Experts Urge Good Governance, Rational Taxation To Boost Investors' Confidence

Eminent economist and former secretary finance Dr Waqar Masood Khan has indicated some silver linings in the presented budget stating that it could improve fiscal and economic management if handled wisely

Islamabad (UrduPoint / Pakistan Point News - 15th June, 2019) Eminent economist and former secretary finance Dr Waqar Masood Khan has indicated some silver linings in the presented budget stating that it could improve fiscal and economic management if handled wisely.He was speaking at a roundtable session held at Institute of Policy Studies (IPS) to review the Federal Budget 2019-20.He claimed that there was almost no economic management of the country during the past three fiscal years of 2015-16, 2017-18 and even 2018-19 - the initial incumbency period of the new government - and ad-hoc approaches were adopted to shoot the troubles.He stressed the need for creating national consensus on the economic challenges and the IMF deal with an effective communication strategy, which he found nearly non-existent in the government's policy so far.Questioning the rationale behind opting for the IMF programme this late, he said that a key focus of the IMF program was to fix the primary deficit, which is the need of the time for the country's economic management.The former secretary finance viewed IMF's review of the economic targets on quarterly basis for the next three years as a good omen for the country's economic discipline.He also praised some steps being taken in the budget including ban on government borrowing from the State Bank of Pakistan, this however should be coupled with improving the governance and privatizing the loss-making PSEs instead of trying to fix them endlessly, he viewed.He also advised the privatization of the country's power sector companies to get rid of the menace of spiraling circular debt issue, which is one of the biggest fiscal burden to deal with every year.The session, moderated by Khalid Rahman, executive president, IPS, was also addressed as key discussants by Zafar-ul-Hasan Almas, chief macroeconomics, Planning Commission of Pakistan, Dr Pervez Tahir, former chief economist, Zaheer-ud-Din Dar, economic policy analyst, Dr Aneel Salman, HoD, Management Sciences, COMSATS University and Mubarak Zeb Khan, senior economic journalist.In his opening presentation, Almas said that the recent budget was made in the most difficult economic environment the country was ever faced with embracing the unprecedented challenges of macroeconomic instability, growth slow down, high inflation, decline in private investments, issue of fiscal adjustments, debt servicing, trade imbalance, and high losses incurred by public sector enterprises.

Dr Salman was of the view that implicit obligations were missing in the budget as no long-term objectives were being seen.

He said that the country's economy has always been unstable, unsustainable, unfair and unpredictable, a state that can only be improved by good governance. He said that there was considerable policy research work done by the country's academia and it was the government's responsibility to take advantage from it.Zeb opined that it was the political economy that was at the center of all problems, stressing that the expenditures done in the name of PSDP should be monitored.

He was however able to see a positive side stating that the pressures brought forth by IMF and FATF may pave way for some kind of improvement in the affairs. Legislation such as the Baynami Act' are a positive sign, he remarked.Dar was critical of the proposed federal budget and questioned if the budget was made to increase the growth or to escalate poverty.

He said that the interest rate which was set this year would not attract any business investment.Iqbal also expressed his apprehensions, failing to understand how PKR1600 billion tax target would be possible to be derived from an economy with 2.4% of growth rate.Dr Tahir criticized the approach of the country's economic managers and policy makers of seeking external support to solve home-grown issues.Khalid Rahman was of the view that while several measures taken in the federal budget 2019-20 were raising fears in nearly all sectors of economy and various segments of society, it may well pay good dividends in the longer run for enhanced fiscal discipline and meaningful economic management.

It was however essential to develop a national consensus through effective communication strategy to see off the difficult times, a need that has been sorely overlooked by the people at the helm of affairs.