Tola budget proposes rupee at 250 per dollar

Rs10 remittance bonus could boost inflows, reduce inflation by up to 6%, economist says

Reducing the value of the rupee to 250 per dollar could lower inflation by up to 6%. while offering a bonus of Rs10 per dollar for remittances sent through banking channels instead of hawala/informal hundi systems could increase inflows. These proposals were outlined in a model budget prepared by economist Ashfaq Tola for the upcoming fiscal year.

The model budget states that Pakistan's economy is currently trapped between pursuing domestic growth. complying with stringent International Monetary Fund (IMF) conditions. It warns that strict IMF policies could harm long?term economic stability. The government has assured the IMF that it will adhere to tough conditions to secure budget approval. According to the model budget, IMF?driven policies could push the fiscal deficit to 4.4% of GDP. However, if domestic reforms are pursued independently of the IMF, the deficit could be reduced to 2.1%. It emphasises that local tax reforms and revenue enhancement are essential for economic stability.

The document further argues that granting tax exemptions to the IT sector could significantly boost exports. while imposing taxes on agriculture is now necessary to broaden the revenue base. The model also notes that controlling the budget deficit is impossible without reducing losses in the energy sector.

It further suggests that privatisation of state?owned enterprises could substantially reduce the fiscal burden on the national budget,. that removing regulatory barriers is essential to encourage private sector growth. Offering tax exemptions on repatriated foreign assets could attract up to $20 billion in investment.

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