EAC to help government keep economy afloat: Tareen

ISLAMABAD: Convener Economic Advisory Council (EAC) Shaukat Tareen Friday said Pakistan was facing numerous economic challenges and they were considering convening the council’s maiden session anytime next week to give policy advice to the government.

The challenges facing the country are resource mobilisation, loss-making state enterprises, rising current account deficit as well as scarcity of housing units for millions.

Talking to The News, Shaukat said after the council meeting they will meet with the prime minister to suggest ways and means for overcoming the challenges.

The government has constituted the high-powered EAC under Shaukat Tareen, former finance minister, with the mandate to give policy advice on key economic challenges.

Shaukat said the incumbent regime did not have enough time for undertaking the reforms agenda but they would suggest certain measures in consultation with the EAC members so that the government could set a path for bringing the desired reforms in key sectors of economy.

He said the government was preparing budget 2018-19 ahead of normal schedule because its tenure was going to complete very soon.

He said resource mobilisation and tax collection were among the major challenges facing the economy at the moment.

“The yawning current account deficit poses another challenge that requires a comprehensive strategy to overcome it,” he added.

The third challenge, he said, was the loss-making state-owned enterprises (SOEs).

He said the China Pakistan Economic Corridor (CPEC) was entering into the full-fledge scale for which the government would have to accomplish its homework in a proper manner.

He said scarcity of housing units was another challenge facing the country and economy and there was a need to take the required steps to boost construction sector in the upcoming budget.

According to the State Bank of Pakistan, the housing shortage had gone up to 9 million in 2015-16. However, the World Bank report published in 2010 stated that in Pakistan it stood at 7.57 million units, as the housing finance-to-GDP ratio in the country was below one percent compared with seven percent in India and 50-70 percent in the developed world.

According to the WB report, the unwieldy land administration, unprecedented rises in land prices and inadequate mortgage lender experience with lower income housing prevented the market from advancing in the provision of housing and housing finance solutions.

“Pakistan is facing unprecedented challenges of acute housing shortages, unhealthy living conditions and a non-existent or dilapidated infrastructure across the country,” it said.

There is demand for 0.7 million housing units every year owing to population growth, but only 0.3 million are built, leaving a shortfall of 0.4 million units.

The WB report also stated that only five percent of the population was provided with housing loans, as banks do not provide loans to middle income or low income groups.

For middle income group, there is House Building Finance Corporation (HBFC) but there is no institution for the lowest income group with earning below Rs6,000. It faces housing shortage of 1.5 million units.

The WB report pointed out that there were regulatory weaknesses creating continued uncertainty on property and housing finance transactions.

An inefficient legal framework, fragmented ownership and titling procedures, ineffective land information system, inaccessible government land, high stamp duties and registration fees, a weak tax framework and ineffective land dispute mechanism dampen the willingness of banks to increase their mortgage portfolio, said the report.

In Karachi, 17 different agencies are responsible for land titling and registration, stamp duty and registration fees can go up to nine percent in some provinces and land registration is manual, non-transparent and cumbersome.