T seems there is no escaping the fiscal straitjacket that the country is in, no matter what the level of external assistance.

Next year`s PSDP allocations, announced yesterday, show that a severe shortage of resources is hitting projects under the ChinaPakistan Economic Corridor. This underlines the point that pursuing a large developmental agenda on the back of external assistance is an unviable proposition. The meagre increase of 14pc in the PSDP for next year shows there is no substitute for mobilising own resources, and that can only come with deeper and substantive reforms that help broaden the base of taxation. The gap between resources required and those available cannot be reliably bridged with external resources.

The Planning Commission had asked for Rs900bn to be able to complete ongoing CPEC projects, but Rs655bn has been allotted.

Given the large amount of unbudgeted expenses, as well as securityrelated overruns running into Rs100bn annually for a number of years now, and the rigidity of the country`s outmoded revenue system, the finance ministry has struggled to keep to its deficit target this year largely by slashing development spending by almost a third.

Now the same dilemmas are presenting themselves for next year when a number of CPEC projects will be at a crucial stage. This is especially troublesome because these projects are being counted on heavily to help lift growth. When the resource envelope constrains us between security and development, and particularly when the impact of that choice falls on those areas that are central to next year`s growth, the enduring rigidity of the revenue system must come under focus. The government has done a noteworthy job, mobilising revenues in its three years in power, but largely through burdening existing taxpayers and businesses rather than broadening the base.

The results are there to see, with crucial CPEC projects being forced to bear the brunt of the budget axe. Tax reforms are becoming more and more urgent in Pakistan.