Daily Times

The World Bank Group (South Asia) Regional Director, Mathew Verghis noted here Friday that Pakistan has the potential for a brighter future, leveraging its youth, natural resources, and strategic location to achieve 7-8% annual GDP growth.

Speaking at PIDE and World Bank Debate on Fiscal and Governance Reforms, Mathew emphasized the need to prioritize reforms addressing the current economic crisis.

The WB Regional Director said Pakistan’s existing economic model was unsustainable due to its reliance on borrowing to finance its fiscal and current account deficits, leading to a growing debt level, which has reached 80% of GDP.

He further added that Pakistan’s spending exceeds its revenue, and it imports more than it exports, resulting in increased domestic and external borrowing.

On the occasion, the Vice Chancellor of Pakistan Institute of Development Economics (PIDE), Dr. Nadeem ul Haque spearheaded a pivotal economic reform initiative titled “ISLAAH: Immediate Reform Agenda – IMF and Beyond, beginning with his opening remarks at this significant event.

This strategy emerges in response to Pakistan’s pressing need for substantial external financing, highlighted by an IMF report which necessitates over USD 120 billion in the next five years. Dr. Haque’s comprehensive reform agenda addresses crucial sectors including regulatory modernization, tax reform, market liberalization, energy efficiency, and enhancements in agriculture and banking.

A key feature of the reforms is the introduction of a ‘Regulatory Guillotine’ aimed at eliminating burdensome regulations that hinder business growth and innovation. These reforms are designed to rejuvenate Pakistan’s economic landscape, facilitating a more business-friendly environment, optimizing export strategies, improving import regulations, and enhancing overall sectoral efficiencies. The goal is to catalyze investment, create jobs, and promote higher GDP growth, thus steering Pakistan towards long-term economic stability and prosperity.

On the occasion, Joint Director PIDE Dr, Durre Nayab talked about Public Administration for the 21st Century. She addresses critical inefficiencies in Pakistan’s governance system, proposing comprehensive reforms across various sectors including the cabinet, civil bureaucracy, judiciary, and local government.

She highlighted the necessity to reduce the size of the federal cabinet, limit political appointments, and emphasize expertise and performance in governance roles. The reforms aim to professionalize and streamline public administration by eliminating outdated practices, introducing competitive hiring processes, digitalizing operations, and enabling greater autonomy at the local government level.

Senior Economist at the World Bank, Derek H.C. Chen outlined a comprehensive review of Pakistan’s federal tax system, aiming to enable a modern and efficient tax structure.

Chen discussed the need for substantial reform due to Pakistan’s low revenue collection compared to international standards and the complexities within the current tax system marked by numerous special provisions and concessional rates.

The review provides detailed analyses of specific taxes such as sales tax, personal income tax, and corporate income tax, revealing inefficiencies and the potential for broadening the tax base.

Senior Research Economist, PIDE, Dr. Ahmad Waqar Qasim extensively critiqued the existing regulatory framework in Pakistan, highlighting it as a significant impediment to economic activity due to its complexity and the burdensome nature of obtaining permissions. He identified the pervasive regulatory burden as an “invisible tax” that stifles economic initiatives across all sectors.

Education Specialist at the World Bank, Ms. Maliha Haider highlighted significant strides made in Pakistan’s educational system, including expanding access to free and compulsory education and introducing innovative reforms such as merit-based teacher recruitment and public-private partnerships.

Despite these efforts, Pakistan still faces substantial challenges, underscored by its low education spending relative to South Asia, which contributes to high dropout rates and learning poverty.