Pakistan Institute of Development Economics


Managing Growth with Stabilization

Date : May 18, 2020 at 08:00 pm
Speaker : Masood Ahmad
Discussant : Shaukat Tarin

Pakistan has been struggling hard for stabilisation and strappingly relying on IMF programs for decades. Pakistan is extensively running after loans with the hidden conditions and now the state reflects that Pakistan is under pressure of approx. 53 billion debt. IMF internal evaluation report depicting that three things which lead towards austerity mainly include design failure, implementation failures related to government and institutional decay. Now the problem lies in the capacity issues especially in FBR, Ministry of Finance and Planning Division and finally the tax policy which is an absolute disaster of all. Considering the last program where offering a number of waivers, appreciated exchange rate, loss of reserves that built up debt during the program, increased energy prices and increased circular debt creating mess in the energy sector. Unfortunately, all these factors reflect the declining long run growth rate as well as investment rate i.e. Pakistan is lowest in Asia. Now the question arises that when and how we will be able to attain durable adjustments? What would be the ultimate objectives? Can our economic policy be able to refurbish all? Tax regime is happening at the cost of growth and employment. This is in fact a huge burden on the economy leading towards the declining GDP, killing investments and ultimately high fiscal deficit.