EDITORIAL

On the conclusion of the 9th review of the International Monetary Fund under Poverty Reduction and Growth Strategy (PRGF), the fund reportedly succeeded in getting CBR assurance of collecting Rs10 billion over and above the laid down target of Rs580 billion. In spite of the likely impact on the nation, two things particularly bother one's mind. Firstly, why the potential, if any, was not explored before it was brought to notice by IMF and secondly how much economic sovereignty has been achieved as is proclaimed rather too repeatedly. There can hardly be any opinion against exploring the new areas of tax collection so that the national exchequer gets the strength enough to be able to meet the social and development needs of the country. The broadening of the tax base is, therefore, an issue over which one finds a general consensus. However, if the taxes are to be collected through increase in tax rates by just squeezing further the captive taxpayers, it will be resented by all and sundry in this country. Admittedly, the present government has been successful in broadening the tax base to an extent it, however, leaves much to be desired.
The decision to this effect was taken in a meeting at the Ministry of Finance on Tuesday and reflected that the IMF still has strong grip over the economic affairs of the country. It will be naïve to expect this grip to loose at once, but in these columns, we have been advocating for tough negotiations particularly in areas of taxation and economic policy making. For the objective conditions of the economy determine the policy-mix suited for the country, it is necessary that this sovereignty be regained and used for public welfare. The government revenues have surged significantly in the last couple of years thanks to prudent macroeconomic policies pursued by the government. But dragging the course further can prove counter-productive and, as such, should be avoided at all costs. The government has already achieved the kind of stability where it can have the room for bargaining and re-assert financial sovereignty. Hitherto, Mr Shaukat Aziz has been proclaiming that the economic sovereignty has been achieved and the present PRGF is going to be the last arrangement with IMF. But will the end of any further economic arrangement with the fund will end their influence as well, remains a big question.
The national exchequer seems to be under strain already. The end of Saudi oil facility and the government decision of not raising the prices of petroleum products are likely to have a negative impact on revenues. So, the upward revision at this point in time does not sound convincing. This feeling is further strengthened by the fact that at a time when the growth of the economy remains the prime focus, the decision seems to be against the conventional logic. It would have been much convincing if the government had decided to quantify the expansion of taxpayers, so that the burden on the captive taxpayers could have been avoided. With Mr Shaukat Aziz as the prime minister, it is hoped that the growth potential of the economy will not get destabilised by imprudent exercise of accumulating more revenues. It will be more prudent if the economy is allowed to expand and grow which will ultimately result in more revenues for the national kitty. It will also help the government in keeping the employment level high besides reducing some pressure on the already burdened taxpayers.###