ISLAMABAD: The government has increased power tariffs by 75 per cent
during in last two years and a modest program has recently been approved
by the Cabinet, though power subsidies remain untargeted and high at
about 1.5% of DP.
According to the World Bank Progress in
improving macro-economic management has been weak. Of structural
reforms, particularly in tax policy and administration and the power
sector, followed by the recent closing of the IMF program, the Bank has
been unable to extend the development policy funding under the Country
Partnership Strategy (CPS) proposed series of Poverty Reduction Support
Credits (PRSCs).
Though approval of Reformed General Sales Tax
(RGST) was postponed due to lack of political consensus, some technical
progress has been made in managing taxes including removing some tax
exemptions, broadening the tax base, increasing the number of
e-taxpayers, and reducing the backlog of sales tax refunds.
According
to World Bank Report, in the absence of the PRSC, dialogue on key
economic issues continued under non-lending technical assistance and
other instruments, including the on-going Tax Administration Reform
Project (TARP) (Cr.4007) and Electricity Distribution and Transmission
Project (Cr.4463).Given limited progress and lack of the PRSC
instrument, the original CPS goals of reducing the fiscal deficit to
3.5% and raising the tax to GDP ratio to 12.7% by 2012/13 are no longer
realistic and have been updated to more modestly help the Government
contain the deficit to below 5.5% of GDP and bring the tax to GDP ratio
back in the double digits. Online
