ADB enumerates reasons behind fiscal imbalances
Low tax revenues, inefficient public sector enterprises, and large subsidies, have contributed to fiscal imbalances in Pakistan, said Asian Development Bank (ADB). The "ADB and Pakistan: Fact Sheet" updated on its website stated that to achieve sustained higher growth, Pakistan will need to prioritise the implementation of structural economic reforms-including taxation and other fiscal policies-and take action to alleviate power shortages.
Copyright Business Recorder, 2015
Low tax revenues, inefficient public sector enterprises, and large subsidies, have contributed to fiscal imbalances in Pakistan. These need to be addressed to encourage private investment, and to sustain public investment in infrastructure, education, and health. With considerable natural resources and ample scope to grow its economy, Pakistan must look to improve agricultural productivity, and to expand markets for the manufacturing and service sectors, maintains the Fact Sheet.
It further states the near-term economic outlook for Pakistan has improved, with somewhat higher growth and lower rates of inflation being flagged. In the medium to longer term, a faster and more sustained rate of economic growth is required to generate sufficient employment for a rapidly expanding labour force. In line with the strategic priorities and development plans of the government of Pakistan, ADB is finalising the country operational business plan, 2015-2017. This business plan will support the strategic proposals contained in the ADB interim country partnership strategy, 2014-2015, and the directions anticipated in the country partnership strategy, 2015-2019.
According to the updated Fact Sheet during the 2015-2017 period, ADB will help address Pakistan''s energy sector needs through investments and policy reforms. Assistance will also be provided to develop transport connectivity and economic corridors, better manage water resources and irrigation, promote urban services, and support disaster risk management. Meanwhile, ADB and the government will seek to stimulate private sector investment through the reform of public sector enterprises, by generating long-term finance for infrastructure, and by facilitating public-private partnerships.
It further maintains by the end of 2014, cumulative direct value-added (DVA) official co-financing for Pakistan amounted to $1.39 billion for 32 investment projects and $58.6 million for 44 technical assistance projects. Cumulative DVA commercial co-financing for Pakistan amounted to $5.70 billion for 18 investment projects.