On fiscal discipline
From the Blog PkColumnist.com: On fiscal discipline - Sound fiscal finances are essential to sustain higher economic growth, provide flexibility for responses to new shocks, ensure the capacity to meet the challenges of aging physical and human infrastructures, and avoid leaving future generations with a legacy of deficits and debt. Any government which succeeds in maintaining fiscal discipline is bound to succeed on the economic front and hence political front as well. The government will be able to sustain higher economic growth, will succeed in creating more jobs, lift millions of people out of poverty, spend more on people, and strengthen the country's physical infrastructure. A strong economy promotes political stability and strengthens democracy. Pakistan's fiscal balance has deteriorated over the last four years. The gap between revenue and expenditure has remained elevated at an average of 6.4 per cent of GDP – twice as large as the average of the Asian developing countries. When annual expenditure is forced to exceed revenue by such a wide margin, the result will be misery, deprivation, unemployment, poverty and loss of respect in the comity of nation. The persistence of large budget deficits (6.4 per cent of GDP on average) for the fourth year in a row has slowed the pace of economic activity and shrunk the capacity of the economy to create more jobs, resulting in the rise in unemployment and poverty. The large budget deficit has caused Pakistan's public debt to rise astronomically. In the last three years, Pakistan added Rs4,099 billion in public debt, as opposed to Rs4,814 billion in the previous 60 years. This is the height of fiscal irresponsibility. No sensible government or finance minister would ever perform such an irresponsible act. The surge in public debt caused by large budget deficit on the one hand and 30 per cent depreciation of the exchange rate on the other, has wiped out enormous fiscal space which could have been utilised for spending on people. Interest payment rose from Rs387 billion in 2006-07 to Rs717 billion in 2010-11, which is likely to increase further. The expected increase will be a result of the higher cost of government borrowing on the one had and slippage on the budget-deficit target on the other, taking it to over Rs800 billion in the current fiscal year. An increase in interest payment to the extent of over Rs400 billion is simply a drain of national exchequer. Interest payments on debt are nothing but an onerous burden placed on the poor. Debt is nothing but borrowing from the future to enjoy a standard of living that is unsustainable. If being able to borrow to such an extent makes government feel richer, having to repay the debt will make them feel poorer. Fiscal indiscipline is the root cause of our miseries today. We love to spend but hate to collect resources and, as such, beg from the Friends of Pakistan. For three years we have been begging all over the world and the begging bowl keeps on growing. A beggar never commands respect in the comity of nations. Is this the fate of the people of Pakistan? How long can we keep on borrowing recklessly? Reckless lenders, as well as imprudent debtors, like our government, are equally responsible for the current dismal state of affairs. The present government did a great job in reducing budget deficit from 7.5 per cent of GDP in 2007-08 to 5.3 per cent in 2008-09 – the first year of the IMF Programme. But complacency struck thereafter. The government started missing the budgetary targets as agreed with the IMF. Efforts on resource mobilisation started waning with expenditure continuing to grow with a pace set by the government itself, resulting in the widening of the revenue-expenditure gap. The government firmly believed that in a worst possible situation "someone will bale us out." The IMF continued to provide generous waivers on the "direction" of "someone." When we became addicted to missing targets we were told to bring our house in order, mobilise taxes from within, and not to expect from friends writing out cheques for us. Who should be blamed for our current misery? The reckless lender, "someone," and our irresponsible government are equally to be blamed. The current economic mess is created by ourselves, and therefore the solution must come from within. The solution lies in maintaining financial discipline. For policymakers, the priorities are clear. They need to focus on tax reform and expenditure rationalisation. IMF or no IMF, the implementation of a reformed GST is in our national interest. There are 141 countries that have implemented this tax successfully and reaped the benefits of higher revenue. Are we different from the 141 countries? If it can work well in those countries, why can't it work in Pakistan? Improvement in withholding the tax regime will generate billions of rupees in taxes. The people of Pakistan are paying this tax on a daily basis. A withholding tax is collected by a withholding agent, like restaurant owners. There is no guarantee that the tax collected by a withholding agent is deposited in the government's account. Reforms in the withholding tax regime, according to one calculation, can yield over Rs200-250 billion. Should we not go for a reform in this tax? Income originating from agriculture has been exempted from direct taxation. This is against the principle of equity and fairness. Should we not bring income originating from agriculture under the direct tax net? Expenditure reduction and expenditure priority should be the part of expenditure reform. There is no need to have such a large pool of ministers. The size of the cabinet should be brought down to 20-22. We must eliminate or reduce untargeted subsidy and prioritise development spending with emphasis on education, health and physical infrastructure. Outright privatisation of PSEs should be high on the agenda. At least the government can save Rs250 billion from the budget. . Read Full Post
Etihad Airways Increases Flights for Hajj Pilgrims
From the Blog Geo Tau Aisay Pakistan!: Etihad Airways Increases Flights for Hajj Pilgrims - Etihad Airways will increase its services from Abu Dhabi to Saudi Arabia in November, providing additional flights to Jeddah for Muslims making the annual Hajj pilgrimage. Pilgrims from Pakistan taking Etihad Airways for their Hajj journey will also be able to avail the opportunity provided to ease the surge in demand for Hajj pilgrimage flights. Related posts: Etihad Airways Expands Codeshare Deal With Royal Air Maroc Virgin Blue Group Announces Partnership With Etihad Etihad Airways Signs "Katrina Kaif" As Brand Ambassador Etihad Airways Gets Top Ranking At Conde' Nast Awards Etihad Airways signed "STRINGS" as Brand Ambassador . Read Full Post
Yet Another Corruption Perception Index – Transparency International's mindless logic
From the Blog Let us build Pakistan: Yet Another Corruption Perception Index – Transparency International's mindless logic - A press conference is going to take place today in which the high and mighty, Syed Adil Gilani, Chairman of Transparency International Pakistan is going to thunder that "Pakistan 2010 Corruption Perceptions Index Score is 2.3 against 2.4 in 2009, and out of 178 countries, its ranking as most corrupt country has slipped 7 ranks, . Read Full Post
Reserve your White iPhone 4 right now
From the Blog geekword - > Reserve your White iPhone 4 right now geekword.net — Well Well Well. What we have here. It seems as if the white skinned iPhone 4 might be nearing its release. What makes us say so? Apple's updated Apple Store app for iPhone now lets you reserve the white colored stainless steel phone, yes the very same phone which has been subjected... . Read Full Post
0 comments :
Post a Comment