 billion dollars.
He said that the current account deficit of the country may touch to the tune of $19 billion with the end of the current financial year. It is important to protect the poor and vulnerable through social protection measures, said Dr Aliya Hashmi Khan.
Copyright Business Recorder, 2022