Islamabad: Pakistan Institute of Development Economics (PIDE) organized an open lecture titled “Sustainable Tax Reform: International Experience and Practice for Pakistan” with Arturo Herrera Gutierrez, Global Management Director, World Bank.
Arturo Herrera Gutierrez said there is an urgent need for sustainable tax reform in Pakistan. Drawing on international experience, he said it was important to establish a sustainable and sustainable credit system as the basis for Pakistan’s economic future. “Pakistan is at a critical juncture where it can embark on sustainable economic growth or fall into a debt trap continuously,” said Gutierrez. In parallel, he discusses the historical context of the economic challenges faced by countries such as Mexico in the 1980s and how these experiences shape current financial strategies.
In addition, Gutierrez stressed the need to establish strong macroeconomic fundamentals, a good debt management system and institutional measures to ensure discipline in fiscal policy. He said ensuring financial sustainability requires a long-term strategy, not just balancing annual budgets. These measures are important to increase reliability and ensure access to financial markets. World bankers stressed the need to maintain consistency over time to avoid past economic crises.
He points to the resurgence of the credit crisis, especially post-COVID-19, in the world that calls for a re-evaluation of the approach to financial stability. In his presentation, countries with general public debt problems are mentioned; It should be noted that countries such as the US, Canada, Japan and Pakistan share more than 75% of GDP. Japan, with 252% of GDP and a low interest rate of 0.88%, is in stark contrast to Greece, which faces a high interest rate of 3.55% despite a low interest rate of 168%. This shows that the debt-to-GDP ratio is important, but the sustainability of fiscal financing sends an important signal to the market by influencing interest rates.
During the lecture, Gutierrez provided important insights into sustainable tax policies around the world, focusing on how this strategy can be adapted to Pakistan’s economic situation.
Instead, the PIDE group offers a new perspective, arguing that Pakistan’s economic woes go beyond simple accounting measures. They advocate comprehensive treatment rather than superficial repairs. Putting growth at the center of its reform agenda, PIDE prioritizes economic development over revenue collection. They advocate allowing the economy to develop before imposing additional taxes, proposing reforms to facilitate operations and stimulate economic activity, resulting in increased revenue. PIDE pointed out that the main problem was high spending, not income, and introduced misguided efforts in reform.
Finally, PIDE and the World Bank promised to continue the reform debate, with more cooperation between the two parties to push for reform.
This lecture was attended by high-ranking economists, politicians, young researchers, journalists and representatives of international financial institutions, reflecting the public interest in strengthening global financial governance.
Gutierrez called for bold financial reforms
