Some Core Issues in Economy
A study in light of the 2018 manifestos of Pakistani Political Parties 1
Economy is one of the most attention-grabbing and
prime area of focus in electoral agendas. The issue has
always been important to voters as it concerns all,
regardless of their various standings in society. Strong
relationship exists between economic growth and
human development, where the former provides
resources for sustained improvements in latter.
Popular perceptions and support are thus largely tied
to economic mandates.
Pakistan’s economy is growing; nevertheless,
vulnerabilities remain, reflected in a number of
warning signs. On external front, trade deficit
continues to widen, putting the country at serious risk
of Balance of Payment (BOP) crisis. Additionally,
high level of debts, rising unemployment, inadequate
tax revenues, unstable rupee and dwindling foreign
exchange reserves, all signal toward weakening
macroeconomic outlook.
Unlocking potential for sustained economic growth
and effective resource mobilization comprises a major
challenge for the upcoming government. This brief
focuses on few selected areas of economic pledges
made in manifestoes. It entails systematic analysis on
party positions within policy space, revealing
preferences and perceived best strategies on
challenges facing economy. It also aims at analyzing
the possibilities on the extent of shared policy
grounds, keeping in view the bargaining position of
the party in government or coalition partners within
the spatial distribution.
1
This brief is part of a larger study being conducted at IPS to understand the national mood in light of the approach of various
Political Parties, participating in the elections 2018, on subjects of important issues related to the National Agenda.
2
Pakistan Economic Survey, 2017-18.
3
“Tax Challenges Faced by Pakistani Governments “, RIA Barker Gillette, January 19, 2017.
4
Pakistan Economic Survey, 2017-18.
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1- TAXATION
Taxes are the largest source of revenue generation for
any government. It is central to a state’s ability for
financing public goods such as social services and
critical infrastructure. Tax system, if efficiently
designed, can considerably promote economic
growth, reduce inequalities and plug budget deficit.
Whereas inadequate revenue generation handicaps the
government’s capacity for public sector catering while
increasing national debt liabilities.
Tax to GDP ratio in Pakistan remains one of the lowest
in South-Asian region, standing at 13.2% of GDP.2
Only one-tenth of an estimated eligible population
pays taxes.3 Fiscal consolidation in the country has
seen a reversal as fiscal deficit rose up to 5.8% of GDP
in FY 18 compared to 4.6% in the preceding year.4
Rising expenditures accompanied by weakening
growth in revenues lies at the root of Pakistan’s fiscal
imbalance. Potential hazards stand in the way of tax-
base expansion, overcoming of which necessitates
broad-based reforms related to tax administration.
Against this backdrop, extending tax base has become
political necessity. In this regard, PTI, PPP and PML-
N have proposed diverse proposals on technically
efficient methods aiming at broadening of tax base,
simplification of rules, ease of payment and
prevention of evasion. Table.1 shows highlights laid
down in party manifestoes with respect to more
efficient tax administration.
 Table 1. Tax Administration

Reduce the transaction cost of paying taxes through tax registration. (PTI; pg. 26)
Establishing risk engines and smart algorithms to identify potential taxpayers for audit. (PTI;
pg. 26)
Simplify tax assessment rules for corporation and small business. (PTI; pg. 26)
Improve enforcement through a robust standardised escalation process to ensure follow-up of
every non-payment. (PTI; pg. 26)
Publish names of non-compliant debtors and strongly pursue large tax evaders. (PTI; pg. 26)
Launch IRIS, an integrated, end to end system covering all business process of income tax
Technological
and sales tax. (PML-N; pg.17)
Reforms
Set up WEBCO for simplified customs processes which has 80.000 registered users with 24/7
availability. (PML-N; pg.17)
Establish online connectivity within provinces for automatic business registration for
taxpayers. (PML-N; pg.17)
Subsidy Policy for local cloud computing. (PPP; pg. 34)
Free installation of point of sale (POS) System. (PPP; pg. 38)
Simplification of tax arrangements for agriculture community. (PPP; pg. 38)
Tracing software to prevent tax evasion. (PPP; pg. 8)
Increase FBR’s autonomy by reducing the influence of Ministry of Finance. (PTI; pg. 26)
Build a Special Task Force to launch a drive to recover looted national wealth parked in
offshore tax havens. (PTI; pg. 12)
Other Incentivise businesses to become a part of the formal economy. (PTI; pg. 26)
measures Delegating the administration of federal tax to provincial tax through partnerships. (PPP; pg.
38)
Abolishing benefits, subsidies and privileges granted to former rulers of States, their
dependents or other special classes of citizens (ANP; pg. 23)

