Call to declare economic emergency
Reliance on borrowing and bailouts has landed Pakistan in a debt trap, which pushed the country to go from one IMF loan tranche to another. Photo: file
Businessmen have demanded that Prime Minister Shehbaz Sharif declare an economic emergency in the country and take urgent steps to avoid a Sri Lanka-like situation.
Prominent businessmen and around 50 representatives from the business and industrial community including chambers of commerce and industry, stock exchange, industrial, textile and exporters’ associations, builders and developers and other leaders representing large-scale manufacturing, small and medium enterprises, wholesalers and retailers held an emergency meeting to discuss the current economic crisis.
Meeting participants sought workable solutions to improve the deteriorating economy and later held a press conference, where they pressed the government to declare economic emergency. Businessmen Group (BMG) Chairman Zubair Motiwala and Karachi Chamber of Commerce and Industry (KCCI) President Muhammad Idrees demanded that the currency exchange rate should be fixed, according to a statement.
Pakistan Businesses Forum (PBF) Senior Vice President Muhammad Riaz Khattak said the government should announce economic emergency as the country was facing severe economic challenges with unprecedented depreciation of the rupee against the dollar.
PM Shehbaz should immediately call a National Economic Council meeting and take on board all political parties, including the PTI and armed forces, to make day-to-day decisions on the economy, he said.
“Pakistan is going through a severe economic crisis and unfortunately mainstream political parties have not come up with any effective measures to save the economy,” he said. “Every new government borrows and imposes new taxes on the public.”
“We are deeply concerned over the government’s unconcerned attitude to deal with the current economic challenges, heightened political uncertainty, steep devaluation of the rupee, ineffective role of the State Bank of Pakistan and unregulated profiteering by banks,” said Motiwala.
Idrees demanded that the SBP governor be appointed as soon as possible to manage affairs of the central bank.
Khattak said reliance on domestic and foreign borrowing and bailouts had landed Pakistan in a debt trap. “It has also pushed the country to go from one IMF tranche to another.”
SITE Association of Industry President Abdul Rasheed expressed serious concerns over SBP’s uncaring approach to control present rupee devaluation and demanded that it should take urgent steps to control increasing rupee-dollar parity.
On Thursday, the dollar has touched the highest ever rate of Rs228, which is adversely affecting the business activities and the industries are now on the verge of collapse due to constantly increasing cost of production.
Rasheed said due to high dollar rate, the imports have also become costlier, making it difficult to run industries.
The government is focusing only on getting a loan from the IMF without considering how to refund it when industries will close and tax collection will be halted forcing the economy to collapse.
PBF Vice President, Ahmad Jawad said where we are heading? From August 2018 to till date the rupee depreciation was highest in our 75 years of independence. Rupee dropped Rs105 against a dollar, something never happened to any other country. Banks are opening the L/C’s on the rate of 242 and above for oil companies.
Motiwala maintained that the economic situation of the country is deteriorating and industrialists are pondering over closing productions.
Khattak said the government must control rupee value and appoint a governor of SBP as it is running without governor for the last 75 days. If dollar is
not controlled, the petroleum and electricity prices will spike to unimaginable level.
Further, Jawad said that the structural sources of the country’s chronic financial imbalances have remained unaddressed with a narrow and inequitable tax regime, energy sector’s circular debt, bankrupt public-sector enterprises, overvalued exchange rate, heavy regulatory burden and a narrow export base.
He called for reducing benchmark interest rate, which has been increased to 15% in order to save the economy from troubles.
“Benchmark rate in Malaysia is 2.25%, Indonesia 3.5 %, China 3.7 %, Bangladesh 4.75 % and India 4.9 %, but it is 15 % in Pakistan. It is impossible for private sector to compete effectively for promoting trade and exports,” he said.
Published in The Express Tribune, July 22nd, 2022.
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