World Bank’s advice

IN recent years, Pakistan’s fiscal situation has deteriorated significantly due to persistently low tax revenue collection and burgeoning public expenditure. This has led to large budget deficits year after year, while a massive debt has been accumulated in the attempt to plug the gap. The situation has had a spill-over effect on the external sector, as reflected in the recurrence of balance-of-payments crises every few years. It is in this context that the World Bank, in its new policy note, has reiterated its ‘advice’ to the government to implement fiscal sector reforms in the next federal and provincial budgets. The objective of the suggested reforms is to cut down the consolidated fiscal deficit by boosting tax revenues, controlling expenditure, and reforming borrowing processes to limit debt accumulation.