Business community fears economic contraction after IMF deal

Attaining growth within IMF limits biggest test for Govt: FPCCI

Govt may not be able to accomplish economic objectives: Zubair Ahmed Malik

Dated: Sept 11

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Wednesday said using IMF loan responsibly and ensuring growth within the parameters of lender’s harsh conditions is to be one of the biggest test of the government’s ability.

IMF policies are widely blamed for chocking growth making life difficult for masses and the private sector while the PML-N is known for its pro-investment and pro-business policies, said Zubair Ahmed Malik, President FPCCI.

This obvious contradiction will make it very difficult for the government to ensure growth keeping lender happy and without compromising the falling living standards of masses, he added.

Speaking to the business community, Zubair Ahmed Malik said that majority of the population is already living below the poverty line reeling under rising inflation while businesses are finding it difficult to sustain.

“We see ahead an era of further depreciation in exchange rate, monetary contraction, massive unemployment, dwindling exports, reduced forex reserves, missed revenue targets, double digit inflation and rising cost of production,” he added.

He said that gas levy estimated at Rs105 billion, 30 to 50 per cent increase in power tariff and 30 per cent escalation in domestic power price from next month could result in increased energy theft and decelerated power sector recoveries.

Business community doubts accomplishment of the Government’s stated objectives like pushing growth rate to six per cent in five years, fiscal deficit at 4 per cent, tax to GDP ratio at 15 per cent, investment to GDP ratio at 20 per cent, and generation of 10,000MW of electricity.

Similarly, the FPCCI chief said, increase in food production and expenditure on education by 4 per cent each, pushing literacy rate to 80 per cent, 2 per cent hike in health sector spending, and creation of three million jobs seems difficult tasks. 

He noted that deadly combination of growing fiscal deficit and unsustainable trade deficit should be tacked to ensure sustainability.

Zubair Ahmed Malik said that solid and bold policy action is lacking which can tackle terrorism and sectarianism and improve socio-economic and political situation of the country which will help reform the economic fundamentals ensuring a bright future for generations to come.

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Rising dollar and falling rupee exposes Govt, IMF deal

Rising dollar and falling rupee exposes Govt, IMF deal

July 26

The Pakistan Economy Watch (PEW) on Friday said rising dollar and falling rupee has exposed the secret deal between government and IMF to depreciate the local currency.

The sliding rupee has also exposed expertise of the economic managers of the incumbent government, it said.

The deal between government and the lender is also evident from the role of SBP which has been reluctant to take concrete steps to stabilise the exchange rate, said Dr Murtaza Mughal, President PEW.

He said that depreciation in the value of rupee will invite inflation as Pakistan heavily relies on imports. Moreover, it will add to the foreign debt and make life of masses miserable.

Overseas Pakistanis will prefer to send money through hundi as the difference in interbank and open market rate is at unprecedented level, he added.

Dr Murtaza Mughal said that there was no justification in the rapid erosion of rupee as overall economic situation was calm, indicators are as usual and there was not major change in the position of forex reserves.

A check on Dubai-bound flights can expose all the elements involved in flight of capital, hoarding of dollars and turning of black money into white, an evidence of blooming grey economy, he informed.

Exchange rates should not be taken lightly as it is among the most analysed and forecasted indicators in the world. The currency markets are the most liquid in the world with a daily turnover of close to $2 trillion as compare to $ 70 billion on the New York Stock Exchange.

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Proper usage of borrowed money real test of the government

Nothing wrong in getting IMF loan as last option

Decision of equitable loadshedding questioned

July 08

The Pakistan Economy Watch (PEW) on Monday said securing IMF loan was not a success unless the government ensures proper utilization of borrowed money to the satisfaction of all stakeholders.

Real test of the government will be to best utilize the money and fulfill promises with the international lender to improve economy and boost credibility, it said.

Pakistan was left with no option but to accept IMF conditions or face a default as the former government left Rs. 14.3 trillion of domestic loans, Rs. 500 billion circular debt, external financing requirements of $ 11.5 billion and budget deficit at 9 per cent, said Dr Murtaza Mughal, President PEW.

Pakistan would have been a developed country if if half of the money borrowed in past was utilized properly, he said adding that asses were expecting a good decision on taxing agricultural income to balance the taxation regime which hasn't happened.

Moreover, he said, many former governments ignored economical ways to secure energy and preferred the costly western solutions which has resulted in an energy mix where country is using 75 per cent of costly fuels and only 25 per cent of cheap solutions.

Dr Murtaza Mughal said that this policy hiked the power generation cost to Rs. 14 per unit in which Rs. 5 is given as subsidy which is simply unsustainable for an economically challenged country like Pakistan.

He warned that energy theft has touched Rs. 250 billion mark which will register increase if the government continued to ignore the issue.

Decision of equitable load-shedding across country should be revisited. The areas with high theft ratio theft should face more load-shedding while the consumers of the regions with minimum theft should enjoy better power supply, he opined.

Such a decision will reward honest consumers and push people to point towards power thieves which will improve overall situation, said Dr. Mughal.

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