Both PML-N and ANP have set explicit targets on
increasing tax to GDP ratio to 16% and 15%,
respectively. PML-N has also committed to doubling
of FBR revenues by 2030. In addition to narrow base,
tax system in Pakistan is highly regressive as 57% of
total tax revenues come from Indirect taxes.5
Unrelenting reliance on indirect taxes have
overburdened the tax payers and poor segments of
society. PTI, ANP and MMA, all three parties have
articulated their intention of increasing share of direct
taxes in the tax mix. Again, the tax burden on
corporate sector is also quite high compared to
neighboring countries. PML-N and PTI, both have
committed to reducing tax burden on businesses.
Additionally, PPP and MMA have also announced tax
reliefs for multiple sectors. Table.2 shows highlights
on commitments related to changes in Tax pool.

Table 2. Tax Pool

Increase tax to GDP ratio from 13% to 16%. (PML-N; pg. 17)
Increasing Tax Double the revenue of FBR from 3.9T to PKR 7.8T by 2030. (PML-N; pg. 17)
Pool Will increase the tax to GDP ratio from the current low level to a minimum of 15% (ANP;
pg. 24)
Promote direct taxes instead of indirect taxes. (MMA; pg. 4, PTI; pg. 26, ANP; pg. 24,
Changing Tax
MQM; pg. 15))
Mix
Reduce tax burden on businesses. (PTI; pg. 26, PML-N; pg. 17)
Offer tax as well as other reliefs to the private sector. (PPP; pg. 16)
Eliminate tax on smart phones below PKR 15000. (PPP; pg. 34)
All taxes associated with data transfer will be eliminated. (PPP; pg. 34)
Tax Reliefs Unnecessary taxes on mobile phone usage, electricity bills and gas bills will be completely
eliminated to reduce the utility bills. (MMA; pg. 4)
Remove unnecessary tax burden on farmers or agriculture sector and promote easy loan
services. (MMA; pg. 6)

5
Budget in Brief, Ministry of Finance (2018-19).
[2]
Above facts indicate that parties may differ on steps
and strategies, nevertheless they converge on policy
objectives in their commitments related to taxation,
particularly on making tax collection technically
efficient. PTI manifesto calls for comprehensive
overhaul of tax base. For any reforms to be
materialized on tax front, reforming and strengthening
FBR, making it autonomous and vibrant is important,
to which PTI has committed itself.
On debt management, ANP has clearly articulated its
intent on adherence to fiscal responsibility and debt
limitation Act The part has claimed to prioritize
payment of expensive debts, for making the overall
debt burden manageable (pg. 24). MMA has stated its
intention of not relying on loans anymore (pg. 4). PPP
has committed to setting up a working group of
Pakistani experts and taking stock of all aspects of the
economic crisis including public debt (pg. 24).

