LAHORE: We must accept the reality that the way matters are being handled currently, our economy is doomed. Ishaq Dar or anyone else from the present political lot cannot revive it. We need a man of steel who can confront the vested interests.
Taxing real estate, stock market and withdrawing all exemptions will in no way hurt the common man. The economy is already at its worst. Nothing more harmful would happen if transparency in the economy is ensured.
Investors’ confidence always increases with transparency. Currently, most of the vested interests are the main investors. Their confidence is shattered when concessions and subsidies are withdrawn.
Government succumbs to the pressure of these pseudo investors. It is time to say goodbye to the status quo and start building our economy from scrap.
When an economy is spending over 70 percent of its revenue on debt servicing and needs to borrow an equivalent amount to run state affairs, it is facing severe fiscal challenges. To address this situation, the economy would need to take several measures.
The first should be fiscal consolidation. The government should prioritise reducing its budget deficit by implementing austerity measures. This could involve cutting unnecessary expenses, reducing subsidies, and improving the efficiency of public spending. This was not seen in this budget.
The state must start negotiating with creditors to restructure the debt. It can help alleviate the burden of debt servicing. This may involve extending the repayment period, reducing interest rates, or even partial debt forgiveness, depending on the negotiations. We have not yet started this process.
Focusing on diversifying the economy can help generate additional revenue streams. The government should encourage investment in different sectors besides textiles, promote entrepreneurship, and support the development of industries with growth potential. There are many sunshine industries pointed out by global experts. Those include pharmaceuticals, value adding agro-based industries and few others.
Implementing tax reforms can increase revenue generation. This may include broadening the tax base, improving tax compliance, and reducing tax evasion.
However, it is crucial to consider the impact on the informal economy and ensure that the tax burden is distributed fairly. No steps in this regard have been taken in this budget.
The government should take steps to bring the informal economy into the formal sector. Encouraging informal businesses to register, providing incentives for compliance, and offering support for their transition to the formal economy can increase tax revenues and stimulate economic growth. The planners are afraid to take these steps that are strongly opposed by vested interests.
Expanding exports can help generate foreign exchange and improve the country’s balance of payments. The government should invest in export-oriented industries taking into account many industries that are exporting goods without government support or refunds given to few export sectors. The state should provide incentives for exports, and explore new markets for goods and services.
Addressing corruption and improving governance practices should be the priority of the government. Only this can help regain public trust and attract investment. Implementing transparent and accountable systems for public procurement, reducing bureaucratic red tape, and enhancing the rule of law are essential steps.
There is no denying the fact that the government is in dire need of external assistance from international financial institutions or friendly nations. The state must first restore trust among donors and friends. Assistance should be accepted with caution, taking into account the associated conditions and long-term implications.
Consulting with economists, financial experts, and international organisations can provide more tailored guidance for addressing the specific challenges faced by the economy.