WASHINGTON: Pakistan’s gross financing needs during 2019 increased to 42.3 per cent of GDP as budget deficit increased to 7pc and maturing debt widened to 35.1pc of the GDP, data released by the International Monetary Fund (IMF) showed on Tuesday.
The IMF in its fiscal monitor for April said that, “in Pakistan, the overall deficit was 2.5 percentage points of GDP looser than budgeted, owing to underperforming revenues and expenditure overruns related to the political cycle.”
The fiscal monitor also warned that many emerging market economies including Pakistan “have become vulnerable to rollover risks if they face large financing needs” amid “rising interest burdens, which exceeded 20 percent of total revenue in 2018 in … Pakistan.”
Moreover, the report also adds that Pakistan’s gross financing needs for 2020 are expected to reach 46pc of the GDP on account on anticipated increase in the budget deficit by 1.5 percentage points to 8.7pc and2.1 percentage points in maturing debt, which is expected to rise further to 37.2pc of the GDP.
Curbing corruption: The report highlights that corruption remains one of the major challenges in the world – especially emerging economies subsequently eroding the public’s trust in government leading to social and political instability and undermines the quality of public services and infrastructure.
The report includes Pakistan among the list of countries where despite increases in the salaries of public servants, performance-related incentives can have the potential for undesirable consequences: while performance-based salaries of tax officials led to a significant increase in tax collection (by as much as 50pc), bribe requests increased by 30pc.
Pakistan’s ranks 117 on the Transparency International’s Corruption Perceptions Index with a score of33 out of 100.
“Equally damaging is the way it [corruption] corrodes the government’s ability to help grow the economy in a way that benefits all citizens,” the report adds.
The IMF also warns donor countries that corruption in the aid receiving countries also hurts their taxpayer dollars, which “are lost in different ways, siphoned off from schools, roads, and hospitals to line the pockets of people up to no good.”
The report, however, points that higher wages can be effective if complemented with other institutional features, such as monitoring and sanctions in order to curb corrupt practices.
The IMF suggests that with global growth slowing and uncertainty rising, governments should balance fiscal policies to prepare for potential downturns — balancing stabilisation and sustainability objectives.
It also underlines the need to “put more emphasis on reforms to foster long-term inclusive growth in a fast-changing global economy.”
The report warns that corruption — the abuse of public office for private gain — distorts the activities of the state and ultimately takes a toll on economic growth and the quality of people’s lives.
It weakens key functions of the public sector, including the ability to collect taxes or to make expenditure choices in a fair and efficient way.