Pakistan central bank concerned over parallel ''economy''

Islamabad, Jun 17 (UNI) Pakistan's black economy is estimated to have grown to be half as big as the formal economy, which yields a GDP of 166 billion dollar, local media reports said today.

The problem had reached alarming proportions and has the potential to upset public welfare plans, sources were quoted as saying by the Dawn.

The parallel black economy of 83 billion dollars could yield the national exchequer eight billion dollars if taxed even at a rate of 10 per cent.

''These are very conservative estimates. The fact of the matter is that black economy could be much bigger,'' said an official dealing with economic affairs.

''Pakistan's economy is largely undocumented, providing space to the informal sector to grow and thrive. Under-invoicing has gone on for years and at a huge scale,'' he said.

Most recently hoarders and black marketeers earned billions in wheat and flour trading, but no record was available to pin them down, the official said.

''This approach is no different from that adopted by former economic managers, headed by Mr Shaukat Aziz, who first launched documentation of the economy in 2000-01, but abandoned it on the same excuse in the name of being business-friendly,'' the sources said.

They said that a strategy was being finalised to bring the informal sector into the formal one in order to achieve new resource mobilisation, particularly by encouraging the development of cottage industry.

Officials in the economic ministries have been directed to give an implementation mechanism to substantially raise revenues by providing incentives to the informal sector to merge into the formal sector.

The Federal Bureau of Revenue Chairman said that there were different estimates about the size of the black economy.

''But I believe black economy is 30 to 40 per cent of our total economy and this is quite disturbing,'' he said.

UNI XC SZ DB1258