INCHEON, South Korea: The Asian Development Bank (ADB) has suggested Pakistan to provide targeted subsidies to mitigate inflationary pressure on people; bring about necessary structural reforms and enhance tax to GDP ratio to come out of existing uncertain economic situations and steer the economy towards a sustainable growth trajectory.
In a joint interview Director General, Central and West Asia Department Yevgeniy Zhukov and Country Director Pakistan Resident Mission, Yong Ye, with one-voice, highlighted the importance of targeted subsidies to assist downtrodden segments of the society and effective mobilization of domestic resources to help improve the national economy which ADB predicted would grow at just 0.6 percent this year, coming down from last year’s 6 percent growth.
The International Monetary Fund (IMF) has also been advocating for the provision of targeted subsidies, which are very crucial, Yong Ye said stressing to strengthen the Benazir Income Support Programme (BISP), improve its verification system and make this package more affordable for the country by reaching to only those people who needed assistance.
Responding to the same query, Director General of, the Central and West Asia Department Yevgeniy Zhukov said the Asian Development Bank had been extending financial assistance to the government to strengthen social security through the BISP programme.
He said the bank was engaged with the BISP since 2016 while it provided assistance of $600 million since 2021 for conditional cash transfers in the areas of health and education besides $1.5 billion, under the Countercyclical support facility of which substantial part would be going through the BISP to provide the much-needed assistance to the people mostly affected by the ongoing difficulties.
Zhukov was of the view that Pakistan should improve revenue collection as it has one of the lowest tax-to-GDP ratios standing at only 10 percent whereas there are countries in the region having Tax to GDP ratio of about 20 percent to 25 percent.
If the Pakistan government is collecting only 10 percent, it may not have enough money to provide support and enhance income, he cautioned.
