2013年-世界发展银行全球_A_Growth_and_Adjustment_Strategy_for_Pakistan_35页_808kb

A Growth and Adjustment Strategy for Pakistan: Summary

Core Content

This policy paper outlines a comprehensive strategy for Pakistan to address its prolonged economic downturn and significant macroeconomic imbalances. It emphasizes the need for a coordinated approach to stabilize the economy, improve governance, and revive growth. The authors, Shahid Javed Burki and Parvez Hasan, highlight the challenges faced by Pakistan, including weak investor confidence, large fiscal deficits, energy shortages, and structural inefficiencies in the tax system and public spending.

Main Issues and Challenges

• Economic Downturn: Pakistan has experienced the longest economic slump in its history, with GDP growth averaging less than 3% per annum from 2008 to 2012. The decline is attributed to both external factors (global slowdown, floods) and internal policy failures.
• Energy Crisis: Power shortages have significantly constrained economic activity, with line losses at 21% and load shedding at 35-40%. Despite a 75% increase in electricity tariffs, subsidies remain high, contributing to fiscal imbalances.
• Fiscal Deficits: The fiscal deficit has averaged over 7% of GDP for the past three years, with a reported 8.5% in 2011-12. The deficit is financed largely through inflationary means, including bank borrowing.
• Inflation: Consumer price inflation averaged 12% annually from FY 2010-12, but has moderated to 8% in the first nine months of FY 2013.
• Foreign Exchange Pressures: Pakistan faces a balance of payments crisis, with a current account deficit of USD 4.3 billion in FY 2012. The country's foreign exchange reserves are critically low, with only about 2 months of import coverage.
• Capital Account Pressure: Repayments to the IMF and declining foreign investment are putting significant pressure on the capital account, with USD 3 billion due to the IMF in 2013 and USD 2.1 billion in 2014.
• Weak Tax System: Pakistan has one of the lowest tax-to-GDP ratios among developing countries. The tax system is inefficient, with limited reach and a lack of progress in reforming it.
• Informal Economy: A large informal sector, not fully captured in GDP statistics, contributes significantly to economic activity but remains outside the tax net, reducing government revenue and export competitiveness.
• Public Spending Inefficiencies: Public spending is inefficient, with high administrative costs, excessive defense spending, and subsidies to non-poor households. Development projects are often of low priority and long gestation, leading to suboptimal outcomes.

Key Policy Actions

1. Improving Macroeconomic Balances

• Fiscal Consolidation: Reduce fiscal deficit from 8% to 4% of GDP over the period FY 2014–2016.
• Tax Reforms: Implement a coherent national tax strategy, including restructuring the tax system to increase tax-to-GDP ratio to 15% within four to five years.
• Public Expenditure Restructuring: Undertake comprehensive reviews of public expenditure to improve efficiency and reduce waste. Implement strict austerity measures for administrative and discretionary spending, except for high-priority social programs.
• Subsidy Reform: Eliminate subsidies for non-poor households and focus on targeted support for those in need.
• Increase Provincial Tax Revenue: Raise provincial tax revenue from 0.5% to 1.5% of GDP over three years through improved property and agricultural taxation.

2. Reviving Growth

• Governance Reforms: Strengthen public institutions and improve governance to restore investor confidence and promote domestic investment.
• Energy Sector Reform: Address energy shortages by reducing line losses, improving efficiency, and phasing out subsidies in the power sector.
• Agricultural Development: Support diversification in cropping patterns, improve processing of agricultural products, and enhance the use of water and other inputs.
• Human Development: Enhance education quality, promote skills training, and focus on adult literacy.
• Private Sector Engagement: Develop a new compact with the private sector by reducing economic rents, streamlining regulation, and strengthening incentives for investment and productivity.

3. Political and Institutional Reforms

• Federal-Provincial Relations: Strengthen federal-provincial coordination to ensure effective implementation of reforms.
• Judicial and Media Role: Leverage the proactive role of the judiciary and free media to enhance accountability and transparency.
• Tax Policy Coordination: Establish a National Tax Policy Office (NTPO) to coordinate tax policy at the federal and provincial levels, supported by a Tax Policy Research Institute.
• Tax Reform Commission: Form a high-level Tax Reform Commission to guide both tax policy and administration.

Conclusion

The paper stresses the importance of addressing macroeconomic imbalances and fostering sustainable growth simultaneously. It advocates for a "home-grown" economic strategy that can be supported by the government and potentially assist in negotiations with the IMF. The strategy includes both short-term measures to stabilize the economy and long-term reforms to improve governance, tax collection, and public spending efficiency. Political will and institutional integrity are identified as critical to the success of these reforms.