Abdul Wajid Khan

The government has been advised to revise its annual tax revenue collection target of Rs7.4 trillion with the consultation of the International Monetary Fund (IMF) to ease inflation and provide relief to the public.

While talking to WealthPK, noted economic expert and Deputy Executive Director of Sustainable Development Policy Institute (SDPI) Dr Sajid Amin said the government needs to adopt multi-pronged proactive strategy to handle the prevailing tough economic situation.

“Pakistan is already facing stagflation and it needs to curtail inflationary resources of revenue collection to control inflation. The government also needs to revise its tax revenue collection target of Rs7.4 trillion because it was fixed before the flood. The situation has changed now and the annual tax revenue target should be reduced by around 10%,” he said.

Dr Sajid said ample time will be required to put the economy on the path of inclusive and sustainable growth, but it is the need of hour to provide immediate relief not only to the flood victims, but also to the people of the entire country by controlling inflation.

He advised that the government should suspend some projects of the public sector development program (PSDP) and divert resources to the flood victims and the vulnerable segments of the society. He said instead of growth, there should be a prime focus on providing relief to the people in the prevailing difficult circumstances.

Dr Sajid said the country was facing worst balance of payments crisis before the floods, and the government was implementing tight fiscal and monetary policy under the IMF program. Due to decrease in growth rate, employment opportunities are also decreasing.

Dr Sajid said floods have further increased difficulties for the people, because initial estimates suggest that it has eroded more than 10% of the GDP and affected around 35 million population. A large portion of the people who were associated with agriculture have lost their employment.

“Pakistan is passing through critical time, because on one hand the country is facing macroeconomic crisis and political instability, while on the other hand flood has further deteriorated the situation. In August, headline inflation increased to 27%, while food inflation soared to 30%. Flood has increased food inflation, and it is badly impacting the people, because 60% to 70% of the income of the poor people is spent on food,” he highlighted.

Dr Sajid said the government should provide shelter, food and basic needs to the people of the flood affected areas on immediate basis with the help of provincial governments.

“The only cash transfer under the Benazir Income Support Program (BISP) will not be helpful because markets no longer exist in flood affected areas. Hunger and diseases are increasing in these areas, and children and women are amongst the most vulnerable segments that need urgent attention,” he said.

Dr Sajid said the government should relaunch ‘Rashan Riayat Program’ and extend it to 53 million households to protect them from inflation.

He said the program will cost around Rs40 billion per month which can be arranged by diverting 25% of the revenue from petroleum development leavy.

Minister of State for Finance and Revenue Dr Aisha Ghaus Pasha in a recent statement said that the recent unprecedented floods and devastation caused in all provinces had given a major blow to the financial resources of the country.

She said that funds were diverted to provision of relief/rescue to the victims. She said that rehabilitation and reconstruction of infrastructure will be an uphill task.

Aisha said that financial estimates for the PSDP for the current financial year will likely be redrawn keeping in view the funds required for reconstruction of the devastated infrastructure.

She further said that work was still underway to finalise the estimates of losses due to flood, and after the completion of the work, the macroeconomic outlook will be revised.

Credit : Independent News Pakistan-WealthPk