ISLAMABAD: Institute for Policy Reforms (IPR), an independent think-tank led by former finance minister Dr Hafiz Pasha, has criticised the government’s economic policies and said that the PML-N-led government would miss most of targets of economic indicators including GDP growth, budget deficit during the current fiscal year.
Dr Pasha, who was a member of Nawaz Sharif cabinet during 1997-1999, also accused the government of depriving people of the benefit of falling international commodity prices, subsidising international consumers and artificial overvaluation of the currency.
The IPR projected that GDP growth would remain in the range of 3.8 to 4.3 percent during this fiscal year 2014-15. Pasha said that all determinants of growth such as agriculture and industrial production were sluggish and below the growth rate of the last fiscal year. Industry grew by 2.5pc in July-November 2014 compared to 6pc for the same period in 2013. The target for industrial growth was 7pc. Large-scale manufacturing grew only by 1.5pc. Likewise, growth of major crops was 2.5pc in July December 2014 compared to 3.7pc in 2013. Growth rates of minor crops and livestock increased though.
The IPR report further noted that it was unlikely too that the economy would meet the investment target of 16pc of GDP. Its three elements showed a mixed trend. Machinery import increased by 6pc and important segments, such as, textiles and agriculture saw double-digit decline.
He found it odd that the government was providing substantial subsidies on export of wheat to benefit international consumers instead of benefiting the people of Pakistan.
He alleged that the government had withheld 15 per cent cut in petroleum products prices in line with international prices, blocking 25 per cent reduction in electricity prices and retaining 20 per cent reduction in wheat prices to consumers. He said the government was not taking advantage of a rare low global commodity price phenomenon.
Dr Pasha was very critical of the government decision to introduce four mini-budgets and said it would have net revenue impact of Rs160 billion and yet the revenue target would be missed by a margin.
He said by increasing GST rate on high speed diesel to an unprecedented 37 per cent level, the government would rather raise Rs20 billion in additional revenue contrary to Finance Minister Ishaq Dar’s claim that the recent oil price adjustment was “revenue neutral”.
He criticised the government’s policy of resorting to heavy foreign borrowings and said net foreign borrowings in first half of the fiscal year remained $2.5 billion. He said $1 billion of it was used for consumption purposes instead of spending on development.
Dr Pasha said the FBR was about to face a revenue crisis as it would not be able to put together more than Rs2.6 trillion in revenues as against the original target of Rs2.810 trillion and lamented that the government did not realise that heavy taxation was always counterproductive.
