‘Surplus balance must not hurt growth’

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has warned economic managers that the current account surplus must not be achieved at the cost of economic growth.

While lauding government’s efforts to control Pakistan’s current account deficit, FPCCI President Mian Anjum Nisar said the transformation from deficit to surplus was due to some recovery in exports and increase in remittances with support from several policies and administrative initiatives taken by the central bank.

“But it is also a fact that the massive decline in imports has slowed down overall economic activities, ultimately hitting the GDP growth rate,” he said, adding that the drop in current account deficit was a big achievement as a sign of macroeconomic stability but it was never beneficial to industrial growth - the real indicator of economic performance and development of a nation.

Nisar argued that the current account surplus must be based on growth in exports, resulting in growth in industrial production as well as employment generation.

But unfortunately the present turnaround was largely due to the drop in imports, leading to a slowdown in growth after an unprecedented hike in mark-up rates in the past and rupee depreciation of over 45%, which sent shockwaves through the economy, he said.

Nisar said the surplus had been achieved at the cost of a sharp slowdown in the economy that caused a loss of millions of jobs.

The FPCCI president said the government’s harsh import policy, along with a high cost of doing business due to a continued hike in fuel rates and energy tariffs, had almost halted industrial production. He emphasised the need for a continued process of institutional reforms, ensuring financial discipline with a view to consolidating the process of stabilising economy.

Published in The Express Tribune, September 3^rd, 2020.

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