Pakistan Economy: ‘Low Sources Of Revenue and High Non-Development Expenditures – A Recipe For Financial Disaster’
The root cause of the ever-increasing debt faced by Pakistan is low sources of revenues and high non-development expenditures, which is a recipe for a financial disaster, says an article published by Al Jazeera.
But Prime Minister Imran Khan announced creation of a special commission to investigate why the country has so much debt.
If Pakistan is to avoid the looming economic disaster, the writer said, it must revise current spending and prioritise expenditures that will actually generate social and economic development and uplift the poor, not just the elites.
The article noted that debt consumes around 30 per cent of the budget every year and Pakistan continues to take out loans to be able to cover repayments of past borrowing, including the recently signed deal with the International Monetary Fund.
It says Pakistan has not been able to establish effective tax collection practices, as successive governments have avoided imposing stricter controls because they have been staffed by members of the same elites that are actively evading taxes.
Hence, the tax burden in Pakistan falls overwhelmingly on the poor who pay in various indirect ways and who already struggle to make ends meet. Currently, a third of the nation is living below the poverty line.
On the other hand, the PTI government is not only failing to raise revenue flows but also unable to cut non-developmental expenditures.
“The biggest source of such spending after debt-servicing is the military which officially receives around 18 and 23 per cent of the budget every year.”
Despite persistent pressure from outside entities, defence spending continues to be prioritised. The official justification for this policy is always the perceived threat from neighbouring countries, the article said.