Dr Pasha for coherent policy to tackle economic crisis

LAHORE: Renowned economist Dr. Hafiz A. Pasha on Thursday said promotion of exports, increase in tax-to-GDP ratio, revenue collection from the untaxed and disowning the loss-making state owned enterprises are essential to take the country out of economic crisis.

Speaking at the Lahore Chamber of Commerce & Industry (LCCI) Dr Pasha said, last year, the biggest burden of Rs1,800 billion in the history of the national exchequer was collectively caused by the state-owned enterprises. “Power sector is a black-hole that is destroying the economy while the annual loss of the National High-way Authority is Rs173 billion.”

He said there is a dire need to enhance the tax-to-GDP ratio which is currently lowest in the world. Dr Pasha mentioned that 22 percent of the agricultural land is in the hands of only one percent landowners. “Last year the income of top-20 percent landowners was Rs2,800 billion but they paid only Rs2 billion taxes.”

He said that 80 percent of the tax is being collected from the industry while the tax collection from the services sector is also very low. Dr Pasha said Pakistan is a resource-rich country but its economic condition is deteriorating. He expressed fear that before receiving money from the IMF, the foreign exchange reserves will have gone below $7 billion, although “the safe level is $18 to $19 billion”.

The public debt in July was around fifty trillion rupees while the ratio of external debt to GDP has reached 41 percent, he added. “Five years ago, these loans were $83 billion dollars, which today have increased to $130 billion. It is a matter of concern that we do not have foreign exchange reserves at the beginning of the financial year.”

President LCCI Mian Nauman Kabir highlighted the problems faced by businessmen including exploitation by the commercial banks as they were demanding Rs10 to RS15 over and above the interbank dollar rate for releasing the import shipment documents. The LCCI Senior Vice President Mian Rehman Aziz Chan said that the successive governments in the past have failed to expand the tax base which is still around 3 million taxpayers, resulting in one of the lowest Tax to GDP ratios in the world.