LAHORE: The Federation of Pakistan Chambers of Commerce and Industry’s Businessmen Panel (BMP) said on Sunday that the multilateral donors and friendly countries’ huge sum of aid pledges might not bring any significant impact on struggling economy, as the sustainable solution to Pakistan’s economic issues lies in the structural reforms and consistent policies.
FPCCI former president and BMP Chairman Mian Anjum Nisar said on Sunday that it is high time that the government should start thinking about the debt restructuring, including foreign and domestic. The decision to take more loans will keep complicating the problems in longer term, as the government needs $23 billion in foreign debt repayments for this fiscal year, which is the direct result of such decisions of taking loans from foreign nations.
Anjum Nisar said that the country’s economy is plunging into an ever deepening ravine with plummeting foreign exchange reserves, with the continuation of the flawed policy of keeping the inter-bank dollar rate artificially low that is increasingly being attributed to the government rather than the State Bank, irrespective of the autonomy granted to it.
He said that the government has apparently taken a riskier and longer path of begging from foreign nations to avoid the risk of default. The decision to sell the assets is good but it may not materialize in next few weeks. The reserves are at critically low level. In case Pakistan defaults, the economic wheel in short-term will come to a halt, the nation will suffer, the imports would be cut to critical goods that too at advance payments.
If the decision is to enhance the Saudi deposit to $5 billion and make a claim that the sovereign default has been averted then its cost will be too high to bear in the longer run. The government’s dilemma is that should it protect its remaining vote bank by not going the IMF or protect the economy by going to the IMF. However, its immediate preference seems protecting the vote bank but it may end up losing the both due to hyperinflation likely to be followed by a default.
Mian Anjum Nisar said that undertaking structural reforms require political will. He said that enacting structural reforms, such as improvements in tax collection system, bureaucracy and ease of doing business requires major political will and strict implementation of policies, he added.
The BMP Chairman said that this is the first time the world has acknowledged climate loss and set a new precedent by pledging billions of dollars for the victims of rains and floods in Pakistan. Recalling that earlier the global community had pledged for Ukraine, Syria and other countries, he said but the difference is that this time it is for climate loss.
Acknowledging that Pakistan government got massive support from the global community for the flood victims after they saw government’s willingness to help people, he said that it was a positive sign for the flood-affected people in Pakistan.
He said that the reconstruction and rehabilitation process in flood-hit area should now be expedited as Pakistan has secured pledges of over $10 billion from international community and the global financial institutions at the Geneva conference.
Expressing gratitude to the international community, he said that with this financial support, Pakistan would be able to commence work on the reconstruction and rehabilitation of the flood-affected areas, repairing of damaged infrastructure, agricultural, and poverty alleviation.
He said that Pakistan is among the countries that face endless suffering because of the climate-induced rains and floods affecting over 33 million people in the country last year.
Though he views global pledges positively, he nonetheless pointed out that rich nations had failed in the past to meet a long-standing commitment to deliver $100 billion to help poorer countries cope with climate change.
Also, the global governments’ plans to cut emissions in the years ahead have proven to be not enough to avert catastrophic climate change. While referring to the global pledgers’ past record, where they failed to generate finances and cut emissions, he said that pledging might help unlock agreement on key issues but noted that it was too early to tell whether it would lead to positive change for the environment and climate-change victims.
Though the world community responded overwhelmingly to Pakistan’s appeal by pledging over $10 billion for the recovery of flood-hit areas at the International Conference on Climate Resilient in Geneva, chances are slim that donors will make good on their commitments mainly because of the domestic political situation.
Mian Anjum Nisar said that the government had sought financial assistance from the global community as the funds needed in the aftermath of last year’s devastating floods had quickly ramped up, the world has undoubtedly extended its support to Pakistan but what is left to be seen is if the country can protect these pledges and provide development projects to the donors to finance.
Copyright Business Recorder, 2023