THE Asian Development Bank (ADB) on Wednesday kept Pakistan’s economic growth forecast at 3.7%, the third lowest in South Asia and below the official target, and said that the government may have to slash expenses due to any shortfall in tax collection by the Federal Board of Revenue (FBR). In its flagship Asian Development Outlook, the Manila-based lending agency said that household consumption in Pakistan would remain subdued in the current fiscal year due to a rising cost of living. It put the inflation forecast at 8.3% for the new fiscal year, the second highest in the region after Bangladesh.
The forecast, based on realistic assessments, runs contrary to the oft-repeated claims of the senior government officials that the economy has been stabilized and put on a growth trajectory. The very fact that the GDP growth is projected as the third lowest in South Asia and inflation is expected to remain second highest in the region after Bangladesh makes mockery of the narrative built around so-called economic reforms that have clearly and heavily added to the miseries of the people but contributed negligibly to the cherished objective of expansion of tax net and optimum mobilization of internal resources to lower dependence on foreign loans that come with costly and bitter conditions. This impression is borne out by the fact that the Government expects to collect a staggering amount of Rs.1.68 trillion through petroleum levy whereas its simplified tax scheme for traders has evoked deplorable response as only a few dozens have filed return under the scheme. There are justifiable demands for withdrawal of the exploitative levy and in case the Prime Minister upheld his commitment made to the JI chief about provision of further relief (besides fuel subsidy) to masses, the tax collection target will become an insurmountable challenge as reforms are mainly limited to imposition of taxes on petroleum products and a host of restrictions on the electricity tariff. However, no meaningful change in the situation is likely in the foreseeable future as people wanted the Prime Minister to discuss relief measures for them but instead he has assured the IMF chief that Pakistan will stay the course of reforms.
