Businesses demand clear roadmap

Say lack of coherence in government policies is stagnating economy

KARACHI:

Pakistan’s current economic situation has left businesspeople from the trade and industry sectors unnerved, demanding a clear roadmap from the government for the revival of the economy.

Terming the present financial crisis as nerve-shattering for trade and industry, the Pakistan Industrial and Traders Associations Front (PIAF) on Saturday urged the government to define a clear policy for economic recovery, said a statement issued by the association.

In a meeting presided over by PIAF Chairman Faheemur Rehman Saigol, the participants unanimously agreed that, for the past several months, a lack of coherence in government policies was stagnating the economy.

Speaking to the Express Tribune Union of Small and Medium Enterprises (UNISAME) President Zulfikar Thaver said, “Both big and small businesses are perturbed by the current financial crisis and are demanding to know the strategy being applied by the economic managers to steer the country out of this uncertainty. They have brought the country to near bankruptcy.”

“Although the conditions of the International Monetary Fund (IMF) seem to have been met, the cost is known to all,” he said, predicting that, “Inflation will increase further, along with the 20% interest rate hike and with a bank spread of a minimum 3%, the lending rate will be 23% or 24%.”

“The interest rate at microfinance banks will probably be 30% – altogether unaffordable. In all this, the government is still unable to provide the masses with a clear roadmap because it obviously has none,” lamented Thaver. Offering a solution, the UNISAME president suggested, “First of all, the government must cut all luxury spending. Secondly, it should put an end to inefficiency, corruption and adopt simple lifestyle instead. Lastly, we need to focus on increasing exports and limiting imports to only essential items.”

“The government should seek immediate support from overseas Pakistanis, brotherly Muslim countries and China during this hour of need,” he added.

Lasbela Chamber of Commerce and Industry and Employers’ Federation of Pakistan, Ismail Suttar blamed the economic managers of the country for “having no clue as to where they are leading the nation.”

“The entire country is in a mess with the drivers of economy. The latest monetary policy presentation by the State Bank of Pakistan (SBP) governor says it all,” he said, adding that “It forecasts doomsday for the country’s economy while the government is busy in firefighting with short-term ammunition. They have no idea what the extent of devastation all this is causing to the industry,” lamented Suttar.

Agreeing, the PIAF chairman said, “A volatile exchange rate, unprecedented hikes in the markup rate, repeated increases in electricity rates, gas shortages, price spirals, mismanagement and bad governance have now become the hallmark of the government.”

“The massive fall of rupee value continued to damage the economy, as the rupee witnessed a huge depreciation; one of the highest devaluations of local currency in Pakistan’s history, added Saigol.

“This devaluation of the currency has been dictated by the IMF through prior actions and has nothing to do with macroeconomic fundamentals,” he said, adding that, “The monetary tightening and falling exchange rate resulted in high inflation, public debt and debt servicing. Empirical evidence shows that 1% monetary tightening hiked inflationary pressure by 1.3% in the case of Pakistan and the US dollar’s value continued to rise, reaching a record high. The government needs to devise a strategy on war-footing to increase foreign investment in Pakistan so as to stop the upward trajectory of the dollar.”

“The government can blame the IMF or some unfriendly foreign powers for its economic predicament if it wants, but cannot deny that it is in hot water today due to its misplaced confidence that it could deviate from the IMF programme and turn to friendly countries for its dollar requirements to avoid defaulting,” he added.

“Nearly three months after Finance Minister Ishaq Dar refused to be dictated to by the IMF, these countries also seem to be siding with the lender, providing Pakistan with just enough to manage until the bailout loan is finalised. Now the Fund has also become rigid on issues such as the exchange rate, interest rate, external financing gap and permanent debt-servicing surcharge on electricity,” explained Saigol.

The PIAF chairman appealed to the IMF to relax some of its conditions to prevent the country’s economic crisis from spiralling out of hand.

Published in The Express Tribune, March 5^th, 2023.

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