PAKISTAN’S FINANCIALS LOOK DISMAL; OTHER PARAMETERS ARE NO BETTER

For years Pakistan has been spending more than it can afford to, with the fiscal deficit rising and leading to a current account deficit, which in turn requires foreign funds and aid.

Worse, the deficit has been financed from reserves, bringing the country to the brink of default several times.

The rising fiscal deficit is a symptom of the failure of the taxation system to raise revenues as well as the government’s inability to rein in spending. Having had to resort to borrowing, the country has not done structural reforms that are wide and deep. Hence, reforms were attempted but had to be given up because they were unimplementable.

According to the World Bank’s assessment (March 2018), Pakistan remains one of the lowest performers in the South Asia Region on human development indicators, especially in education and stunting.

The Net Enrolment Rates in education have been increasing in Pakistan but still lag other South Asia countries. The infant and under five mortality rates represent a similar story. Gender disparities persist in education, health and all economic sectors.

Pakistan has one of the lowest female labour force participation rates in the region. Nutrition also remains a significant cross-cutting challenge, as 44 per cent children under five are stunted. The spending on health, nutrition, and education, now totalling 3 per cent of GDP, is significantly lower than in most other countries. Increased allocation will be possible only after increasing government revenues. The World Bank says Pakistan’s tax-to-GDP ratio, at 12.4 per cent, is one of the lowest in the world and it is still half of

what it could be for the country. “Continued reforms to broaden the tax base and increase revenues will therefore need to remain a priority,” the World Bank says.