External debt: business community leader explains enormity of challenge

KARACHI: Chairman of National Business Group Pakistan and President Pakistan Businessmen and Intellectuals Forum Mian Zahid Hussain said that in the current year, Pakistan has to repay debts of about 25 billion dollars, which is six times more than its foreign exchange reserves.

After the agreement with the IMF, new loans and rollover of old loans will be possible, so we have no option but to obey the IMF dictation, he said, adding after the current loan agreement, the newly elected government will also have to sign another long-term loan agreement with the international organization, and if there are no breaches of promises, the terms of this agreement will be somewhat lenient.

He said that the credit of IMF Staff Level Agreement goes to Prime Minister Shahbaz Sharif and Finance Minister Ishaq Dar. The Prime Minister has once again proved his leadership skills and the business community supports the steps taken to fully restore the confidence of the IMF, he said.

Mian Zahid said that those anticipating a default have failed in their designs and the success of the standby program will depend on the capabilities of the current government, the caretaker government and the new government elected as a result of the election.

He said that though the opposition seems disappointed, but the public and business community are satisfied, which is reflected in the increase of 2400 points in the stock market.

If the country had gone bankrupt, the sufferings of the people would have become unbearable and inflation further exceeded. Due to the efforts of the government, the country has temporarily come out of the uncertain situation, but the confidence of the IMF has not yet been fully restored, he said.

He said that government should take all the necessary steps to improve relations with the IMF, for which the business community will continue to support it unconditionally.

Mian Zahid said that as a result of the agreement, in addition to three billion dollars from the IMF, it will also be possible to obtain funds from the World Bank, Asian Development Bank, friendly countries and the international lending market at low interest rates and a total of 10 to 12 billion dollars are expected to be brought into the country.

He noted that the domestic interest rates will remain high, the prices of electricity and gas will also increase, the control on US dollars and imports will also has to be ended, which will affect the people and businessmen, but this will not be as painful as a bankruptcy.

He further said that the terms of the IMF agreement include fiscal discipline, increase in tax base, energy reforms and providing facilities to the people.

The success of the program is linked to political stability in the country. If there is political instability, its success will be difficult, so matters should be kept under control at all costs and no political party or group should be allowed to do mischief.

Copyright Business Recorder, 2023