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Exploring new markets, entry costs business and other reforms can help Pakistan meet growing trade deficit

Govt must curtail budget deficit and create new tax authority for private sector growth

Interview with Mian Zahid Hussain, (Sitara-e-Imtiaz, Hon. Ph.D), Former Minister of Information Technology, Government of Sindh

Profile

Mian Zahid Hussain belongs to Chiniot Shaikh family. He is a graduate and earned his degree from Karachi. He was born in Punjab in 1955. He has one factory in Korangi Industrial area Karachi and the second in Faisalabad. He deals in the manufacturing of industrial and automotive lubricants. He came into business when he was just 10 years of age while completing his education simultaneously. He took charge of his business when he was about to complete his matriculation. This early age involvement into his business gave him a chance to earn experience of meeting different people and understanding different aspects of trade and business as well as society.

President of Pakistan awarded him with civil award of “Sitara-e-Imtiaz” on August 14, 2007, in the field of social, cultural, religious, educational, philanthropic, economic sectors including community services and maintenance of law and order.

The Indus University Karachi conferred him with the Honorary Ph.D degree in 2009, which was duly approved by the Honorable Governor of Sindh.

Due to his close association with the business community and fair knowledge in the field of Information Technology, he was also appointed as the caretaker Minister & Advisor to the Chief Minister Sindh for Information Technology Department for the period from March 30, 2013 to May 30, 2013.

In 2014, he was appointed as Justice of Peace for Karachi Division by the Government of Sindh for the term 2014-2016. Due to his services to community, he was also appointed as Member Advisory Board for Citizens Police Liaison Committee (CPLC) for 2012-2015. In addition to that, he is a Member Managing Committee of Pakistan Red Crescent Society also.

PAGE: HOW WOULD YOU COMMENT ON THE BUDGET DEFICIT AND HOW COULD BUDGET DEFICIT BE FINANCED?

MIAN ZAHID HUSSAIN: Pakistan’s budget deficit has ballooned up to around 2.4 percent of Gross Domestic Product (GDP) i.e., PKR 804.216 billion, during first half of the current fiscal year 2016-17 due to massive expenditure and lower tax collection. The FBR has collected PKR 2,265 billion during July 16-March 17 so far against the target of PKR 2,433 billion. I believe, government should identify and reform loss making Public Sector Entities (PSEs) and curtail non-development expenditure. Government should curtail its budget deficit so its reliance must not shift to banks so maximum credit is available to private sector. Government should focus to increase tax collection from untapped potential rather increasing tax burden on existing taxpayers. A new tax authority must be established to bring small traders into the tax net and play role in enhancing capacity of small businesses otherwise efforts to expand tax net would not work and the number of filers may drop from the current one million which were 1.6 million in 1996.

PAGE: YOUR VIEWS ON BALANCE OF PAYMENT:

MIAN ZAHID HUSSAIN: Pakistan’s current account deficit widened 135% in 9MFY17, standing at $6.48 billion compared to $2.76 billion in previous year as exports of all major items including textiles continue to fall while imports are growing. Government should take serious measures to contain its current deficit as it is reaching to ever-increasing level due to rising cost of imports and imported oil, sluggish exports, declining FDI and reduced remittances sent by overseas Pakistanis. Government should also take revolutionary and non-conventional steps to increase exports.

PAGE: YOUR VIEWS ON OIL IMPORT BILL AND REMITTANCES DURING THE CURRENT FISCAL YEAR:

MIAN ZAHID HUSSAIN: The home remittances were a major element supporting the current account deficit and funding imports but the same continue to fall which is worrying.

Remittances from the US, UK and Saudi Arabia are going down while overall two percent fall has been recorded. Apart from that, rising oil demand is pushing the import bill up thus, Current account deficit. I believe, to cover this gap government should increase remittances by empowering overseas Pakistanis and discourage consumption based imports.

PAGE: WHAT MUST BE DONE FOR DEBT SERVICING AND FOREIGN LOANS?

MIAN ZAHID HUSSAIN: I believe, getting loans from the banks are not sustainable as they continues to burden exchequer and should not be considered a substitute to the exports. Remittances help government pay some bills but it is falling and pushing country with only option to boost exports or carry begging bowl again. Exports and imports contracted in first nine months but decline in exports was three times faster than imports; exports dropped by around 13 percent, which is extremely shocking. Meaningful economic reforms and selling bleeding enterprises can boost government’s income by two trillion rupees thus, lowering the reliance on foreign loans.

PAGE: GIVE YOUR VIEWS ON EFFORTS OF GOVERNMENT FOR THE PROMOTION OF EXPORTS?

MIAN ZAHID HUSSAIN: I believe, real reforms are necessary in the external sector which should begin with merit based appointments in the export-related institutions. Moreover, ten sector-specific companies should be established to boost exports while SME sector, cottage industry, meat and poultry sector should be promoted. In addition, rice sector which is second largest export sector deserves attention. Moreover, value addition in the textile sector should be promoted while agreements regarding regional cooperation should be finalized immediately.

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