‘Fiscal policy should promote social justice’

Islamabad:Dr Muhammad Ali Talpur, Joint Chief Economist, Ministry of Planning, has said that under the Uraan Pakistan, fiscal policy must be a tool for social justice.

Dr Talpur was delivering the keynote address on behalf of the Federal Minister for Planning, at a pre-budget dialogue on “Strengthening fiscal policies for inclusive and sustainable development: advancing child and gender-responsive public investments” jointly organised by Ministry of Planning, Development and Special Initiatives, UNICEF Pakistan and Sustainable Development Policy Institute (SDPI) here Wednesday.

Dr Talpur said that our fiscal decisions must uplift most underserved especially children, women and low-income families. He vowed that fiscal policy is also social policy. He announced the formation of a high-level technical working group to explore reallocation strategies, identify new fiscal opportunities and reinforce Pakistan’s commitment to inclusive development under the Sustainable Development Goals (SDGs).

In his opening remarks, Dr Abid Qaiyum Suleri, Executive Director, SDPI, said that Pakistan is navigating two IMF programmes — Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) — with contrasting objectives. While the EFF focuses on reducing energy circular debt and raising energy prices, the RSF emphasises green technology and climate resilience. This paradox presents both challenges and opportunities, he said and urged the policymakers to integrate climate tagging into development to empower girls and adolescents through climate-aligned and inclusive fiscal planning.

Sharmila Rasool, the UNICEF Representative in Pakistan, stressed the importance of human capital in a rapidly changing global environment. Pakistan's Human Capital Index stands at 0.41, which suggests that only 41% of children will reach their full potential, she said. She called for bringing about urgent reforms in tax equity and public expenditure. She noted that Pakistan's regressive tax system unfairly burdens the poorest while shielding the elites. She reaffirmed the UNICEF’s commitment to supporting Pakistan’s efforts to align spending with equity, especially for children and adolescents.

Ayesha Javaid from the Ministry of Finance mentioned that for the first time, Pakistan’s federal budget is gender responsive. She acknowledged the extensive institutional efforts needed to incorporate gender into fiscal planning.

Dr Ashfaq Hassan Khan from NUST stressed that Pakistan's budget deficit is driven by soaring interest payments and that the current monetary policy, particularly high interest rates, is unsustainable. He advocated for a freeze on new infrastructure projects and called for immediate privatisation of loss-making state enterprises to relieve fiscal pressure.

Tobias Becker, the World Bank representative, presented empirical findings under the Uraan Pakistan, indicating that the poor contribute disproportionately to the tax system while benefiting less from public spending. He noted excessive subsidies in electricity and tertiary education and urged reorientation toward primary education and equitable subsidy distribution.

Saima Bashir, Member Social Sector, Planning Commission, said the real GDP growth stands at 2.38%, and inflation has eased significantly. However, poverty remains high and 25.6 million children are still out of school, she noted. She emphasised that inclusive fiscal reform is not a cost but an investment. A high-level working group will be convened to explore reallocations and alternative financing models targeting children, youths, and women.