Article Type

Article

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Debt dynamics requires continued primary budget surpluses to be generated for gradually lowering the burden of interest payments and reducing public debt-GDP ratio. Revenue mobilisation of an additional 1.5 percent of GDP annually from those outside the tax net (divided evenly between the provinces and the federal government) insulating the lower-middle and poor classes appears a plausible means to achieve these surpluses. The pension bill is growing much faster than any other expenditure head and a switch has to be made from the present defined benefits to the defined contribution system. The results from tax and pension reform would appear in the medium-to-long term and therefore the focus of expenditure rationalisation should be on the discretionary expenditures. Our budgets still remain input-oriented rather than outcome-based. Public Financial Management Law has delegated powers from the finance ministry to the line ministries to manage the allocations in line with their goal-oriented performance agreements reached between the PM and the ministers. Similar arrangements ought to be made in the provinces.

Publication Source

The News

Publication Date

1-21-2022

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