After the arrival of International Monetary Fund Mission( IMF) Staff level Mission, Advisor on Finance Dr.Abdul Hafeez Sheikh told media persons that implementation of $6 billion loans programme was showing results as foreign direct investment was pouring into the country. The results of earlier 12 such programmes in the past do not confirm this claim. Moreover, in the decade of 1960s no IMF economic reforms programme had been under implementation. But massive investment both foreign and domestic had been done in industry and agriculture. Similarly, during 2002-07 substantial foreign interment came in the telecom sector.
It is the attractive economic environment and low cost of doing business buttressed by the availability of highly skilled manpower that give boost to investment. The sustained level of high economic growth of Bangladesh, Vietnam and Asian Tigers are the living examples. Although Pakistan’s Ease of doing Business Index has gone up by 28 points but still the economic environment is very depressing because of highest in the world electricity and gas tariffs, dearth of skilled manpower, technological stagnation, and complex and regressive taxation regime. Fiscal and industrial policies that bring improvement in the economic environment are not in place.
Staff level IMF mission is holding talks for the second time to know how far the tough condition about achieving ambitious target of Rs. 5.238 trillion tax revenue collections is achievable. In the current round of talks, the government team will once again make an attempt to persuade the global lending agency to agree to slash tax revenue collection by Rs.300, bringing the set target of Rs.5.238 trillion to less than Rs. 5 trillion. A short fall of Rs. 385 million has already been witnessed. The FBR authorities have told the IMF Mission that they could not collect more than Rs.4.6 trillion or Rs.4.7 trillion in tax revenue. In the previous round the government team could not convince the IMF Mission to lower the tax revenue target. If again the lending agency does not concede the demand of slashing tax collection target then the axe will fall on the honest electricity and gas consumers in the shape further jacking up the tariffs of these utilities.
Increase in the prices of utilities fuel inflation. But Advisor on Finance has asked the provincial government to take administrative actions for combating inflation, which is not possible in the prevailing demand-supply situation caused by shrinking economy. Likewise, the symbolic stipend of Rs.1000 per family doled out under KafaltProgramme cannot ease the inflationary pressure.
