Zafar Masud Kamran Khan Kay Saath – A discussion about sustainable development and solutions required for the economic problems of Pakistan.
Zafar Masud (President & CEO – BOP) shares his expert opinion and insights on sustainable development and solutions required for the economic problems in a special series of Dunya News focusing on Pakistan’s debt problem.
Pakistan’s debt has increased significantly in the past 15 years. Here are some key points:
- Pakistan’s external debt for 2018 was $99,223,959,505, which represented an 8.25% increase from 2017.
- The incumbent government has almost doubled Pakistan’s external debt in just three years.
- During a five-year rule, Pakistan’s external debt increased from US$52.4 billion to US$75.3 billion, an increase of 226.80 percent.
- The Pakistan government’s total debt has increased by 34.1% year-on-year to Rs. 58.6 trillion at the end of April.
- In January 2023, Pakistan’s government debt jumped by PKR 4 trillion, which is a 30% increase over the past year.
These figures indicate a significant increase in Pakistan’s debt over the past 15 years.
Zafar Masud’s ideas on managing Pakistan’s fiscal accounts can be broadly summarized as follows:
- Increase tax revenue. This can be done by broadening the tax base and improving tax administration. For example, the government could introduce new taxes on luxury goods or increase taxes on the informal sector. It could also improve tax collection by reducing corruption and making it easier for businesses to pay their taxes.
- Reduce government spending. This can be done by eliminating wasteful and inefficient expenditures. For example, the government could reduce subsidies on goods and services, streamline bureaucracy, and consolidate public sector enterprises.
- Improve the quality of public services. This can be done by investing in education, healthcare, and infrastructure. This will help to improve the productivity of the workforce and boost economic growth.
- Promote economic growth. This can be done by creating a favorable business environment and attracting foreign investment. For example, the government could reduce red tape, improve the regulatory environment, and invest in infrastructure that supports businesses.
Masud argues that these measures are necessary to reduce Pakistan’s fiscal deficit and put the country on a sustainable path to economic growth.
In addition to the above, Masud also proposes a theory of “Big Five”, whereby the top five regulators and top five public sector enterprises (PSEs) in Pakistan should be made independent and eventually reformed. He argues that this would help to improve governance and efficiency in these key sectors.
Masud’s ideas have been praised by some economists, who argue that they are necessary to address Pakistan’s long-standing fiscal problems. However, others have criticized his proposals as being too ambitious and unrealistic.
The economic challenges facing Pakistan today are daunting and the roadmap for enhancing wealth and prosperity for the 230+ million citizens needs to be fostered. While the resumption of the IMF program is critical for addressing our immediate financial needs, their standard prescriptions may only address our short-term challenges. What we need is a radical transformation in the way the economy is structured, the way policy is formulated and implemented, and the redistribution of wealth in a more equitable manner. That is the only way forward to escape from the boom & bust cycles that have plagued our economy over the last many decades.
In the previous article, we had focused on the fiscal policy challenges and how it was driving the current economic crisis. In today’s article, we argue for finding evidence based solutions to tackle our financial challenges and devising a home grown roadmap for equitable prosperity.
The Federal Board of Revenue (FBR) needs to develop capacity to formulate practical evidence-based policies and implement them. According to the Pakistan Business Council (PBC), there is Rs. 1.8trn tax potential from real estate and retail sectors alone that has currently been ignored.
Video originally posted here.