Experts call for reliance on local resources to improve economy

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Economic Updates - Pak Major Financial News

KARACHI :Experts on Tuesday urged the government to mobilise internal resources to underpin the falling economy with unselective taxing of untaxed sectors, improve education and healthcare systems and reduce external financial assistance. The peer-review came from scores of experts of different fields of economy and academicians at a seminar on Pakistan: Challenges and Aspirations.

Taking Stock , organised by the Overseas Investors Chamber of Commerce and Industry (OICCI) organised at a local hotel. The experts also discussed the worsening energy crisis in the country, asking the government to frame policies to deregulate the existing tariff system to avoid possible collapse in power generation.

Speaking during the economy segment of the function, Dean Institute of Business Administration (IBA), Dr Ishrat Hussain, said the government had to focus on stabilising the economy with its internal resources and reduce external funding to bring the nation out of economic crisis.

He said flood had inflicted vast devastation on the nation, ravaging the infrastructure, and killed human being and animals. On the other hand, it had made even the arid land fertile and the country was anticipated to post a record growth in agriculture sector this year.

He said external account, export and remittances were encouraging, however inflation had to be brought into single figure. He said per capita income was not good to sustain the economy, which would have negative impact on the economy and trigger urban unemployment and hit badly the poor. Ishrat feared the fiscal deficit could jump to 7 percent this fiscal year from 5. 5 - 5. 6 percent.

He said revenue mobilisation of the government was weak and issues of external and domestic debts were serious. He said the country had to spend Rs 9 billion for external debt servicing. Ishrat Hussain said the government should supply power and gas to industries and export oriented sectors on a priority basis and not for the domestic use.

Former Chairman Federal Board of Revenue, Abdullah Yousuf, said the government needed to mobilise the resources to get out of the debt trap . He said the revenue collection institutions lacked the capacity to implement the government s policies of the day. He said Pakistan s economy was undocumented based on cash transitions which allowed people to evade taxes. He said tax gap in the country was 67 percent, and suggested the government should tax sectors, which were still untaxed to overcome shortfalls in revenue.

Abdullah said the banks should provide online access of its data to revenue collectors to ensure transparent tax collection and reduce leakages of evasion. He said the manufacturing sector of the country was contributing two third of the total tax, whereas agriculture and services sector s share was nominal. A leading tax Expert, Shabbar Zaidi, said the country needed to increase revenue from internal sources and not from external ones if intended to improve the economy. He warned the government that there had been no excuse left with it clamouring for flood devastation s and war on terror chaos, and had to seriously look after the economy.

He said the country s agriculture sector was sustaining the economy and criticised the media, academia and politicians for not having clear apprehension of the real economic issues of the nation. He estimated that the country may not accumulate taxes beyond Rs 1800 million during the next three years, while censuring the political parties for lacking clear or affective economic policies ahead of the next year s general elections.

Zaidi said four issues including shortfall in revenue collection, high government borrowings, high inflation rate, and PSDP would continue to persist during the next couple of year in the country. He suggested the government to focus on documentation of the economy and fair recovery of taxes. He said low revenue collection, high discount rate and high government borrowings were a vicious circle around the fragile economy.

A foreign expert, Gareth Aicken, said Pakistan had to focus on local growth and minimise its reliance on foreign aid. He observed Pakistan s record of generating domestic growth had not been good. He said Pakistan had to fight terrorism, drugs and nuclear proliferation problems, if it really wanted to become a stable nation. He noted Pakistan had received less relief/ assistance during recent floods from international donors as compared to the assistance they had provided after earthquake. He said donors were now tougher than they used to be and stressing Pakistan for initiating public-private partnerships in different sectors.

Dr Akmal Hussain said incentives and subsidies had always negative impact on the national economy and was not a solution to improve growth. He stressed on change in institutional economic structure and supported his arguments with a statistic presentation. He said the poor and middle-class segment of the society had to be made part of the economy and the government had to rely on their abilities and services if it wanted to improve the economy. He said the government had to give opportunities to middle and poor class of the society to invest in the economy with improved policies.

A former representative of International Monetary Fund (IMF), Paul Ross, highlighted the fund s different monetary programmes and agreements with different countries. He said Pakistan was its close member since the Fund was established, and during the last 30 years it was associated with different programmes. He said Fund had its fresh programme of $7. 5 billion agreement with Pakistan.

He observed Pakistan was in an awkward economic situation after floods had damaged its infrastructure, high inflation and low growth. He suggested Pakistan could attain high growth if it liberalised trade and improved financing. Dr Shamsh Kassim Lakha, Nasreen Mahmud Kasuri and Hussain Dawood spoke about the country s weak educational and healthcare systems and set forth suggestion to improve both sectors. They observed the best students were not adopting teaching profession in Pakistan, which had had negative impact on education system.

They said only 28 million children making 40 percent of 70 million children in Pakistan were able to attain education at schools while the rest were left to lead aimless life. They said those children were unable to find education schools went to madrassas (religious schools) for education of which a large number of institutions were oblivious of formal economic issues of the world. They said investment in education was nominal to attain the desired results. They said some 26 countries of the world were poorer than Pakistan, which were fully providing education to their children. For fighting terrorism, they said the government had to improve education systems in the country.

Farooq Rehmatullah and Abbas Bilgrami spoke on energy issues of the country, saying the government had to improve the power generation. They suggested the government should form a national energy authority (NEA). They said the government should also solve the circular debt issues, which was about Rs 450 billion.

Courtesy: Business Recorder

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