The Business Forum of the Awam League while questioning the performance of Federal Finance Minister Ishaq Dar held him responsible for the fading national economy that led the country to face unprecedented rise in the trade deficit, and internal and external debt.
Talking to Business Recorder here on Tuesday, the Forum's President Agha Saiddain, who is also a leading leather exporter, said, "Unfortunately Ishaq Dar is not aware about the wrong decisions he took causing serious damage to our economy and the opportunities he missed during the last four years.
Commenting on the country's export sector, he said the exports witnessed persistent decline that stayed at US $25.110 billion in 2013-14, $23.667 billion in 2014-15, $20.787 billion in 2015-16 and $20.40 billion in 2016-17. During the same period, exports of Bangladesh reached US$ 37 billion in 2017 from US$ 17 billion in 2013-14, he said.
Agha Saiddain claimed that the first wrong decision was taken when electricity tariff was increased by 33 percent in 2013 to clear the circular debt of Rs 450 billion of private power companies. The second mistake was that all working capital of exporters was stuck up in sales tax and customs duty refunds. Consequently, acute liquidity crunch resulted in closure of many textile and leather units, he said.
He said though Ishaq Dar was not an economist but to maintain the level of $25 billion of 2013-14 was not a difficult task. The exports of all neighbouring countries including India, Bangladesh, Sri Lanka and China increased during these four years but in South Asia we were the only unfortunate nation showing 20 percent decline in exports, he maintained.
"Had we maintained even level of 2013-14, the country would have earned extra $10.476 billion in these four years from our exports and there was no need to borrow dollars at high interest rate which went up to 8.26 percent, the highest in the world," he said.
Export level of $25 billion added with benefit of oil prices would have made us self-sufficient and there was no need of borrowing, he opined. He said the oil import bill for the year 2013-14 was $14.860 billion which fell to $ 12.166 billion in 2014-15 and $7.667 billion in 2015-16. In these two years only, the government could have saved $9.847 billion from oil imports due to decline in crude oil prices from $110 per barrel to $ 45 per barrel.
Agha Saiddain said the benefit of falling oil import bill in these four years exceeded $10 billion. India passed a little percentage of decreasing oil bill to the general public and used rest of the benefit to improve the competitiveness of its industry to maintain the GDP growth above 7 percent. "We also could have followed the same policy as the government already passed a little benefit to the general public and where the rest of the benefit of lower oil prices was used is not known," he maintained.
"Had we maintained export level of $25 billion with lower import bill of oil, there could have been a golden opportunity to get rid of IMF forever. Ishaq Dar is expert in borrowing and tax collection without expanding tax base. He borrowed from the IMF, World Bank, Asian Development Bank, China and all commercial banks. He is happy to borrow at 8.26 percent interest rate but not ready to raise same from exports by introducing export-friendly policies which will cost less than 8.26 percent," Agha said.
"Our exports have dropped to 7 percent of GDP which is lowest in Asia. We have not only lost our capacity to earn foreign exchange but also financed imports with cheaper dollar earned through exports and foreign remittances. We borrowed to finance our imports which increased from $45.073 billion in 2013-14 to $53 billion in 2016-17, the highest in the history of last 70 years, and we faced historical high trade deficit of $32 billion," he added.
All recipes of Ishaq Dar in last four years have failed and have taken our economy in bottomless pit. The industrial growth in the country went down due to closure of 35 percent textile units and 40 percent leather units, he claimed.
Due to heavy domestic borrowing of the government from commercial banks, the investment in industry declined. In the indexes of cost of doing business, we are at 137th position among 142 countries and at 132nd position on the competitive index. Our exports were doubled from 2004 to 2011 in seven years with 10 percent yearly growth," he said.
Ishaq Dar always achieved targets set by the IMF for revenue collection which really increased the cost of shut down of industrial units in the country and decline in exports. For tax collection, he used the FBR to rob bank accounts of existing tax payers without increasing tax base, he added.
He further commented that Dar always stood against any export incentive suggested by the Ministry of Commerce and TDAP. Even recently when the government decided that like other countries Pakistan will also refund all Drawback of Local Taxes and Levies (DLTL), the Finance Minister linked it to 10 percent increase in exports.
He said the Finance Minister could not understand that all over the world the exporters are allowed refund of all taxes, duties and levies - direct or indirect - to make exports competitive and it is also allowed under WTO rules but our Finance Minister wants us to link it to 10 percent increase in exports. During all these years, he focused on borrowing and implementing policies detrimental to industrial growth and exports, he concluded.
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