Emphasizing the need for structural reforms, the Asian Development Bank (ADB) advised Pakistan to reduce inflationary pressures on the people and move the economy towards a sustainable growth trajectory from the current uncertain economic conditions. Provide targeted subsidies to increase the tax-to-GDP ratio for
In a joint interview after the ADB’s 56th Board of Governors meeting in Incheon, South Korea, Director General of Central and West Asia Department Yevgeny Zhukov and Country Director of Pakistan Resident Mission Yeung Yee unanimously called for targeted subsidies. Highlighted the importance of Effectively mobilizing domestic resources to support disadvantaged sections of society and help improve the national economy, which ADB had predicted would grow at only 0.6% this year, down from 6% last year. is less than growth.
The International Monetary Fund (IMF) has also been advocating the provision of targeted subsidies, which are crucial, Yong Yee said, strengthening the Benazir Income Support Program (BISP), improving its verification system, and Emphasizing on making the package more affordable, he said. Country by reaching only those who need help.
Responding to the same question, Central and West Asia Department Director General Yevgeny Zhukov said that ADB is providing financial assistance to the government to strengthen social security through the BISP programme.
He said the bank has been associated with BISP since 2016 while it has provided $600 million from 2021 for health and education sectors in addition to $1.5 billion in conditional cash transfers from 2021. of which a major portion will go under the countercyclical support facility. BISP will provide much-needed assistance to those most affected by the ongoing crisis.
Zhukov believed that Pakistan should improve revenue collection as it has the lowest tax-to-GDP ratio of only 10 percent, while there are countries in the region with tax-to-GDP ratios of around 20 to 25 percent. is the percentage.
He warned that if the Pakistani government is collecting only 10 percent, it may not have enough money to provide aid and raise revenue.
“It is important for the current and incoming governments to continue to work seriously on structural reforms to mobilize domestic resources,” he said, adding that the IMF would work with the government in this area. doing.
Zhukov said that Pakistan has the potential to perform better economically. However, public sector governance needed to be improved and the reform process taken seriously. He added that as long as Pakistan keeps its internal affairs in order, I think there is no reason why Pakistan should not develop.
In response to another question, ADB Country Director Pakistan Resident Mission Yong Yee said there is a mechanism to implement the Geneva commitments [made with Pakistan after it faced devastating floods last year]. .
He said that the second session of the Geneva conference was to be held later this month in which countries would report progress on their commitments, supported by the core group Pakistan including the World Bank, ADB, the European Union and the United Nations. can. Monitor commitments made in July 2022.
Expressing sympathy for the flood victims, Director General of the Central and West Asia Department, Yevgeny Zhukov, said that ADB had approved a $1.5 billion program for Pakistan before the floods to help its economy from the Russia-Ukraine war. Negative effects can be removed. Redesigned to provide social protection to flood affected people.
In December 2022, ADB approved an additional emergency assistance package consisting of several parts including an emergency loan of $175 million, supplemented by a grant of $5 million, he said. .
Zukov said that the work being done by ADB through emergency assistance is not only the restoration of damaged infrastructure and emergency assistance, but also building a strong infrastructure that can withstand future floods.
He said that the Bank is working closely with Pakistan and other development partners including the International Monetary Fund and the World Bank to help the government introduce important structural reforms in various sectors including public finance management, domestic resource including mobilization, and reforms in the energy sector.
He said that the Bank is keen to work with its partners and the Government of Pakistan to advance this reform agenda.
