FAISALABAD: Economic revival is imperative for progress and in this connection, negotiation are inching towards a successful International Monetary Fund (IMF) programme, said IMF Resident Representative Teresa Daban Sanchez.
During her visit to the Faisalabad Chamber of Commerce and Industry (FCCI), she discussed various issues with FCCI Senior Vice President Mian Tanveer Ahmed. Daban said the 6.6% fiscal deficit is a major challenge for Pakistan. There is no doubt friendly countries have supported Pakistan in overcoming this critical situation, but it still needs a comprehensive IMF support programme for medium and long-term sustainability, she stated.
Sanchez said hectic negotiations have been continuing for the past many months and some pending issues would be settled very soon. The balance of payments issue, coupled with inflation, has further complicated the situation, she remarked.
The present government has taken some bold initiatives, but it will take some time to put the economy on the right track, she remarked, stressing that it was important to maintain a strategic balance between reserves and expenditure for stability at a macro level.
“No economy can sustain on borrowed loans and hence, Pakistan must take immediate corrective measures to enhance tax collection by broadening the tax base.”
The IMF resident representative negated the notion that IMF enforces unnecessary and unrealistic conditions, saying the tax collection must be in conformity with the overall economic growth of the country.
She also discussed other issues related to the tax rate, competency of the Federal Board of Revenue (FBR) to collect taxes through existing tax machinery among other matters. She said the FBR must develop good relations with tax payers to further broaden the tax base.
Putting forward her stance for development, she said the tax-to-GDP ratio is 12% and the people must understand that for a sustained development, we must generate indigenous revenue resources. Sanchez also underlined the need for a strong, vibrant and prudent central bank, which could efficiently fix the policy rate.
Also speaking on the occasion, FCCI Senior Vice President Mian Tanveer Ahmed said during the last seven months, exports have recorded a modest increase of 2.19% with 12% increase in foreign remittances.
“Moreover, a visible decrease of 5.17% has also been witnessed in imports, which helped bridge the gap between imports and exports.” He said the government has encouraged the export sector with fixation of electricity and gas rate. These measures would help Pakistan overcome the financial crisis, he added.
Published in The Express Tribune, March 14th, 2019.