DAWN Editorials - 17th february2025
Posted: Tue Feb 18, 2025 5:32 pm
Tax policy reform
THE cabinet’s decision to create a Tax Policy Office at the finance ministry has raised hopes that tax policy is finally being separated from revenue administration, which is simply the function of tax collection. The FBR would still have a role in the tax policymaking process, but it will be restricted to suggesting rather than dictating. Why should tax policy be bifurcated from tax collection? The answer is simple. Tax policy should be closely aligned with broader economic and sectoral growth aims rather than focusing on just revenue collection for running day-to-day affairs. The concentration of powers — to frame tax policy and collect revenues — in the hands of the tax bureaucracy brings the entire focus of policy on revenue generation. It defeats the aim of using the policy framework for growing the economy through equitable and fair taxation. Sadly, successive governments’ urgent revenue needs have kept them from divesting the FBR of its policymaking powers at the expense of both GDP growth, and fair tax. The tax bureaucracy, too, has previously resisted moves to take away its policymaking function in order to retain its control over who pays tax and how much, and who does not.
The decision will help the government meet another IMF programme goal ahead of the first biannual review of the ongoing loan by the lender next month. But the separation of policy and collection will mean nothing, nor will it produce the desired results, if the TPO is staffed with another set of bureaucrats rather than tax experts well versed in the latest technology, who can tap economists and business leaders for their input regarding a pro-growth tax policy and a transparent taxation system that is responsive to the needs of the people. It has taken us decades to take this first step. But, as they say, it is never too late.
Published in Dawn, February 17th, 2025
UN monitoring report
THE latest report of the UN Security Council’s sanctions monitoring team paints a grim picture of the banned TTP’s growing operational capacity.
It says that “the status and strength of TTP in Afghanistan had not changed”, but its attacks on Pakistan have “significantly increased, with over 600 attacks during the reporting period [July-December], including from Afghan territory”. This underscores Pakistan’s long-standing concern at Afghan soil being used for cross-border violence.
Despite the Afghan Taliban’s reassurance that their territory would not be used for terrorism against any country, the report confirms that they “continued to provide TTP with logistical and operational space and financial support”, including funds for the TTP leadership and the creation of new training centres in Kunar, Nangarhar, Khost, and Paktika provinces. Such support undermines Pakistan’s security and further strains its ties with Kabul.
Pakistan’s ambassador to the UN Munir Akram had also warned the UNSC that the TTP was now “an umbrella organisation” for various militant actors, increasing the risk of regional instability. The report corroborates this, noting that the TTP’s coordination with Al Qaeda and other extremist outfits “might transform [TTP] into an extra-regional threat”.
Islamabad has historically pursued a dual-track approach to dealing with the TTP menace — diplomatic engagement with Kabul alongside military action against the terrorists.
However, with the Taliban’s continued reluctance to take concrete action against the TTP, Pakistan has also resorted to cross-border strikes against militant hideouts in Afghanistan. While such operations may provide short-term relief, unilateral military actions are not a sustainable solution. They risk worsening relations with Afghanistan and complicating broader stability.
Pakistan must intensify its diplomatic engagement with Kabul, stressing that its tolerance of the TTP is a serious breach of regional peace and bilateral trust. The Afghan Taliban leadership, in turn, must recognise that harbouring groups like the TTP will only increase global scrutiny and isolate them further.
Unfortunately, instead of accepting the realities detailed in the report, the Afghan Taliban have rejected the findings, dismissing them as propaganda. This can only be perceived as a sheer unwillingness to act, an approach that has implications not only for the Pak-Afghan relationship but also regional security. The international community must continue to ramp up the pressure.
Published in Dawn, February 17th, 2025
Climate funding gap
PRIME Minister Shehbaz Sharif’s recent appeal for climate finance at the World Governments Summit in the UAE underscores a critical challenge Pakistan faces: bridging the enormous gap between climate funding needs and available resources.
