Differences between ministers behind unprecedented loadshedding

Lahore:  The Pakistan Economy Watch (PEW) on Monday attributed continued worst loadshedding across the country to the differences among caretaker federal ministers.

The ministry of water and power wants Rs 22 billion to reduce crisis while the finance ministry, despite directives of the PM, is not ready to pay the money to annoy IMF by increasing deficit, it said.

The loadshedding has not only compromised growth but added to frustration of masses to an extent that many gave started taking against the country, said Dr Murtaza Mughal, President of the PEW.

He said that Rs 180 billion was allocated as power sector subsidy in the last budget which was revised to Rs 291 billion and now it has crossed Rs 315 billion only to make situation worst.

Pakistan’s power sector cannot become functional unless tax-to-GDP ratio is improved which is falling by almost one per cent since a decade, he said.

Dr Murtaza Mughal said that reforming tax system will provide funds to revive power sector without dictation otherwise it will continue to compromise economy.

Currently the tax administration of the central and provincial government is working at around 20 per cent efficiency which forces policymakers to revise tax collection targets every few months.

Three million shopkeepers are contributing 1.5 per cent in form of sales and income tax while the contribution of agriculture, 22 per cent of the GDP, has been contributing less than one per cent.

Dr Murtaza Mughal said that if new government initiate reforms and reduce gas between income and expenditure which is currently at Rs 800 billion, it will gain confidence of investors as well as lenders. Otherwise, he warned, the domestic debt will cross mark of Rs 10 trillion by the next fiscal.

Government should also initiate massive investments plan in power sector and infrastructure improvement to revive economy and create jobs as private sector is not taking any interest in investment since years.