Islamabad: World Bank Group Regional Director (South Asia) Mathew Vergis today said that Pakistan will have a bright future by harnessing its youth, natural resources and strategic location to achieve 7-8% GDP growth.
Speaking at the PIDE and World Bank discussions on tax and governance reforms, Mathew stressed the need to prioritize reforms related to the current economic crisis.
The WB regional director said that the current economic model in Pakistan could lead to a debt ratio that has reached 80% of GDP due to reliance on borrowing to finance fiscal and current account deficits.
He further said that Pakistan’s expenditure is higher than its income and imports are more than exports, resulting in increasing internal and external debt.
On that occasion, Pakistan Institute of Development Economics (PIDE) Vice Chancellor Dr. Nadeem ul Haq led the economic reform initiative titled “ISLAAH: Immediate Reform Agenda – HPG and more” from the opening ceremony of this important event.
This strategy is in response to Pakistan’s dire need for external financing, which HPG reports is over US$120 billion over the next five years.
Dr. Haq’s comprehensive reform agenda covers key sectors including regulatory modernization, tax reform, market liberalization, energy efficiency and advances in agriculture and banking.
A key feature of the reform is the introduction of a ‘Regulatory Guillotine’ aimed at removing burdensome regulations that hinder business growth and innovation. These reforms are designed to revive Pakistan’s economic situation, create a more conducive environment, optimize export strategies, improve import regulations and improve the efficiency of the entire sector.
The aim is to catalyze investment, create jobs and drive higher GDP growth, thereby leading Pakistan to long-term economic stability and prosperity.
At the event, PIDE Joint Director Durre Nayab spoke about governance for the 21st century. He pointed out the main inefficiencies in Pakistan’s governance system and proposed comprehensive reforms in various sectors, including ministers, civil bureaucracy, judiciary and local government.
He stressed the need to reduce the size of the federal cabinet, limit political appointments, and improve experience and performance in executive roles. These reforms aim to professionalize and streamline public administration by eliminating outdated practices, introducing competitive business processes, digitalization processes, and providing greater autonomy at the local government level.
World Bank Senior Economist Derek H.C. Chen gave a comprehensive overview of Pakistan’s federal tax system aimed at ensuring a modern and efficient tax structure.
Chen discussed the need for major reforms in Pakistan due to its low revenue collection by international standards and the complexities of the current tax system marked by some special rules and concessional rates.
The review provides a detailed analysis of specific taxes, including sales tax, personal income tax, and corporate income tax, revealing inefficiencies and opportunities to broaden the tax base.
Senior Research Economist, PIDE, Dr. Ahmad Waqar Qasim has criticized the existing regulatory framework in Pakistan, saying it is a major obstacle to economic activity due to its complexity and burden of permits. He described the huge regulatory burden as an “invisible tax” that hinders economic initiatives in all sectors.
World Bank Education Specialist Ms. Maliha Haidar highlighted important steps in Pakistan’s education system, including expanding access to free and compulsory education and introducing innovative reforms such as teacher recruitment and public-private partnerships.
Despite these efforts, Pakistan still faces major challenges, contributing to low education spending and poverty compared to South Asia.
WB sees brighter future for Pakistan
