THE National Economic Council (NEC) took a significant decision on March 7 to accord Sustainable Development Goals (SDGs) a strategic place in the national planning process.

The council gave the go-ahead to the Planning Commission to prepare a draft of the 12th five-year plan (2018-23), with a focus on achieving SDGs while scaling up the annual economic growth target to an average 7.5pc during the period.

The decision has come a month ahead of the next year’s federal budget, to be announced on April 27. The NEC has also directed provincial governments to set up an institutional mechanism at district level for achieving SDGs.

The Planning Commission has three months to come up with a draft plan before the ruling Pakistan Muslim League-Nawaz yields place to an interim government to hold fresh general elections.

A key issue in implementing an SDG action plan is the lack of sufficient resources required to make the massive project a success

The draft plan has to be formulated in consultation with provincial governments and a wide range of other stakeholders. Perhaps the commission will come up with an outline or contours of the plan.

Facing a lot of political troubles, the ruling party may be employing SDGs as a political weapon to win the elections, but it is unlikely that the decision would have a significant impact any time soon.

A key issue in implementing any SDGs action plan is the lack of sufficient resources required to make the massive project a success. Hope can only be pinned on more tax revenues, normally generated from an expanding economy if growth targets are met.

The issue in not of merely producing a plan; securing a national consensus with different political parties sharing power at federal and provincial levels in a growing pluralist society is just as important.

It would have been more appropriate for the ruling PML-N to include the SDGs in its election manifesto, seek electoral mandate and take the first necessary step to build a national consensus for a long-term project of enormous importance. It should not be forgotten that the SDGs action plan should be designed to bridge the widening gap between citizens and governments.

After all, SDGs are supposed to be a collective responsibility of all tiers of the government, civil society, academics, businesses, etc. In this regard, the coming elections can provide a full-fledged national debate on the SDGs. The commitment only from the representatives of provinces run by different political parties is not enough.

“The economic future of Pakistan is the collectively responsibility of all political parties,” says an official close to the International Monetary Fund, referring to the organisation’s call for “greater political consensus on key reforms”.

PML-N’s Quaid Nawaz Sharif, who was ousted as prime minister last year, is talking about the sanctity of the vote. It would thus be appropriate to seek the approval of the SDGs agenda of the sovereign electorate on issues affecting their economic and social future.

Another big question is: from where will the huge resources to finance the development goals come when fiscal and external pressures continue to mount?

Pakistan’s tax-to-GDP ratio is among the lowest in the region and its extractive tax policies have begun to turn counterproductive. Around 75pc of direct taxes are collected through withholding tax and the informal sector remains as problematic as ever.

Millions and billions of dollars are stashed abroad to protect the value of cash holdings in the greenback against a constantly depreciating rupee and to partially fund imports of plants and machinery to evade custom duties and sales tax.

Despite growth of tax revenues in absolute terms over the decades, the tax-to-GDP ratio continues to remain low. And going by the low level of foreign funding of Millennium Development Goals, not much can be expected to come for the international community. The SDGs action plan also envisages that “much of the increased public spending will have to be generated domestically”.

Perhaps the SDGs can be used to improve tax compliance when its benefits are widely recognised. Implicit in the SDGs agenda is the assumption that macroeconomic imbalances will remain within manageable limits if the programme is seriously and fully implemented.

Incidentally, Pakistan’s decision to focus on SDGs in the next five-year plan coincides with the first international conference on taxation and SDGs held last month. On Feb 16, a statement issued at the end of the conference stressed that taxation has a key role to play in financing the SDGs.

Pakistan was represented at the conference organised by Platform for Collaboration of Tax — a brainchild of the United Nations, World Bank, OECD and IMF — by a four-member team comprising senior officials of the Federal Board of Revenue, Sindh Revenue Board and Punjab’s finance minister.

The platform has pledged to step up efforts with active collaboration of developing states to “address tax transparency and base erosion and profit shifting including on (international) treaties” and provide guidance and toolkits to expand the tax net to the informal sector.

The mandatory SDGs are anchored on no poverty, zero hunger, good health, decent work, economic growth and social justice, etc. Here, economic growth is one of the crucial elements of sustainable development, but not the overriding objective.

This is similar to people-centred development advocated by some leading development economists in the 1970s designed to unleash energies of the masses to improve their livelihood by themselves. All those who benefit from the SDGs are eligible stakeholders in its active implementation.

Despite a number of deep-seated problems, Pakistan has managed an economic growth trajectory, with a helping hand from the China-Pakistan Economic Corridor.

However, the fiscal and current-account stability is seen as fragile and unsustainable. While there are fears that Pakistan might soon come under the IMF stability programme once again, PML-N’s policymakers are planning for a far more difficult task in focusing on SDGs in the core planning process, and hopefully, sooner or later, for its sincere implementation.

However, a right step has been taken without much preparation, particularly for mobilisation of domestic resources.

jawaidbokhari2016@gmail.com

Published in Dawn, The Business and Finance Weekly, March 19th, 2018