The United Nations Economic and Social Commission for Asia and the Pacific has projected the economic growth for Pakistan at 5.4 percent during the current and the next financial years. Higher consumer credits, improved security situation and developmental projects under the China-Pakistan Economic Corridor would spur economic growth in two years. The inflow of Chinese investment in projects related to the economic corridor is continuing and the process has also contributed in generating the receipts of foreign exchange from various legal sources. In view of Chinese investment, many other countries are also taking interest to invest in Pakistan. Various energy projects are part of the economic corridor, which will help move the wheel of industry in Pakistan once those are completed. The UN agency hopes the large-scale manufacturing sector would benefit from greater energy security and the government has already slashed gas prices for the industrial sector. It is also hoped that the agricultural sector would improve the production of cotton, sugarcane and maize this year. The country faced severe cotton shortage due to low yield last year and had to import it from India to cater to the needs of the local textile industry. The current government has successfully contained inflation at around five percent, but upward trends in the oil prices in the international market can push the inflation rate up to six percent.
The agency, however, warns that energy shortage could affect potential growth in the country and the government should introduce energy sector reforms by reducing subsidies, tackling the outstanding arrears and better use of technical efficiency. A low tax base is a major area of concern and tax revenues in Pakistan are one of the lowest as compared to the countries in the region. The government will have to assert its writ on every sector of the economy and should have to launch capacity building programmes for the tax officials. In the current scenario, those who pay taxes and those who don’t are treated equally by the government authorities. Rather, the government is ever ready to tighten the noose of tax laws around the neck of genuine taxpayers and they are not offered any privilege by any government department. There is a need to boost the morale of genuine taxpayers, they be given incentives and compliance of the relevant laws by tax officials should also be monitored. The agency calls for simplification of the tax laws and should curtail the excessive discretionary powers vested in the tax officials.
