Will Pakistan ever achieve economic independence is a million dollar question as most of its policies are based on foreign assistance, especially on the Chinese loans. The Chinese influence on the economy is growing and some experts believe the move will bolster economic independence of the country. However, others argue the country is heading toward attaining fiscal independence without giving least consideration to the Chinese assistance. The Chinese loans and grants have their own merits and demerits and may have no short term effects whatsoever, but the country will have to be ready to face some implications in the long run. The Pakistan’s economy has now crossed $300 billion mark, which indicates that it is going on the right direction, but a lot of work is still required to be done. In a country of 200 million, only 1.1 million pay taxes and half of the taxpayers are from salaried class. This shows that documentation of the economy is the major area of concern which is being ignored at all levels. Experts believe the government either botches the tax laws or make a mess of the tax collection producer. It has so far failed to introduce structural reforms in the tax machinery and rid itself of the black sheep.
However, it is good omen that the government is struggling to revive economy, but it should also launch a drive for documentation of the economy, and should record the volume of foreign loans, investments, business potentials and industrial output. The growing dependence on loans and imbalance between imports and exports could lead to many complications. According to a recent report of the State Bank of Pakistan,a drop in the Pakistan’s net reserves is largely due to the discrepancy between imports and exports and this has pushed Pakistan to seek further loans from foreign donor agencies to pay off the previous loans. Pakistan is required to pay nearly $13 billion as markups on loans which it took last year. Pakistan has received more than $1.2 billion in loans from China in one year. The money is used to ward off devaluation of the Pakistani rupee or save the country from imminent currency crisis. The government is not willing to take loans from the International Monetary Fund after it completed a three year extended facility programme, but it is also looking toward other sources to stabilize the economy.
The government should also concentrate on generating funds from the domestic economy, improve balance of trade and maintain fiscal stability. In the present circumstances, devaluation of Pakistani rupee cannot be ruled out.
