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Donors call for stronger economic reforms

Fodp brussels Pakistan NewsBRUSSELS: Leading donor nations on Friday pressed Pakistan for stronger economic reform, including measures to widen the tax base to generate more funds for post-floods reconstruction.

All international donors wanted a “safe, secure, stable and prosperous Pakistan”, said European Union foreign policy chief Catherine Ashton who co-chaired a meeting of the “Friends of Democratic Pakistan” with Foreign Minister Makhdoom Shah Mehmood Qureshi.

Domestic reforms were necessary and important, Ms Ashton told reporters after the meeting, echoing sharper comments made earlier in the week by US Secretary of State Hillary Clinton.

“It is absolutely unacceptable for those with means in Pakistan not to be doing their fair share to help their own people while the taxpayers in Europe, the United States and other contributing countries are all chipping in to do our part,” Mrs Clinton told reporters after meeting Ms Ashton on Thursday.

Mr Qureshi told Dawn that Pakistan recognised the domestic tax base is not broad enough.

“If we want the economy to grow, we will have to put in greater efforts at resource mobilisation,” he said. Pakistan’s tax-to-GDP ratio was “perhaps the lowest in the region”, he recognised.

The country had relied too long on “indirect taxation” and needed now to put in direct measures, he said. Without such action, growth, investment and the social sector would not have the resources needed for longer-term development.

The foreign minister said the government was striving to build a consensus on a general sales tax and to bring more people into the tax system.

“Regardless of what Hillary Clinton says, we know we have to have an equitable (tax) system,” said Mr Qureshi.

The foreign minister said the EU’s planned move to liberalise imports of Pakistani textiles and ethanol would help stabilise the economy and help protect and create jobs.A joint communique by the 27-nation group noted “the need for continued efforts by the government of Pakistan under its reform programme towards economic stabilisation and sustained economic revival, including widening the tax base, and to take other structural measures to generate and enhance the maximum possible domestic resource mobilisation for reconstruction and long-term development”.

It added: “The success of Pakistan’s experience in developing a strong democratic system, the welfare and well-being of its people, combating extremism and terrorism and Pakistan’s economic prosperity and stability were critical for regional and global peace and stability.”

Pakistan has been asked to present a national plan for reconstruction and an economic stabilisation plan at a development forum to be held in Islamabad on November 14-15.

Discussions also focused on Pakistan’s energy needs and recognised water management as an important priority for the country.

Egypt has joined the group and the meeting in Brussels was attended by several foreign ministers.

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