2- DEFICIT Bridging trade imbalances is also imperative for

Pakistan’s external sector is facing daunting
challenges. As of June 2018, current account deficit
(CAD) ballooned to $17.99 billion PKR.6 Growing
trade deficit on one hand and insignificant
improvements in remittances on the other have put
significant pressure on current account. The foreign
currency reserves have depleted to 8.4 billion $.7
CAD along with fiscal deficit has in turn led to
considerable accumulation of debt. Public debt has
reached unprecedented levels, hovering at 70.1% of
GDP, exceeding way above the 60% threshold
stipulated in the Fiscal Responsibility and Debt
Limitation Act 2005.8 The stated debt obligations
impose a heavy cost on the citizens owing to resultant
mark-up payments which takes major share of annual
budgets, leaving limited room for social and
development expenditure. An urgent task awaits the
upcoming government on reducing debt liabilities,
improving terms of trade and plugging the rising
deficit, which are all together impeding growth.
containing mounting external debt. All parties have
spelled out their own plans on it, simultaneously
committing to increasing exports and plugging CAD.
PML-N has set a 15% annual target for export growth
and has adhered to rationalization of tariff structure
and continuation of economic support packages for
promotion of exports. PTI has devised a
comprehensive program for rectifying trade
imbalances. The party has committed to lobbying for
GSP+ status and has particularly focused on
revitalizing textile sector for boosting exports. Both
PTI and ANP have adhered to improving export
product quality. PTI and PPP have also committed to
diversification of exports and promotion of regional
trade. ANP has committed to decreasing export duties.
All three parties i.e. PTI, MQM and PPP have also
expressed their intentions on reducing reliance on
imports. Table 3 entails details on party roadmaps
pertaining to strengthening of international trade and
plugging of trade imbalances.

Table.3 Strengthen International Trade

Grow export by over 15% every year. (PML-N; pg. 13)
Promote export. (MQM; pg. 11, MMA; pg. 4) eliminating unnecessary taxes and duties
on the export industry. (MMA pg. 6) Accessing Chinese market for fruits and
vegetables under the CPEC cooperation mechanisms. (MMA pg. 7)
Rationalize tariff structure, reduce input costs, rationalize import tariff of industrial raw
materials, and continue economic support packages to boost exports. (PML-N; pg. 13)
Transformation of export processing zones, make export oriented sectors and allied
industries 100% zero rated and faster refunds on income and sales tax. (PTI; pg. 30)
Export Promotion
Promoting higher value-added exports (PTI; pg. 30, PPP; pg. 30)
Provision of electricity at subsidized rate to the export sector. (PPP; pg. 30)
Make energy costs regionally competitive for the textile sector. (PTI; pg. 36)
Lobby for the GSP+ status of Pakistan. (PTI; pg. 36)
Improve export product quality. (PTI; pg. 36, ANP; pg. 24)
Diversification of export (PTI; pg. 35, PPP; pg. 30)
Immediate payment of all rebates due to export sector. (PPP; pg. 30)
Decrease export duty (ANP; pg. 24)

6
Summary Balance of Payment, State Bank of Pakistan (2018).
7
National Summary Data, State Bank of Pakistan (2018).
8
Pakistan Economic Survey, 2017-18.
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 Strengthen the allied industries to ensure that required inputs are manufactured in
Pakistan. (PTI; pg. 36)
Reducing Reliance
Drastic cut on imports of non-essential goods, ban imports of narcotics (MQM; pg.)
on Imports
Ban on import of luxury goods (MMA pg. 6)
Review all FTA’s in the light of national interest (PPP; pg. 30)
Encourage domestic savers and foreign investors to invest in the country (PTI; pg. 35)
Ensure that our foreign exchange rate is regulated based on economic fundamentals.
(PTI; pg. 35)
Other measures
Maintain a market based exchange rate policy to create a balance between interest of
exporter and importer. (PPP; pg. 30)
Promote trade within the region. (PPP; pg. 30, PTI; pg. 35)

