Peshawar - The Pakistan Institute of Development Economics (PIDE) Macro Policy Lab has conducted an extensive evaluation of the national budget to ensure its alignment with the country’s goals and maximize its impact. In a press release issued on Monday, the Lab emphasized the importance of resource allocation optimization, addressing socio-economic challenges, and promoting sustainable development.
The Lab’s comprehensive analysis resulted in valuable insights and recommendations that aim to enhance the effectiveness of the budget and drive economic growth. Key focus areas identified by the PIDE Macro Policy Lab include an export promotion, evaluation of taxes and withholding practices, prioritizing productive growth, addressing public debt concerns, efficient utilization of resources through the Public Sector Development Program, and measures to attract foreign investment and diversify exports.
Regarding export promotion, the Lab recommends that the government prioritize this aspect as a crucial element for economic growth. Boosting investor confidence and creating a favourable business environment should be included in the budget proposals. Additionally, measures to stabilize and enhance the export sector, such as providing incentives for the IT industry and freelancing, should be implemented. The government should also facilitate the remittance of earnings by allowing registered freelancers to open and maintain dollar accounts in local commercial banks.
To strengthen the tax system and revenue generation, the Lab highlights the need to evaluate taxes and withholding practices. Withholding taxes have shown detrimental effects on financial inclusion, and promoting digital payments in certain cases is suggested. Expanding the tax net by considering sectors like agriculture and retail should also be a focus.
To drive productive growth, the government should prioritize sectors that can generate higher value-added outputs, and employment opportunities, and contribute to overall economic development. The Lab emphasizes the need to incentivize the manufacturing and export sectors for sustainable productivity gains. It also recommends allocating a portion of the budget for research and development grants to foster innovation and address national challenges.
Addressing the growing concern of public debt and debt servicing is crucial in the budget proposal. The Lab highlights the need for effective management of both external and domestic debts, exploring long-term debt restructuring strategies to alleviate the burden. Achieving tax revenue targets and ensuring fiscal discipline is vital to avoid further accumulation of debt.
Efficient utilization of resources is crucial, and the Lab suggests re-evaluating allocations to certain schemes while focusing on targeted sector promotion. Funds should be directed toward youth investment programs, establishing digital labs for startups, and implementing monitoring and evaluation mechanisms to ensure transparency and accountability.