Transparency with accountability to resolve Pakistan’s corruption issues: IMF DG
INTERNATIONAL Monetary Fund (IMF) Managing Director Christine Lagarde on Tuesday said that fight against corruption should be taken seriously as the best solution lies in introducing transparency in the system to ensure economic stability and investment.
She expressed these views while addressing a joint news conference with Finance Minister Ishaq Dar on Tuesday. Corruption leads to decline in economic stability, lowering of investment and unemployment for the youth, she said, adding that Pakistan’s economic transformation cannot take place without the country’s youth—that comprise about 60 per cent of the population, and women, of whom only one in four participate in the labour force.
She denied that Pakistan has asked for another support program and stressed on the need for increasing tax revenues, eliminating tax exemptions and enlarging the tax bases to further enhance economic stability. She also advocated discipline in government spending.
Finance Minister Ishaq Dar denied the reports that new taxes under IMF amounted to 4 per cent of GDP and said he did not have the exact number but its size would not be more than 2 per cent of GDP. He said that 12 layers of reforms during the last three years have resulted in the successful completion of the IMF program.
Ishaq Dar said besides consolidating gains of the last three years, the government would focus for next two years on growth, creation of job opportunities, poverty reduction and creating space for social sector spending.
He said this has been reflected in the current year’s budget, which is aimed at broadening tax net and improving financial disciple.
The minister said development spending had been increased from 300 billion rupees three years back to 800 billion rupees this year and social safety net expenses taken from 40 to 117 billion rupees and budgetary support for higher education has been increased substantially.
Ishaq Dar expressed pleasure that for the first time the country completed an IMF programme and embarked upon comprehensive economic and financial reforms.
He said that when the present government assumed power; it pledged to focus on addressing the four challenges which include economic instability, energy shortages, low spending on social sector and extremism. He said the country had made good progress on all these fronts.
Congratulating Pakistan on having successfully completed its IMF-supported economic reform program, Christine said improved macroeconomic stability and strengthened external buffers and public finances will provide a solid foundation for the economy. Many tax exemptions and concessions have been removed, and higher tax revenue has allowed for greater public investment and social spending, she said.
She said the number of poor households benefitting from the targeted social assistance was increased by 1.5 million than it was three years ago, and added that power outages have gradually decreased and the financial performance of the power sector is strengthening. A country-wide strategy to improve the business climate is being implemented, she said.
Much has been achieved and much more remains to be done, so this is Pakistan’s moment of opportunity to forcefully address remaining economic challenges and lay the foundation for more private sector job creation and higher living standards for all segments of society, she added.
She said that achieving higher and more sustainable growth would also require completing important structural reforms in the energy sector, and tax policy and administration; ending losses in public enterprises; and making a sustained effort to improve governance and foster a dynamic and exportoriented private sector. In parallel, added focus on strengthening health, education, closing the gender gap and providing social protection can ensure that gains in living standards are widely shared, she noted.
Lagarde offered condolences to the people of Pakistan for the tragic loss of lives at the Quetta attack overnight. “We are deeply sorry for the families of those who lost their lives in this horrific attack.” During the visit she also held a meeting with students, women leaders, and representatives of the business community and civil society.