Above analysis reveals a very similar pattern (as
shown in previous section) where divergent strategies
have been proposed for accomplishment of very
similar objectives. On international trade,
comprehensive policy mix has been presented by most
parties prioritizing export promotion. Though,
disastrous consequences of debt reliance for propping
up growth are abundantly clear, nevertheless only few
parties have manifested their intention on bringing
down the public debt, and that too without detailed
roadmaps. Apart from promises on addressing
external sector challenges in medium to long-term, the
party manifestos lack commitments on immediate
financing needs of the country.
3- EMPLOYMENT9
Within the economic domain, creating opportunities
for youth employment is another major challenge,
made particularly urgent by the country’s youth bulge.
Two-third of the country’s population is below age
30.10 Youth are taken as leading agents for
transformational change. Nonetheless, if policies are
not framed to utilize this huge human resource
potential, youth bulge could in fact backfire by adding
into the existing challenges of country. Many socio-
economic woes such as poverty, social exclusion,
crimes and the like, are consequential outcomes of
inadequate decent opportunities for livelihood.
All parties have focused on employment generation
and building sustainable working environment for
youth. In this regard, PML-N and PTI have set the
target of creating 10 million jobs. PML-N committed
to increasing employment through Common Facilities
Center (CFCs) and constructive industry.
Additionally, it has focused on improving living
standards by developing youth entrepreneurship
ecosystem, providing low medium skills job and
maximizing export of highly skilled workforce. PTI
has spelled out agenda on building investor friendly
environment for boosting professional development
and human capital system and has particularly focused
on employment opportunities for youth in tribal areas
and Balochistan. PPP and ANP both have aimed at
creating internship programs. Table.4 highlights party
proposals on job creation.

9
A separate brief focusing on policies for youth has surveyed employment and skill development as well as entrepreneurship
proposals for youth in rather detail is also part of the manifesto study.
10
“Unleashing the Potential of a Young Pakistan”, UNDP (2017).
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 Table.4 Job Creation
Job formations for 2M new entrants into the job market every year. (PML-N; pg. 13)
Creating 10 million jobs through cross-cutting initiatives led by the private sector. (PTI; pg.
27)
2% job quota fulfilment for differently-abled persons at all government establishments. (PTI;
pg. 50)
Ensure that economic development initiative offer Employment Guarantee Schemes with
focus on women and rural areas. (PTI; pg. 27)
Increase employment through Common Facilities Centre (CFC’s) and constructive industry.
(PML-N; pg. 15)
Improve possibilities of employment by encouraging industrialization throughout the
Creating country. (MQM; pg. 15)
Employment Create investor-friendly environment for investments in human capital and professional
Opportunities development. (PTI; pg. 27)
Job creation in the tribal areas, especially with investments to harness natural resources of
the region. (PTI; pg. 19)
Political and economic empowerment of Baloch youth and leadership. (PTI; pg. 19)
Create Internship Guarantee Programs (PPP; pg. 21, ANP; pg. 14)
Invest in different traditional crafts in the socio economically backward areas of the country
to create employment (ANP; pg. 14)
Develop a holistic youth policy with special emphasis on providing employment
opportunities to youth. (ANP; pg. 14)
Interest free loans for self-employment schemes (MMA; pg. 8)
Special schemes for overseas Pakistanis returning to the country (MMA; pg.9)

Skill development can significantly enhance
employability of youth population. Lack of relevant
skills lowers chances of earning livelihood. On
training and development, all parties have committed
to enhancing skill development and provision of
training facilities to youth. PTI has focused on
regulating the labor markets along with the
implementation of technical and vocational education
reforms. PML-N has committed to creation of 200,000
apprenticeship positions for skill development as well
as technical training opportunities for 3 million
people. ANP has emphasized on vocational capacity
development programs along with launching of a
holistic youth policy. Table.5 place special attention
on skill development area related to manifestos.

Table.5 Skill Development:

Develop Relevant Skills, create 200,000 apprenticeship positions for skill development in
collaboration with 500 companies, technical training opportunities for 3M people (PML-N;
pg. 25)
Establishment of Skill Development Centers under “Hunarmand Pakistan Scheme” for youth
training. (MMA; pg. 4)
Training and Provide Technical Training, upgrade TVET institutes, and establish Technology University
in Rasul, District Gujrat and train 2 million people in skills required for entrepreneurship.
Development
(PML-N; pg. 15)
Implement a technical and vocational education reform programme for up skilling, upgrade
existing and building new technical education universities and provide income support to
differently-abled persons with severe disabilities. (PTI; pg. 27,50)
Develop a holistic youth policy with special emphasis on providing opportunities to youth
for creative learning, art and culture, recreation and sports, skills and vocational capacity
development (ANP; pg. 14)

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The well-being of community is highly dependent on
social welfare. PTI, PML-N and MMA have
devotedly committed to boosting social welfare for the
nation building. PTI and MMA have emphasized on
promotion of corruption free society and strict
enforcement of laws. MMA has guaranteed
employment allowance for all disables. Additionally,
PML-N has also committed to provision of loans or
stipend for at least 2 million disable people and
interest free loans to the farmers.

