The increasing disparity.

While the persistently high inflation rate has become the primary concern of the vast majority of the citizens, the risk of foreign debt default has turned into a pivotal issue in public policy.

And the surge in the cost of living and inequality is prompting an increasing number of development and political economists as well as financial experts to shift their focus on the need for an alternative economic model based on the country's priorities.

Former State Bank governor Dr Reza Baqar forcefully recommends proactive programmes to reduce wealth inequality in a sustainable manner and that need to be front and centre of our priorities for our progressive and peaceful future.

He notes that 'rising international prices of energy and commodities are raising inflation, squeezing further the household budgets of the less well-off and driving the wedge of wealth disparity deeper and deeper in the social fabric. The importance of policies to reduce wealth inequality cannot be overemphasised.'

Some analysts believe that inflation can only be controlled when economies move into recession

Under an understanding reached with International Monetary Fund (IMF) on June 21, the government has agreed to impose a 1 per cent poverty tax on firms and individuals earning Rs150 million, 2pc on those earning over Rs200m, 3pc on over Rs2.5m and 4pc on over Rs300m and above. In the original budget, the PML-N government had proposed a poverty tax on those earning Rs300m and above.

The government has also agreed with the IMF to a petroleum levy of Rs5 each month up to Rs50 from July 1 and revised upwards tax collection target by Rs422 billion for the next fiscal year.

The projections of inflation rates vary with the Ministry of Finance estimating it at 11.5pc while the Federal Board of Revenue (FBR) puts it at 12.8pc. As per revised FBR estimates, higher inflation will fetch much more tax revenues than originally estimated.

Islamabad is accepting stiff terms of the deal to avoid a foreign debt default. 'Economic management that relied on borrowings allowed the country's ruling elite to avoid and postpone much-needed structural reforms, including serious tax reforms that could have placed the economy on a viable path,' wrote Dr Maliha Lodhi recently in an article titled 'Is Pakistan ungovernable?' Critics also say that while primary beneficiaries of foreign loans are the rent-seekers, the debt is repaid by ordinary taxpayers' money.

The external environment also...