Pakistan may become Haiti if it follows existing path: economist

ISLAMABAD: Economist Atif Mian has said the ruling elite including the military, judges, politicians and bureaucrats will have to sit together to devise rules for the smooth functioning of the country.

He warned that Pakistan might become Haiti if it continues to pursue its existing path. There is a risk that the country may be run the same way in the next 50 years as in the past. The last two years were the worst in Pakistan’s economic history. In his online lecture titled “How to Design Pakistan’s Macro-Financial Policy”, organized by the PIDE and the SIA here on Thursday, he talked about different macroeconomic and political issues for more than two hours and stated that the monetary policy should be independent as it could not be run by making it subservient to political masters. There is the need to ensure the independence of monetary policy by making the central bank independent from any kind of influence. The fiscal dominance would ultimately result in running out of trade and current account deficits as doling out spending would pave the way for purchasing BMWs by rich people. Dwelling upon the fiscal policy, he said there was the need to discourage plots as it did not help in achieving productivity. He criticized the policy for granting exemption from taxation to armed forces personnel or bureaucrats and stated that the concept of equity and fair taxation demanded that the tax be imposed across the board and there should be no exception for anyone. “Such taxation does not help in achieving growth and productivity, rather it takes away the growth,” he said, adding that the taxation gave signaling to markets and taxation system needs to be changed. On the spending side, he said there was the need for implementing dynamics scoring of each and every penny spent by the government as every dollar utilized by the government must be analyzed in terms of its net present value (NPV). It does not exist in Pakistan. He proposed slapping Land Value Tax and creating a separate body for its collection, but it should be transferred to local governments for fulfilling the huge infrastructure requirements at local levels. By doing so, the investment levels will go up in the country. He also proposed increasing prices of petrol and diesel and even doubling the petroleum levy and decreasing the prices of electricity. This signaling will convey the message that reliance on fossil fuel will be discouraged while dependence on electricity and renewable electricity will be encouraged in the country.