Table.6 Social Welfare:

Crack down on corrupt and other illegal practices that deny employees social welfare and enact
laws and regulations with strict enforcement against workplace harassment and denying
minimum wage. (PTI; pg. 27)
Community Social welfare of workers will be ensured by the state without putting any additional burden on
well-being businesses. (PTI; pg. 27)
Guarantee of 100% employment or employment allowance for disables. (MMA; pg. 4)
Expanding the scope of Social security scheme (MMA pg. 6.) Increase in old-age pension
according to inflation. MMA pg. 6.)
Capital Availability, provide loan/stipend to at least 2 million disable people, provide 2 million
interest free loan to farmers and small entrepreneurs. (PML-N; pg. 15)

It is apparent from the above statements that almost all
parties are keen on boosting employment
opportunities. PTI and PPP have specifically focused
on disadvantaged groups within their mandates. The
commitments toward creation of huge-scale
employment opportunities and provision of technical
trainings looks strong, nevertheless un-costed as not a
single party has mentioned the funding sources i.e.
whether these opportunities will be financed from
educational budgets or will come at cost of spending
cuts in other sectors. Again, promotion of meritocracy
at recruitment stages has hardly been mentioned.
Better employment outcomes can be ensured provided
trainings and skill development are linked to labor
markets. Human capital is vital resource for
accelerating economic growth. Equitable
opportunities of skill development and employment
generation for the educated, less-educated and semi-
skilled labor force will increase national productivity.
4- INSTITUTIONAL CHANGE
Cross-country differences in economic performance
have been intimately related to institutional
differences. Potential for growth as well as
distribution of resources in society, are largely
determined by typology of institutions. Corruption,
lack of transparency and accountability, weak
property rights, weak contract enforcements, all
together undermine economic performance and
ultimately productivity.
A nation’s wealth and adequate property rights
complement each other. Inadequate recording of
property rights leads to dead capital, declining the
productivity of capital owing to its inability to be used
as collateral for loan or leveraging the resources for
generating further growth. Lack of property rights also
underpins lack of willingness for documenting one’s
titles. Additionally, absences of overall digitalized
records impede efficient performance. Land registry
digitalization is also crucial for well-defined property
rights. Lack of transparency creates room for corrupt
practices.
All parties have talks to eradicate corruption. MQM
and PTI both have committed to digitalization of
records and reducing cost of doing business. PTI has
particularly emphasized on undertaking structural
changes for overhauling existing outdated system by
digitalizing land records, court orders related to
property cases as well as dedicating courts for contract
enforcements. It has given roadmap on overall
institutional changes. Table.7 shows highlights on
institutional reforms, indicated in party manifestoes.

