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Political Parties Focusing on Economic Reforms in Pakistan

Posted on the 05 September 2012 by Center For International Private Enterprise @CIPEglobal

Political Parties Focusing on Economic Reforms in Pakistan

With general elections in Pakistan just around the corner, the ruling coalition, headed by the Pakistan People’s Party’s (PPP), and the other main political parties are increasingly considering the country’s economic revival as key to securing voters’ loyalties. This process is taking place against the backdrop of both high levels of corruption and a weak economy. According to Transparency International, over the past four years, the country has seen levels of corruption reaching Rs 8500 billion ($90 billion), with the National Accountability Bureau (NAB) putting the figure even higher, at Rs 2.9 trillion per year, or Rs 11.6 trillion — about $122 billion — over four years.

In response to the economic situation, three major political parties — the Muttahida Quami Movement, Pakistan’s third-largest party; the Pakistan Muslim League (N), currently the second largest party in Parliament; and the Pakistan Muslim League (Q) – have presented their economic reform agendas to the business community ahead of the elections, helping to bring economic issues to the forefront of the campaign.

On August 24 a fourth party, Pakistan Tehrik –e-Insaf (PTI), presented its own, even more detailed agenda. This agenda is based in part on the National Business Agenda for Pakistan, which was developed by the Pakistan Business Council (PBC) in 2010. Asad Umar, a key figure in PTI, previously served as Chairman of the PBC. The PBC’s National Business Agenda, which was designed to represent the priorities of Pakistan’s business communtiy as a whole, covered four critical reform areas: the consolidation of industry in Pakistan, creating a level playing field for industry, broadening the tax base, and the development of human capital.

Some of the issues that were raised by the PBC have now been included in PTI’s economic agenda, including:

  • Energy reforms – Focus on reducing cost of producing electricity from indigenous resources. This will help to resolve the circular debt and make Pakistan an energy secure state. The details have already been announced as part of the party’s energy plan.
  • Expenditure reforms – Shut down the Prime Minister’s, Chief Ministers’, and Governors’ Houses. Slash the budget for the presidency by 50 percent. Reduce the number of ministries to 17 from 37. Abolish free and subsidized land plots. All state departments including the military will be required to reduce spending and release funds for the welfare of the citizens.
  • Tax reforms – Tax all incomes regardless of source and create a just and equitable tax system. Impose a minimum asset tax adjustable against income tax already paid. End ‘soft’ amnesty schemes. Provincial governments must take responsibility for collecting property and agriculture taxes from the large landholders. Revamp FBR and make it autonomous insulated from political pressures. Reforms will increase tax revenue to 15 percent of GDP in 2018, from 9.9 percent in 2012.
  • Institutional reforms – Carry out deep reforms that make state institutions empowered, accountable and transparent. Devolve power from the central and provincial capitals and empower local communities at the grassroots level.

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