The International Monetary Fund (IMF) is reported to have expressed full satisfaction in the deliverables so far achieved by Pakistan. The mission during its visit to Pakistan reviewed the measures taken by the government in the policy, fiscal and current account adjustments.
At a briefing session the team held with Prime Minister Imran Khan, it expressed satisfaction and appreciated and endorsed the efforts being made by Pakistan.
They were happy to note that this is the third month of implementation and already the indicators in relation to taxation efforts are showing improvements.
The prime minister is reported to have stressed that nation's economy needs a complete overhaul and that the IMF programme with its structural reform set in motion would support government's efforts of putting the economy on track. The team greatly appreciated the interest expressed by the Prime Minister in restructuring the economy.
Notably, the IMF team is reported to have acknowledged Prime Minister's zeal to lead from the front which has been the main reason behind the progress made so far.
The IMF appears have been impressed by FBR's drive of tax collection which in two months has managed to collect 50 percent more General Sales Tax (GST) and around 30 percent more domestic tax revenues as compared to the same period of last year.
It is unprecedented that the IMF, in its very first appraisal, expressed this level of satisfaction and praise regarding the implementation of the programme and its results even in profoundly difficult economic times.
Poor and non-transparent economic governance has always been a serious issue in Pakistan. The difference this time appears to have emerged from the following changes in the state economic governance:
1. Personal commitment and assertiveness of the PM to get implemented on ground the economic reform agenda rolled out by the IMF and the economic team.
The PM single-handedly withstood all the pressures from powerful business lobbies in relation to withdrawal of subsidies, duty drawbacks, etc.
2. As against the previous trend of state fiscal discipline concentrated in only one hand, notably the Finance Minister, who called all the shots, fiscal and economic governance in the current setup is well balanced. The State Bank of Pakistan, FBR and SECP, for example, are meant to be autonomous to ensure transparency, checks and balances in economic governance. All these institutions are now seen to be autonomous as never before, each pursuing its given mandate professionally.
The IMF's full marks on three months' performance should be a source of satisfaction and encouragement for the vast majority of people who opted to sustain inflation and sluggish economic fallout in the hope of a better tomorrow. The nation appears to be moving well towards that end.
It is understandable that fiscal and governance reforms usher in uncertainty and rising inflation and Pakistan is no exception. The incumbent government provided some space to mellow its effect on the poor. The nation has to endure for another year which is not a bad trade-off for a better 2021.
The economic growth projection for the current fiscal year is set at 3.5% and a growth trajectory projected for incremental growth in years to come. Although it is bullish, it is impressive and achievable if the present pace of reforms rolled out stays on track. With this in order the fiscal year 2020-21 could realistically be a year of economic turnaround.
The government while being well placed on economic reforms has to move fast on revenue generation through growth in industry, agriculture, exports and foreign & domestic investments. Industrial growth has to be the top priority for the much-needed job creation and agricultural growth for food security - the two together constitute over 80 percent of nation's workforce - the prime movers of state economy and social fabric.
The setting up of Special Economic Zones, if well structured and implemented, can turn out to be the fastest and manageable route to usher in industrial, exports and investment growth in the country. Whereas, support to agriculture through technology and agriculture land protection and not subsidies can fuel agriculture growth.
Last but not least, the IMF's positive response must not breed any complacency. The government must continue to pursue the reforms agenda vigorously.
(The writer is the former President of Overseas Investors Chamber of Commerce and Industry)