Karachi, May 27, 2015 (PPI-OT): Resident Representative of International Monetary Fund (IMF), Tokhir Mirzoev has said that although Pakistan’s GDP growth has improved to 4.1 percent but it was not enough as faster growth rate was needed to create more employment opportunities and absorb new entrants into the job market.
Speaking at a meeting during his visit to the Karachi Chamber of Commerce and Industry (KCCI) which was attended by President KCCI, Iftikhar Ahmed Vohra, Former President KCCI AQ Khalil, Former Senior Vice President KCCI, Shamim Ahmed Firpo and KCCI Managing Committee members, Resident Representative of the IMF said that Pakistan’s economy was gradually improving and heading towards stability as various economic indicators have been progressing well due to lower oil prices, lesser inflation, robust remittances and sustained foreign reserves.
Commenting further on prevailing economic scenario in the backdrop of lower oil prices, Tokhir Mirzoev said that luckily, it has created opportunities and now it all depends on how Pakistan uses it. In order to ensure that the economy stays on track, structural reforms were needed to improve the overall tax base and the business climate of the country, he stressed.
Advocating KCCI’s demand to bring maximum number of tax evaders into the tax net, Tokhir Mirzoev said that relying on borrowings was not the right option, Pakistan must raise its revenue by enhancing the taxpayers’ base so that the revenue generated could be utilized on various development projects pertaining to energy, health and education etc.
He said that taxation remained a significant issue in Pakistan even though tax-to-GDP ratio had been increasing for the last two years but it still remains very low at around 10 percent and efforts must be made to raise it to somewhere around 20 percent.
“The first option, which is the best way to achieve revenue target, is to widen the taxpayers’ base and the second option is to raise the tax rate for the existing taxpayers. We (the IMF) are in favour of the first option”, he opined, adding that political will, vision and a clear strategy along with capacity building and training were needed to overcome the issues being faced by Pakistan.
He further pointed out that key priorities of the IMF program include improving the energy sector; widening the tax net, improving the business climate, and further strengthening external reserve buffers. Strong implementation of reforms in these areas, as envisaged in the program, will transform Pakistan into a dynamic emerging market economy.
Highlighting the purpose of his visit to KCCI, IMF Resident Representative said, “IMF is keen to establish contact with Karachi Chamber of Commerce and Industry so that we could exchange ideas on how we can work together.”
Speaking on the occasion, President KCCI Iftikhar Ahmed Vohra appreciated the IMF authorities for preferring to take KCCI’s input on overall business climate and how the business community feels about the economic challenges being faced by the country.
He said that instead of raising the taxes, the government should be urged to bring maximum number of tax evaders into the net. “The Karachi Chamber has been raising this serious issue on various occasions as we strongly believe Pakistan will never be able to come out of crisis unless the number of taxpayers is enhanced”, he added.
President KCCI noted that in the last few years, Industry and Trade in the private sector have suffered set-backs because the cost of doing business sky-rocketed. High costs of Industrial inputs including raw materials, gas, electricity, manpower and working capital made it difficult for many industries to survive and run profitably. Pakistan direly needs an environment whereby new entrants are encouraged and incentivized rather than merely providing them a level playing field, he added.
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