In Exchange for Aid, Donors Press Pakistan for Reforms

Pakistani Minister of Foreign Affairs Makhdoom Shah Mehmood Qureshi shakes hands with Catherine Ashton, high representative of the European Union for foreign affairs and security policy and vice president of the European Commission, during the Friends of Democratic Pakistan ministerial meeting on Oct. 15. Photo by: European Union

Donors want Pakistan to boost its tax revenue collection in exchange for post-flood aid for the Islamic nation.

The 26-member Friends of Democratic Pakistan noted in their meeting in Brussels last week that the Pakistani government should carry on with its economic reform program including broadening the country’s tax base and raising more domestic resources for reconstruction and long-term development.

“[Y]ou can harvest as much money as you want, it won’t be enough at the end of the day if there is no reform,” German Foreign Minister Guido Westerwelle told the Pakistani government during the meeting, Agence France-Presse reports.

On the eve of the meeting, U.S. Secretary of State Hillary Clinton urged the Pakistani government to require the “economically affluent and elite” to pay their taxes.

“Rhetoric in Washington on Pakistan has picked up across the board in the last few months,” Dhruva Jaishanker of the German Marshall Fund in Washington was quoted by The Wall Street Journal as saying.  

The World Bank has also made a similar call.

“There is a demand from the international community … that Pakistan has to do its bit, mobilizing resources before it can expect donors to pitch in,” Rachid Benmessaoud, World Bank country director for Pakistan, told Reuters in an interview. “Pakistan must tax the rich who are not paying taxes at the moment.”  

Pakistan Foreign Minister Shah Mahmood Qureshi pledged “more reforms in the pipeline,” noting that his nation’s tax system had to be “more equitable,” AFP reports.

The international community has welcomed Pakistan’s pledge to boost its tax collections, The Canadian Press reports.

The meeting, hosted by European Union foreign affairs chief Catherine Ashton, also concluded with an agreement that the Asian Development Bank will help Pakistan prepare a water management strategy.

Meantime, United Nations Secretary-General Ban Ki–moon has called for “a generous and swift international response” to its USD2 billion aid appeal for Pakistani flood victims. Some 34 percent of the appeal, or nearly USD690 million, has so far been funded.

In a meeting of the Pakistan Development Forum in Islamabad next month, Pakistan is expected to present its economic stabilization plans and a national plan for reconstruction.

“So much of the challenge for Pakistan, a huge country of 170 million people, lies in how, in fact, you make its economy work more effectively. That’s why we’re all committed to supporting what is called a Pakistan development forum which will convene a meeting in Islamabad before long, about getting the rest of the economy going as well. Not just the immediacy of dealing with this humanitarian disaster called the floods,”  Australian Foreign Minister Kevin Rudd told ABC News 24.

About the author

  • Ma. Rizza Leonzon

    As a former staff writer, Rizza focused mainly on business coverage, including key donors such as the Asian Development Bank and AusAID.