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Grim outlook of economy

Grim outlook of economy

According to economists, Pakistan needs a paradigm shift in its economic policies. It is time for the policymakers sitting in the government offices to wake up from deep slumber and act now. As the country’s exports could not pick up to the desired level and regulatory duty failed to curb imports, the only option left for the government is to facilitate industrial sector and create industrial surplus to boost exports. But this can be only possible when the officials concerned, who are drawing hefty salaries and perks, take interest in the official work and give new shape to the economy. The regulatory duty was imposed on luxury items, including cars, processed foods, cosmetics and hundreds of other non-essential items, but it did not simply work. The people who have purchasing power can go to any length to buy goods of their choices. Therefore, the curbs on imports would not narrow the growing gap between imports and exports. In the new economic policy, incessant and low tariff electricity supply should be ensured to the export-oriented industry. However, the government opted for taking loans from international donor agencies to arrest the falling foreign exchange reserves and imposed regulatory duty on luxury goods to reduce trade deficit.

The tax system also needs to be overhauled as increasing the tax rates should not be the only option to cover the losses. Pakistan is one of the heaviest taxed countries in the world though only around a million are the registered taxpayers in a country of over 200 million people. Despite consuming a lot of time, money and resources, the country’s tax to GDP ratio is the lowest in the region. Lack of facilities and tough laws discourage not only local entrepreneurs, but also foreign investors. The policymakers should devise such policies to stop arm-twisting of the local investors. Otherwise, it will be impossible to stop capital flight and money laundering. According to experts, revocation of the legal clauses incorporated in the protection of economic reforms Act of June, 1992, is the need of the hour as in some cases the law facilitates money laundering and capital flight. Despite tall claims by the government authorities, the cost of doing business in Pakistan could not be lowered. The investors, whether local or foreigners, only take interest when they are given guarantees that their gains will be high and capital will be safe in the country.