Executive Director Pakistan Economy Watch (PEW) Saifuddin Sheikh said on Monday the attempts made in the federal budget 2023-24 to develop the country’s economy through debt is of no use. In a statement issued here, he was of the view that the government has left with only option to run the system through borrowing as most of the tax revenue will be spent on debt servicing. Saifuddin Sheikh said that imposing withholding tax on cash withdrawals from banks will prove to be a disastrous decision which has damaged the economy in the past.

Imposing tax on bank withdrawals will decrease bank deposits, it will increase money in circulation and the government will have to face difficulty in borrowing from banks, he warned. The ED PEW further stated that the central bank will have to print excess currency and hike interest rates, which will increase inflation. Increase in salaries and pensions will also increase inflation, and in these circumstances the estimate of 21% inflation by the government will prove to be wrong, he noted. The super tax will affect the investment, production, profit and employment in the industrial sector, Saifuddin said, adding that the controversial measures will reduce the size of the documented economy while the undocumented economy will grow.

Taxes have not been imposed on retail, wholesale and agriculture sector as expected due to which black money will be directed towards those sectors which will escalate inflation. The ED PEW said that the rate of population growth in the country is the highest in the world and the real income of the people has not been increased since the last five years. The income of masses is constantly decreasing, and the public will not benefit from the current budget, but on the contrary, there their income will decrease.

Credit: Independent News Pakistan-INP