On 4th April, State Bank Governor Shaid Kardar voiced his concerns regarding a “structural shift of incomes” towards the untaxed sectors. Though Pakistan’s economy has shown signs of improvement, urgent steps are needed to broaden the tax base to benefit from the growth in untaxed sectors such as agriculture. Speaking to Reuters, the State Bank Governor said, “The structural shift now needs to be addressed in the next budget. All sectors of the economy need to be taxed beyond a certain level of income irrespective of the source of income.”
He said that inflation, the budget deficit and he availability of credit for the private sector remain a concern. However, he did say that economic growth may be better than initially expected, “At one stage, we had been talking about 2.5 percentage points of GDP in real terms. I suspect it’s likely to be closer to 2.8 [percentage points] now.” The fiscal deficit is estimated between 5.3% and 5.5% of GDP, though this could be wider if external flows such as grants do not come in swiftly enough.