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Table.7 Institutional Reforms
Guarantee rule of law, meritocracy and transparency. (PTI; pg. 6)
Introduce legislation to assure political, fair and transparent accountability. (PML-N; pg.
59)
Ensure transparency and merit in all recruitments, postings and transfers. (ANP; pg. 6)
Across the board accountability of elected representatives, judiciary, armed forces and
bureaucracy; further legislation for eradication of corruption and discretionary powers as
Transparency well as discretionary funds (MMA pg 4-5)
& Strengthen accountability, strengthen NAB. (PTI; pg. 12)
Accountability Support transparency and accountability as per standards practiced internationally. (PTI;
pg. 15)
Assign the right officer to the right job without any political consideration, internal
accountability, along with a performance audit and a review of the compensation package.
(PTI; pg. 15)
Build capacity within public departments, law enforcement and accountability institutions
to ensure compliance with procurement rules and procedures. (PTI; pg. 16)
Increase transparency and quality of public sector customs service and reduce transit delays.
(PTI; pg. 30)
Fostering a culture of transparency and accountability. (PPP; pg. 5) The party will introduce
further governance and transparency reforms in the areas of taxation, public management,
government procurements and decentralization, will strengthen the ombudsman office.
(PPP pg45)
Establish an autonomous commission for accountability with a constitutional cover. (ANP;
pg. 3)
Eradicate the menace of corruption (MMA; pg. 3, PML-N; pg. 7, ANP; pg. 23)
ANP will devolve the administrative and fiscal responsibility of Primary schools to Local
Governments. Will de-bureaucratize and decentralize educational governance and work
Corruption towards eliminating political interference and corruption in the education sector. (ANP; pg.
11)
State corporations will be made more efficient, transparent and corruption within these
institutions will be dealt with severely. (ANP; pg. 24)
Full autonomy and capacity building of NAB and other accountability institutions; special
Task Force to launch a drive to recover looted national wealth parked in offshore tax
havens.. (PTI pg. 13)
Expand IT-led reforms in land revenue records, police systems and stamp papers across
Pakistan; e-procurement across government departments; move all citizens and credentials
and documents to a unified digital platform (PML-N pg. 23.)
Ensure full capitalisation of digital financial services to supplement digitisation of
Digitization of documentation. (PTI; pg. 15)
Records Digitise court orders linked to property cases to reduce fiduciary risk to investors. (PTI; pg.
30)
Further digitization of processes to make doing business easier. (PTI; pg. 30, MQM; pg.
11)
Digitise all land records and automate processes for property registration. (PTI; pg. 30)
Digitalise monitoring and evaluation of socio-economic indicators with performance
management capability of district and village councils. (PTI; pg. 30)
Reform initiatives to improve the operational performance of courts. (PTI; pg. 14)
Easy online access to government services, plans and activities. (MQM; pg. 21)
Digitalization of documents and records for federal, provincial and local government.
(MQM; pg. 22)

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In view of the gravity of institutional challenges, some
of the parties have mentioned institutional reforms but
specific action plans on it are missing in respective
agendas. Unleashing potential for rapid growth and
designing interventions for prosperity in the country
could be substantiated by means of appropriate and
inclusive institutional framework. Economy must be
rejuvenated with adequate doses of meritocracy,
transparency, accountability, positive incentives and
simplicity in rules and procedures.
CONCLUSION
Major political parties of Pakistan have shown
conformity of views on identification of challenges
facing economy and have generally agreed on
directions to be followed for addressing them. Clear
electoral mandates are necessary and have been put
across in manifestos but they surely are not sufficient
for accomplishing any stated reforms. Beyond
promises, there have to be concrete pathways and
strategies on manifested policy goals, and it should be
hoped that while spelling out the highlights, the parties
must have worked out the details. At times, even the
stated goals sound very ambitious. Lack of realistic
strategies on stated programs often stymies
implementation. In this regard, linking policy goals to
policy actions by means of pragmatist, effective and
sustainable measures are imperative.
Translation of programs into policy actions can
become highly resistant in case of coalition
government as disproportionate emphasis on
recognition of challenges as well as polarized
positions on resolving issues can potentially frustrate
realization of policy mandates. Deviating priorities by
coalition partners can thus impede accomplishment of
desired outcome. Additionally, drastic reforms cannot
be taken without opposition’s cooperation. Each party
has pledged multiple schemes for addressing multi-
dimensional economic woes prevailing in the country,
though diverging on the proposed strategies but
converging on basic themes. Against the backdrop,
there is sufficient room for parties’ collaboration and
coordination, which in turn will determine the
applicability of stated mandates. Overcoming
resistance from vested interests through compensatory
measures and winning public support for
implementation of the agendas can prove significantly
effective.

Prepared by:
Naila Saleh
Junior Research Officer
Ayesha Bibi
Research Trainee
Institute of Policy Studies (IPS), Islamabad.

For queries:
Syed Nadeem Farhat
Senior Research Officer
nadeem@ips.net.pk | www.ips.org.pk

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