Christine Lagarde, the managing director of International Monetary Fund, has showered her praises on the government for bringing the country out of economic crisis. According to the official, the country has “successfully” completing a three-year extended facility programme and achieving macroeconomic stability during a short period of two years. The high-profile two-day visit of the fund official came two months after a final tranche of $102 million was given to Pakistan under the $6.4 billion programme. The tax to GDP ratio in Pakistan is not only low in the region but in the world, but all efforts are made to enhance revenues by enhancing tax rates. This has pushed the already beleaguered economy into further chaos and its consequences are evident as daylight. Exports are falling, the much praised stock market is shedding hundreds of points per day and energy crises still persist. Pakistan has only achieved an acceptable level of foreign exchange reserves through borrowed money. Experts believe the government will have to adopt realistic approach as more than half of its tenure has been consumed and little time is left to bring the economy out of quagmire.
The IMF official showered praises on the government but also showed disappointment on the low collection of taxes which she said were still little more than half of what is estimated as a feasible amount despite successful completion of the three-year programme. She also said that ‘continued efforts are needed to bring more people into the tax net and ensure that all pay their fair share’ in the government exchequer. Though the country is likely to achieve near to five percent growth in its gross domestic product, the fiscal deficit is the area of concern which is being ignored by the government. The government is in the habit of acquiring letters of appreciation from the foreign agencies, but the fact remains that the economy of Pakistan is not in a good shape. The only problem is the disinterest of the political leadership in the economic affairs. The prime minister should have formed a team of economic experts to put the country on the right track, but it is still groping in the dark after completing around three years of its tenure. The situation on the ground is different from situation on the papers. Pakistan needs practical steps and not cosmetic arrangements as has been the practice since independence.
The foreign donor agencies and loans cannot ensure economic recovery, but structural reforms in the system to consolidate the gains. Only a comprehensive reforms agenda can ensure economic stability of the country. Let us see how the government proves its mettle and responds to the IMF official.
