Editorial : Deficits converge -Thursday, May 05, 2011

Source : http://thenews.com.pk/TodaysPrintDetail.aspx?ID=45238&Cat=8

Failure to reform financial systems across the board is feeding directly into the downwards economic spiral. As the need for reform becomes ever more urgent in every sector, the government of the PPP and its allies views with concern an election that is going to be upon them early in 2013. The tax conundrum lies at the heart of many of our ills. The Federal Board of Revenue has announced that a mere 1.9 million people out of a registered taxable population of 3.2 million actually paid anything in 2010. Our fiscal deficit has widened to 5.3 percent from 6.3 percent of GDP in 2010; and our projected growth figures according to the Asian Development Bank limit our growth to 2.5 percent in 2011 and to 3.2 percent in 2012. Slightly less than one percent of the population pays any direct taxes at all.

The failure to reform or collect taxation links to an unwillingness by donor agencies to support us, as evidenced by the stalling of $14 billion by donors for our failure to implement power-sector reforms. The reforms are facing stout opposition from assorted vested interests who fear a loss of their own influence – and personal profits. Smart metering systems have not been installed as promised. There are no new CEOs for the electric power distribution companies as per commitment. The power sector as a whole loses Rs46.8 billion annually due to poor management and the theft of furnace oil. Our deficits are developing an alarming tendency to converge, and the KESC appears to have completely run out of bunker oil to run generators. Spending on health and education is at an all time low and there is a distinct impression that as our metaphorical Rome burns, our politicians play both the literal and metaphorical fiddle. And the common man? Goes hungry, jobless and eternally in the dark – not that this is likely to concern the Neros who lead us. 

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