Overhaul of Govt’s Fiscal Apparatus Vital to Lower Revenue-Expenditure Gap: Finance Minister

Caretaker Federal Minister for Finance Dr Shamshad Akhtar Thursday said a comprehensive overhaul of the government’s fiscal apparatus is necessary to lower the revenue-expenditure gap. In the keynote address on Pakistan’s economic challenges and the way forward at a seminar organized by NUST Institute of Policy Studies, the minister said effective implementation of ambitious reforms will depend on addressing critical underlying institutional, governance, and structural constraints. She highlighted five key areas that have increased the vulnerability of Pakistan’s economy to domestic and global shocks: first, unsustainable fiscal policy due to revenue gaps and unproductive expenditure; second, fiscal unsustainability has enhanced government recourse to public debt which has increased; third, climate shocks as the global warming model predicts that Pakistan’s weather patterns will become even more volatile and extreme in the decades ahead, with an average increase in temperatures by 1.3 percent to 4.9 percent by 2090; fourth, the lack of innovation and diversity in the structure of the economy; and fifth, the failure to integrate Pakistan’s economy with the rest of the world. The finance minister further stressed five critical areas of reforms essential to reducing Pakistan’s vulnerabilities and fostering sustainable growth that included: a comprehensive overhaul of the government’s fiscal apparatus necessary to lower the revenue-expenditure gap; address structural weaknesses of SOEs and improve their efficiency and functioning, reducing the debt burden; and enhancing competitiveness and encouraging new investments.