The Pakistan Business Forum (PBF) has said that entrusting a technocrat with the role of finance minister would pose significant challenges for the country amid the current economic climate.
“Any technocrat may struggle to negotiate a deal that balances economic stabilisation with the growing hardships faced by the people, potentially raising concerns about conflicts of interest,” said Khawaja Mahboobur Rehman, President of the PBF.
“PBF views Ishaq Dar as someone who has earned a reputation as a ‘tough negotiator’ with the IMF and remains a viable option,” said Rehman during a media interaction on Thursday.
He urged the prime minister (in-waiting) to appoint a politician as the finance minister to better grasp the local dynamics.
Rehman strongly demanded that the incoming government re-evaluate the policy of continually raising energy prices immediately. In particular, the decision to increase the captive gas price to Rs2,750/MMBtu, marking a 223% increase since January 2023, which Rehman insists poses a grave threat to Pakistan’s industrial sectors, with a complete collapse looming.
He highlighted that the escalating energy costs directly translate into higher production expenses across all industrial sectors, compelling businesses to transfer these costs to consumers. This, in turn, exacerbates the financial burden on consumers who have been grappling with relentless inflation for the past two years.
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Rehman stressed that dwindling consumer demand would further reduce manufacturing activities, perpetuating the cycle of economic strain. Additionally, the resulting inflation precludes any possibility of interest rate reductions in the foreseeable future, further stifling private sector growth.
Rehman urged the government to comprehensively reassess its energy pricing framework, noting that electricity prices for industrial consumers are significantly higher than those in regional economies like Bangladesh and India. With yet another hike in gas prices, manufacturing has become financially unviable in Pakistan, deterring both domestic and foreign investment.
He proposed the immediate removal of cross-subsidies from power tariffs for industrial consumers to align them with regionally competitive levels of 9 cents/kWh, which would incentivise a shift away from gas-based captive generation, stimulate industrial activity, and facilitate job creation and income generation.
The PBF president added that this measure would enhance Pakistan’s competitiveness globally, positioning it as an attractive destination for investment and manufacturing.
The PBF stands ready to engage in collaborative dialogue with the government and stakeholders to formulate a balanced, forward-looking energy policy that addresses immediate economic challenges and fosters a resilient, competitive, and sustainable industrial sector in Pakistan, said the PBF president.
Published in The Express Tribune, February 23rd, 2024.
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