Pak to survive on borrowing

As the 5th review is approaching to be carried away by International Monetary Fund the question of Reformed General Sales Tax has become an abscess for the government with its allies taking independent and opposition stance not following the ruling PPP line. IMF is reportedly approached with more plausible time lax however the dependence is more on foreign borrowing of extremely distressed macroeconomic conditions tending to become a chaos for Pakistan and its people. A lack of proper team of economic managers is the objective of the government which resorted to changes in finance and revenue team by just reshuffling one bureaucrat to other desk however nothing tangible has emerged form the Finance Minister Dr. Abdul Hafeez Shaikh who despite his promises has not yet met the leading trade body organisations including the FPCCI forum.

A leading industrialist in Karachi asking for anonymity suggested the finance minister to be courageous and speak to the forum being provided at the apex level and get convinced or get the businessmen convinced over the question of so-called new reformed general sales tax which would certainly bring about political instability resulting out of higher prices and exorbitant pressure on cost of living. The quality of life index has suffered the most in past three years despite the fact the poverty alleviation fund has arranged a survey based on socio-economic conditions of every household unit. Farzana Raja being the head of Benazir Bhutto Income Support Programme, a positive tool to help the poor, yet the triggers applied so far for poverty alleviation have not been successful in attaining desired results. It is needless here to say that the poverty is on the rise and people have no savings rather passing through personal loans and enhanced household debts to meet daily expenses.

The PPAF itself has not considerable and notable economists or experts in socio-economic field and the mere cosmetic changes would not yield desired results. Sources say that the conviction and determination of Ms Raja could not be doubted as she was found working desperately for the good of poor and alleviation of poverty through first the survey and then the data would become a basis for implementing the programme. The programme as such is still to be revealed and the questionnaire is also to be made public so that any positive points could also be incorporated before carrying out such a big task.

Meanwhile the IMF has reviewed the economic conditions of Pakistan and observed that the country
continues to be under pressure and it is very difficult to attain even 2.75 to 3 per cent GDP growth, the lowest in the South Asian Region. This is an alarming situation and a long term plan for revival of economy, accelerate investment at domestic and foreign front, creation of new jobs and proving positive for inducing domestic savings are badly required. So far the ministry and the minister’s associates have not been able to introduce a genuine economic model required badly in this critical stage of Pakistan’s economic history. The very beginning of current fiscal has been poor than expected while domestic borrowing from State bank has been higher. Even the official inflation rate has been estimated to be over 15 per cent. IMF analysis say that the provision of external financing on concession-based conditions will reduce downside risks to debt sustainability and increase the prospects for revival of economy.

Pakistan carries huge foreign and domestic debt with huge deficit financing adding to economic problems to the government to manage and provide a relief to the people.