Though the gross domestic product of Pakistan has crossed $300 billion mark by achieving 5.3 percent growth in 2016-17, its macro-economic outlook has deteriorated.The government policy-makers fear they may have to sign another bailout programme with the International Monetary Fund to avert the balance of payment crisis. According to the latest reports, the country’s foreign currency reserves have dwindled by almost a quarter to $14.7 billion since the October last and the current account deficit has been multiplied to $12.1 billion in 2016-17. The government is making a host of measures, including reduction in imports of luxury goods, boosting exports, and rationalizing its currency to alleviate the pressures of current account deficit. However, it is hoped the value of rupee will not be reduced as Finance Minister Ishaq Dar is a staunch supporter of a stronger rupee which is symbol of stable economy. Once the rupee value is allowed to fall, it will crumble the whole economy. It is good omen that the proposal is not on the table at the moment though the new prime minister wants depreciation. Economy is in trouble as the country has the world’s lowest tax-to-GDP ratio, tax evasion is routine and the officials habitually enhance tax rate instead of tax base every year. However Prime Minister Shahid Khaqan Abbasi wants to implement wide-ranging tax reform agenda before the elections.
The ruling PML-N has failed to introduce structural reforms, bring radical changes in tax system by taking integrated approach and building trust among the taxpayers. The structural weaknesses constrain the growth prospects of a developing economyand a more inclusive economic growth is key to ensuring sustainable prosperity for all. Economists hope Pakistan is heading toward regional integration and trade and investment are the best options to improve its standard. Most of economic issues are related to mismanagement and administrative failure. The government is working on the proposals of Tax Reforms Commission and a positive outcome is expected very soon.
Instead of launching new ventures, it will be fine if the prime minister toes the line of former prime minister and completes the ongoing projects as well as follow his policies. The prime minister should ensure consistency in the policies of the former prime minister and it will be a good service to the nation. Pakistan is under pressure after US President Trump’s tougher stance and he has pushed Islamabad closer to Beijing, which has been investing nearly $60 billion in roads, rail and power projects in Pakistan.