A report from the International Monetary Fund says that the economy of Pakistan is gradually picking up after improvement in its fiscal discipline with minimum chances of imminent threat to the economy. The donor agency has projected the country’s real GDP growth at 4.5 percent this fiscal year thanks to macroeconomic stability, low oil prices, planned improvements in the domestic energy supply and investment related to the China-Pakistan Economic Corridor. The report feared that inflation could increase in coming months with the anticipated stabilization of commodity prices. On another note, a World Bank report about the state of the economy is not very promising and it seems the real situation is still out of the bounds of rating agencies such as Moody’s, Standard and Poor’s and Fitch’s reports.
No doubt the present government is taking various initiatives, involving foreign investors to set up economic zones in the country, but how the prevailing energy crisis will end is still a big question for the government. It is good omen that the foreign exchange reserves have crossed $20 billion mark and are increasing due to lower import prices and cheap commodity prices in the international market. Besides, the new interest rate corridor, introduced by the State Bank of Pakistan, is regarded as a major step toward improvement of the monetary policy framework, leading to greater financial autonomy. However, the donor agency seeks the government to plug loopholes and channels which are used for money laundering and the terror financing in the country.
As a matter of fact, all the donor agencies are seeking the government to introduce structural reforms to achieve high and durable growth over the medium term. The government sought to take step to ensure smooth supply of electricity and gas to the industrial sector and reduce fiscal risks. There is a need to accelerated pace of privatization and restructuring of public sector organizations to improve business climate in the country. Voices of concern are also being raised against rampant corruption in Pakistan and the government is advised to focus on reforms and try to overcoming structural challenges to arrest the falling exports, increase investment and job opportunities in the country. The government is already trying to stop tax evasion and enhance tax net, but implementation of vital policies through ‘office orders’ will not serve any purpose, but would worsen the situation. The recent tax on bank transaction through the office order is fueling resentment among the business community as well as destroying the banking system in the country.
Instead, the government should devise a system of tax collection at source and avoid taking steps which are harmful for the national economy.
