MONEM FAROOQI
After failing in implementation of some reform packages, the government has assured the international donors to speed up efforts for deeper reforms and their implementation at a time as the election 2018 approaches, it is learnt.
In a letter dispatched on Monday to International Bank for Reconstruction and Development (IBRD) for Competitiveness and Growth Development Policy Financing, a $420 million policy-based guarantee programme, the government said that the implementation continued in important areas such as the removal of discriminatory tax exemptions and efforts to improve the business environment.
The letter stated that the efforts to implement reforms were becoming more granular and focusing on more difficult aspects like expanding the tax base and improving tax compliance. “FBR is reforming its approach to audits and increasing its focus on large taxpayers. ‘Lessons learned from the past are being applied’, the letter said. It also stated that the access to finance was a key constraint to competitiveness and policy-based guarantee programme would support a significant overhaul of the legislative and institutional framework of the financial sector.
Referring to its progress, the letter said that the government made significant progress in the design and early implementation of its economic reform programme in first two years of its tenure. From the beginning, the government’s top priority was to re-establish macroeconomic stability and strengthen macroeconomic fundamentals, addressing significant internal and external imbalances.
While doing so, it also initiated a number of crucial structural reforms. It cleared pending power arrears, successfully completed the first equity and strategic sales of its privatisation agenda, removed some of the discriminatory tax exemptions and concessions established through statutory regulatory orders (SROs) and transferred the authority to issue SROs to the parliament.
To improve the business environment, it pointed out that the government had created the ‘One Stop Shop’ for business registration and strengthened the regulatory environment for the financial sector. It has also initiated a number of measures to improve tax policy and administration to address the chronically low tax revenue levels. Over the past few years, the government has also strengthened the governance structures of the Benazir Income Support Programme (BISP) and expanded the CCT for primary education.
The previous Fiscally Sustainable and Inclusive Growth (FSIG) development policy credit series supported these reforms, thereby also contributed to restoring macroeconomic stability. On the whole, the government has been implementing a comprehensive and challenging set of reforms. Contrary to initial expectations at the time of preparation of the FSIG series, the reform momentum was maintained despite a challenging political environment, the letter added.
It also highlighted the government’s efforts and strategies to accelerate economic growth, pursue fiscal consolidation and increase investment. The government also pledged for a stand-alone operation to support a selected number of discrete reforms before entering the electoral cycle in 2017.
