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‘IMF preferred silence on poverty, unemployment in Pakistan’

Former minister for finance Dr Hafeez A Pasha has said that the IMF made projections on macroeconomic fronts for Pakistan but preferred to remain silent on poverty and unemployment figures under three-year $6 billion Extended Fund Facility (EFF).

“The poverty has already gone up from 36 to 40 percent of population in Pakistan while 1.2 million have lost their jobs in the last one year. The IMF made projections on all macroeconomic fronts but its report remained silent on poverty and unemployment figures over the next three years,” Dr Pasha said while addressing the session of Sustainable Development Policy Institute (SDPI) conference here on Wednesday.

He said that the public debt was projected to decline under the IMF programme but external debt would increase from $105 billion to $135 billion. Thedebt to GDP ratio is projected to reduce but external debt in percentage of GDP will go up, he added.

He also criticised Pakistan Bureau of Statistics (PBS) for gauging surge in food prices and said that the PBS was making a joke by showing just 7 percent increase in prices of tomato but actually it went up by 230 percent in domestic market.

He said that the tax to GDP ratio was targeted to increase from 11.6 to 17 percent as resource mobilisation needed to be increased through increased direct taxation.

Out of Pakistan’s total tax collection of Rs3,800 billion, there are Rs2,074 billion consumed by the ruling elites, he maintained. He said that the country’s political, establishment elites were consuming the major chunk of resources. He said 22% of agricultural land belongs to feudal class. However, they are just paying peanuts of only Rs2 billion of income tax.

Dr Hafeez Pasha said apart from going to IMF the government had no other option. He said despite negotiating for IMF programme he never saw so much intensity the way IMF showed this time. He said instead of focusing to increase the share of direct taxes the government still relying on indirect taxes to achieve the revenue target. He said if the population growth remained on existing level then in case of achieving growth rate of 2.4 percent it could slip into negative growth trajectory in real terms.

He said the government should focus on reducing the power sector line losses and speed up privatisation process to get rid of circular debt and losses incurred by public sector enterprises.

Dr Gonzalo Varela, Trade Economist World Bank said that the share of exports in the GDP of Pakistan was one of the lowest in the region. He said the government should provide level-playing to exporters so they can enhance exports.

Earlier Dr Jochen Hippler, Country Director FES, said economy doesn’t have human face. But at the same time it has two faces which are economy and society. He said both are interlink. Dr Hippler said the economic policies set the direction of a society where it’s heading for.

Dr Pervez Tahir, former chief economist, also spoke on the occasion. The session was moderated by Dr Nadia Farooq of Asian Development Bank.

Meanwhile, addressing a session on Governing Pakistan’s Water Economy in the 21st Century, Pakistan Commissioner for Indus Water Syed Mehr Ali Shah criticised, what he called, flawed water accounting mechanism placed through telemetry system arguing that it was aimed at blocking way for evolving consensus on construction of more dams.

He also said that Diamer-Basha Dam required funding of $15 billion that could be constructed within period of 15 years and no investors could wait so long to get back their dividend. So the option is earmarking allocation of Rs220 billion each year from Public Sector Development Programme (PSDP) for this important hydropower project for next 10 years.

“There is need to place unified service for dealing water issues in Pakistan as it will help bringing all bureaucrats working in different departments related to water resources under one umbrella,” Syed Mehr Ali Shah, who is also joint secretary into Ministry of Water Resources said.

He cited example of Australia where National Water Initiative (NWI) was established in order to resolve water issues along with federating units and they spent $20 billion to get back water rights given in shape of licenses. The federating units in Australia allowed the Center to legislate on water issues and the NWI got abolished in 2014 after resolving water issues, he added.

He said that the flawed telemetry system was aimed at avoiding accurate water accounts and argued that 19 years data of water resources was available that showed that 29 million acre feet (MAF) was released but the provinces got only 14 MAF so the question arises where this 15 MAF water had gone? He went on saying that it was all done to build the case that water was not available so the debate of construction of new dams ended once and for all.

In order to monitor exact share of provinces for availability of water, the World Bank provided funding for placing mechanism on 24 sites out of which 7 sites were considered crucial connecting provinces with each other, he said and added the procurement related controversies were emerged so this available funding was still lying un-utilised.

He recalled that there was need to build the capacity of Indus Water System Authority (IRSA) as once during the Musharraf regime the meeting was convened to assign IRSA for ensuring water distribution among the all provinces through effective mechanism in line with the mandate of the IRSA Act. However, the members of IRSA who were all retired bureaucrats showed their inability so it was handed over to Wapda and they placed hydraulic on key points and this was bound to fail for achieving the desired results. He said that the allocation of water resource in PSDP stood at Rs70 billion and Rs15 billion for hydropower as this 10 percent allocation was required to jack up for meeting whole requirements.

Alone the Basha Dam requires funding of Rs220 billion per annum for construction of dam with total estimated cost of Rs2,200 billion or $15 billion. He said that the Ministry of Finance could be convinced for allocation of funds purely on basis of business model as the per unit electricity charges of Tarbela Dam stood at 84 paisa per unit while the net hydle profit was deducted at rate of Rs1.15 per unit. With availability of increased funds through NFC, he said that these resources could be diverted towards construction of water reservoirs.

Former Secretary Water and Power Ashfaque Mehmood also came down hard on politicians and bureaucracy on account of implementation and said that he felt pessimistic rather than optimistic after getting retirement about 12 years ago. He said that the issues were same and in some cases it had got even worst on account of bringing efficiency and improving governance structure related to burning water issues. The funding is not available and implementation is not taking place to find out solutions, he added. On unified service structure, he said that the status quo was the order of the day and time had come when something innovative had to be done to come out from existing quagmire.

He said that National Water Policy should be treated as basis for starting delivery on key priorities. There is need to hold ministers and bureaucrats accountable after placing clear cut goals and objectives before them, he added.

“Instead of NAB style accountability, there is need to give targets to ministries and then held them accountable if failed to deliver” he said and added that the different parliamentary standing committees also failed to bring any good because parliamentarians showed that they were furious in the start of the proceedings but after getting few presentations they tend to agree with the policies. He went on saying that soon after the meeting some members used to handover “chit” for getting any favour from the bureaucrats, he added. He suggested to join hands with the media to build narrative on important issues like availability of water.

05 Dec 19/Thursday                                                              

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