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Economic strategy focusing 4 main areas to be ready by March: Moeen Afzal

TAHIR DHINDSA

ISLAMABAD: The government has narrowed its focus on four major areas of economy for preparing an integrated strategy which will be ready for implementation by the end of March, Secretary-General, Finance, Moeen Afzal, said.

In an exclusive interview with Business Recorder, he said: "The government is moving at a gradual pace but is very much surefooted about the objectives, the direction and ways of achieving them."

Dispelling the impression that the government was moving at slow pace and had no focus, he said: "We just don't want to say before we act."

He said that the size of the economic cake would take some time to grow in real terms, but through improving productivity and targeting the right areas, the slide might soon be arrested, and even in the short term, some growth could be maintained.

Moeen said that tax administration, managing a sustainable growth by focusing on four main sectors where the country has inherent advantage or where worldwide sectoral share is growing, attacking poverty through different routes, and tackling debt problem on short as well as long term basis are the four main areas the current economic team is targeting.

The Secretary General, Finance, said that low tax to GDP ratio was the prime reason for the recurring budget deficit problem, which left little room for any real development. He said the current tax/GDP ratio was about 12 percent, at best, whereas, it should be double of that.

He said the government has decided to do away with 'no-questions-asked syndrome', and was improving tax regime. The amnesty on payment of 10 percent tax would go in March.

The second most important measure the current economic team is adopting is bringing equity in taxation. Value-addition tax is levied on traders along with making agriculture sector to pay taxes. He said a committee is working on firming up various options in this regard, which would give its report by the end of March.

In the meanwhile, the government is fully committed to the documentation of economy, including levy of tax on agriculture income. Implementing GST at retail level and stopping smuggling across the western border are key features of broadening the tax net, he added.

To push up growth rates and improve foreign exchange earnings in a sustainable framework is the second main objective the government is working at, Moeen said.

He said the growth rates during the last three or four years had not been good, which were about 3 percent per annum. To improve the situation, he said, four sectors have been targeted where the government wants private investment to flow in. The sectors are agriculture, energy (petroleum and power), small industries, and information technology. These sectors, he said, promise quick growth and would attract private investment.

The third area of economy where the government is focusing is attacking poverty, he said. Poverty figures have gown up during the past ten years, which were a direct result of confused policies, he said. Even when the public money was being spent, it was poured in at a wrong place. Big buildings like convention centre and parliamentary lodges were altogether misplaced. Even development projects like airport terminals and motorways were not priority projects, he added.

In this regard, he said, the government was about to implement a comprehensive poverty alleviation programme, providing food security through food coupons and integrating the ultra-poor in mainstream economy through different schemes is a part of it, he said. Poverty reduction strategy paper is being prepared, which will identify key indicators. To rid poverty it will take 6 to 7 year of focused efforts. And, these efforts would be monitored on yearly basis, he added.

The fourth area of national priority is debt management. The Secretary General said a committee chaired by Dr Parvez Hussain has been constituted, which will give its short-term report before June 2000 for important inputs for budget making. The long-term report, however, would be available later and would relate to tackling the issue according to a longer perspective. He dispelled the impression, as reported in a newspaper attributed to him, that the country would be out of the debt trap soon. All he said was that the current economic team was looking forward to manage the issue professionally, he said.

Moeen said it was a pity that the previous government did not implement the Hafiz Pasha report and the Fakhr-e-Imam report.