The unfortunate reality is that Pakistan requires $40-50bn annually for climate adaptation and mitigation, yet receives merely $1.5-2bn from international sources. This disparity demands urgent attention, particularly given Pakistan’s position as one of the world’s most climate-vulnerable nations despite minimal contribution to global emissions.
The floods of 2022 serve as a haunting reminder of our vulnerability, having submerged a third of the country, affected 33m people, and caused $30bn in economic losses. With Pakistan projected to lose over 6pc of its GDP annually to climate-related damages, the need for substantial climate finance cannot be overstated.
That Pakistan’s energy transition alone requires $100bn in investment highlights the extent of the challenge. However, the international climate finance architecture remains flawed.
Our limited access to the Green Climate Fund, securing only $250m compared to India’s $782m and Bangladesh’s $441m, reflects systemic barriers that climate-vulnerable nations face. Complex approval processes, stringent credit ratings, and high borrowing costs continue to direct climate finance towards lower-risk projects in developed economies rather than where it is most urgently needed.
The way forward requires action on both international and domestic fronts. Globally, multilateral institutions must reform their frameworks to ensure equitable access to climate finance for vulnerable nations. The Loss and Damage Fund, while promising, needs streamlined mechanisms for accessibility. Global bodies must recognise that climate finance is not charity but a matter of climate justice.
At home, Pakistan must boost its institutional capacity to develop bankable climate projects. Our commitment to producing 60pc clean energy by 2030 and converting 30pc of vehicles to electric needs to be backed by action plans that can attract both public and private investment. Creating an enabling regulatory environment through targeted incentives, mandatory climate risk disclosures, and public-private partnerships is essential.
Pakistan must also prioritise financial innovation, exploring blended finance models, green bonds, and parametric insurance schemes. Developing specialised expertise in climate finance and technology, while fostering coordination between federal and provincial levels, will be crucial for effective fund utilisation.
The international community must match its pledges with action, while Pakistan needs to demonstrate its readiness to manage climate finance effectively.
Published in Dawn, February 17th, 2025
THE cabinet’s decision to create a Tax Policy Office at the finance ministry has raised hopes that tax policy is finally being separated from revenue administration, which is simply the function of tax collection. The FBR would still have a role in the tax policymaking process, but it will be restricted to suggesting rather than dictating. Why should tax policy be bifurcated from tax collection? The answer is simple. Tax policy should be closely aligned with broader economic and sectoral growth aims rather than focusing on just revenue collection for running day-to-day affairs. The concentration of powers — to frame tax policy and collect revenues — in the hands of the tax bureaucracy brings the entire focus of policy on revenue generation. It defeats the aim of using the policy framework for growing the economy through equitable and fair taxation. Sadly, successive governments’ urgent revenue needs have kept them from divesting the FBR of its policymaking powers at the expense of both GDP growth, and fair tax. The tax bureaucracy, too, has previously resisted moves to take away its policymaking function in order to retain its control over who pays tax and how much, and who does not.
The decision will help the government meet another IMF programme goal ahead of the first biannual review of the ongoing loan by the lender next month. But the separation of policy and collection will mean nothing, nor will it produce the desired results, if the TPO is staffed with another set of bureaucrats rather than tax experts well versed in the latest technology, who can tap economists and business leaders for their input regarding a pro-growth tax policy and a transparent taxation system that is responsive to the needs of the people. It has taken us decades to take this first step. But, as they say, it is never too late.
Published in Dawn, February 17th, 2025
UN monitoring report
THE latest report of the UN Security Council’s sanctions monitoring team paints a grim picture of the banned TTP’s growing operational capacity.
It says that “the status and strength of TTP in Afghanistan had not changed”, but its attacks on Pakistan have “significantly increased, with over 600 attacks during the reporting period [July-December], including from Afghan territory”. This underscores Pakistan’s long-standing concern at Afghan soil being used for cross-border violence.
