Research & News Bulletin Contents Contours of a programme with IMF .........................................................................................1 Economic Growth and Job Creation ........................................................................................6 Preliminary EIA CPEC Northern Section Road Route (Haripur –Kashgar): ..........................8 Welfare and Finance Bill 2018-19 ..........................................................................................12 Welfare Impact of Withholding Taxes ....................................................................................13 Are dams the only solution to water issues in Pakistan? .......................................................15 Climate change education and awareness manual ..................................................................17 SDPI’s Twenty-first Sustainable Development Conference (SDC) & Eleventh South Asia Economic Summit (SAES XI) ................................................................................................18 Panel: Building Renewable Energy Supply Chains in South Asia . ...................................19 Panel: Can e-Commerce help South Asian Intra-regional Trade?. .....................................20 Panel:Emerging Methods in Policy Engagements and Public Private Dialogue. ...............20 Panel: Whither Left Politics in South Asia? Past, Present and Future in the 21st Century. 20 Panel: Role of Women’s Home Journals and the Development of Female Education in South Asia. ......................................................................................................................21 Panel: Role of Private Sector in Climate Action. ...............................................................21 Panel: Harnessing the Potential of Agriculture Value Chains in South Asia. .....................22 Panel: Practicing Fiscal Decentralisation: Gaps and Challenges. ......................................22 Panel: Transforming Regional Security Corridors into Knowledge Corridors. .................23 Panel: Creating Shared Value:Private Financing for the Sustainable Development Goals ...................................................................................................................................24 Panel: Redefining the Role of Civil Society Organisations in South Asia. ........................26 Panel: Women in the Electoral Process in South Asia. .......................................................26 Panel: Intraregional Trade in South Asia: Challenges and Opportunities. .........................27 Panel: Role of Judiciary in promoting Women’s Access to Justice in South Asia. ............27 Panel: Competition and IP regime in South Asia. ..............................................................29 Panel: Regional Economic Integration in Central and South Asia . ...................................29 Panel: Regional Economic Corridors in South Asia: Opportunities and Challenges. ........30 Panel: Achieving SDGs through Citizen-centric Health Reforms. .....................................30 Panel: Fiscal Policies in South Asia: Why is Revenue Mobilisation so Challenging?. ......31 Panel: Knowledge and Technology Transfer Management under CPEC. ..........................32 Panel: Blue Economy in South Asia: Prospects for Cooperation. ......................................33 Panel: Regional Economic Prospects and Quality Education in South Asia. .....................33 Panel:Intra-regional Investment Cooperation for SMEs Development. .............................34 Panel: Deepening Business-to-Business Engagement Processes in South Asia. ................34 Panel: Women-led Social and Creative Enterprises for Marginalised Communities in South Asia. ......................................................................................................................35 Editor : Saleem Khilji Designor by : Ijlal Ashraf Research & News Bulletin Contours of a programme with IMF Choosing between approaching or not approaching IMF Dr Abid Qaiyum Suleri & Dr Vaqar Ahmed fter coming out of the situation of choosing foreign exchange spot market, Abetween approaching or not approaching, IMF • An agreement at the Council of Common Interest for macroeconomic stabilization, the discussion now on respecting the 2013/14 fiscal balances for the focuses on the nitty-gritty of Pakistan’s home-grown provinces under the programme, solution that it would like to negotiate with IMF for • Issuance of 10,000 collection notices to individuals its forthcoming arrangement. However, the catch is not registered to pay taxes based where indirect to maintain a fine balance between the fiscal reforms methods suggest large potential income tax that strengthen the overall fiscal responsibility at liabilities. the federal and provincial levels under an IMF programme, and an indigenous agenda of structural Fiscal belt tightening, reduction in electricity subsidies, reforms in power and public sector enterprise (PSE) and appreciation of dollar against rupee was a natural management. One would have to be careful not to outcome of those prior actions, but those were a must overcommit on performance benchmarks on power to convince IMF Board that Pakistan was serious to and PSE reforms without losing the pace of those implement reforms against the structural anomalies reforms. threatening its macroeconomic sustainability. Going to fund would have some structural and Apart from those prior actions, the structural some implementation conditionalities. Structural benchmarks that former finance minister Ishaq Dar’s conditionalities would include some prior actions, team agreed for the last IMF loan included approval some performance criteria and certain benchmarks. of a reform strategy for loss making Public Sector On the other hand, implementation conditionalities Enterprises (PSE), hiring a professional audit firm would include quantitative performance criteria, to conduct a technical and financial audit of energy actions implemented on time, actions delayed, actions circular debt, making Central Power Purchasing not implemented, and actions against which a waiver Agency (CPPA) operational by separating it from was given by IMF. For a three-year programme under the National Transmission and Dispatch Company a front-load arrangement (which Pakistan cannot (NTDC), privatizing 26 percent of PIA’s shares to skip), almost half of the actions are required to be strategic investors, and enacting the amendments taken in the first year whereas rest of them are to be to the Pakistan Penal Code 1860 and the Code of taken in 2nd and 3rd year. Usually the first year is Criminal Procedures 1898. All those benchmarks focused on achieving stability of macroeconomic were to be achieved before December 2013. fundamentals, especially the stability of foreign exchange reserves. The second year is aimed at Backed by certain one-off positive factors, including completion of stabilization measures and enhancing low fuel prices in international market, CPEC the efficiency through structural reforms, whereas the inflows, US$ 5 billion from Saudi Arabia, and foreign third year should focus on pro-growth and pro-job exchange generated through bonds and auction of policies. 3G-4G broadband spectrum, IMF loan resulted in It is pertinent to mention that Pakistan took following favourable growth momentum. However, failure of “prior actions” (by five days prior to the Board implementing structural reforms in letter and spirit meeting where the loan was approved) before the last resulted in widening of external and fiscal imbalances, IMF Programme (2013-16); and a decline in foreign exchange reserves. • Implementation of a series of fiscal adjustment measures, One needs to keep Pakistan’s immediate past • Elimination of electricity tariff differential engagement with IMF in mind while negotiating the subsidies (totaling 0.75 per cent of GDP in next arrangement, as IMF would pick Pakistan on its annualized savings), slippages in that programme. In its first post-program • Net purchases of $125 million by the SBP in discussion in February 2018, IMF mentioned widening 1 Research & News Bulletin external and fiscal imbalances as a result of those Recipient countries usually have a choice (depending slippages and emphasized on continued exchange on the bargaining power) if they would like to front- rate flexibility, monetary tightening, stronger fiscal load the reforms which involve relatively painful discipline, and decisive efforts to contain losses in adjustment in the early periods. We may like to adopt public enterprises. this path and pursue the following sequencing of the programme. Taking cue from the discussion, the elements of • The first year of the IMF programme will naturally home-grown reform agenda apart from realistic focus on achieving stability of macroeconomic monetary policy and continued exchange rate fundamentals, in particular the stability of foreign flexibility (which is now more or less adjusted to exchange reserves. This year may see dampening its real effective exchange rate) may also include of growth due to a contractionary fiscal and rationalization of government’s current expenditure monetary policies. (rationalization of grants and subsidies, PSE reforms, • The second year should see the completion of rationalization of ministries and departments); tax measures which can induce efficiency in public policy and administration reforms (broadening sector management, expedite energy sector of direct tax base and