Despite the Afghan Taliban’s reassurance that their territory would not be used for terrorism against any country, the report confirms that they “continued to provide TTP with logistical and operational space and financial support”, including funds for the TTP leadership and the creation of new training centres in Kunar, Nangarhar, Khost, and Paktika provinces. Such support undermines Pakistan’s security and further strains its ties with Kabul.
Pakistan’s ambassador to the UN Munir Akram had also warned the UNSC that the TTP was now “an umbrella organisation” for various militant actors, increasing the risk of regional instability. The report corroborates this, noting that the TTP’s coordination with Al Qaeda and other extremist outfits “might transform [TTP] into an extra-regional threat”.
Islamabad has historically pursued a dual-track approach to dealing with the TTP menace — diplomatic engagement with Kabul alongside military action against the terrorists.
However, with the Taliban’s continued reluctance to take concrete action against the TTP, Pakistan has also resorted to cross-border strikes against militant hideouts in Afghanistan. While such operations may provide short-term relief, unilateral military actions are not a sustainable solution. They risk worsening relations with Afghanistan and complicating broader stability.
Pakistan must intensify its diplomatic engagement with Kabul, stressing that its tolerance of the TTP is a serious breach of regional peace and bilateral trust. The Afghan Taliban leadership, in turn, must recognise that harbouring groups like the TTP will only increase global scrutiny and isolate them further.
Unfortunately, instead of accepting the realities detailed in the report, the Afghan Taliban have rejected the findings, dismissing them as propaganda. This can only be perceived as a sheer unwillingness to act, an approach that has implications not only for the Pak-Afghan relationship but also regional security. The international community must continue to ramp up the pressure.
Published in Dawn, February 17th, 2025
Climate funding gap
PRIME Minister Shehbaz Sharif’s recent appeal for climate finance at the World Governments Summit in the UAE underscores a critical challenge Pakistan faces: bridging the enormous gap between climate funding needs and available resources.
The unfortunate reality is that Pakistan requires $40-50bn annually for climate adaptation and mitigation, yet receives merely $1.5-2bn from international sources. This disparity demands urgent attention, particularly given Pakistan’s position as one of the world’s most climate-vulnerable nations despite minimal contribution to global emissions.
The floods of 2022 serve as a haunting reminder of our vulnerability, having submerged a third of the country, affected 33m people, and caused $30bn in economic losses. With Pakistan projected to lose over 6pc of its GDP annually to climate-related damages, the need for substantial climate finance cannot be overstated.
That Pakistan’s energy transition alone requires $100bn in investment highlights the extent of the challenge. However, the international climate finance architecture remains flawed.
Our limited access to the Green Climate Fund, securing only $250m compared to India’s $782m and Bangladesh’s $441m, reflects systemic barriers that climate-vulnerable nations face. Complex approval processes, stringent credit ratings, and high borrowing costs continue to direct climate finance towards lower-risk projects in developed economies rather than where it is most urgently needed.
The way forward requires action on both international and domestic fronts. Globally, multilateral institutions must reform their frameworks to ensure equitable access to climate finance for vulnerable nations. The Loss and Damage Fund, while promising, needs streamlined mechanisms for accessibility. Global bodies must recognise that climate finance is not charity but a matter of climate justice.
At home, Pakistan must boost its institutional capacity to develop bankable climate projects. Our commitment to producing 60pc clean energy by 2030 and converting 30pc of vehicles to electric needs to be backed by action plans that can attract both public and private investment. Creating an enabling regulatory environment through targeted incentives, mandatory climate risk disclosures, and public-private partnerships is essential.
Pakistan must also prioritise financial innovation, exploring blended finance models, green bonds, and parametric insurance schemes. Developing specialised expertise in climate finance and technology, while fostering coordination between federal and provincial levels, will be crucial for effective fund utilisation.
The international community must match its pledges with action, while Pakistan needs to demonstrate its readiness to manage climate finance effectively.
Published in Dawn, February 17th, 2025