LAHORE: The Federation of Pakistan Chambers of Commerce & Industry’s Businessmen Panel (BMP) has stressed the need for a revisit of the economic policies, as the economic indicators throughout the 2023 remained very depressed amidst high inflation, low exports, depleting foreign reserves and continued uncertain position of the local currency.
FPCCI former president and BMP Chairman Mian Anjum Nisar said here on Sunday that almost all indicators of the economy continued to show poor performance during 2023, including volatile exchange rate, unprecedented hike in markup rate, repeated increases in electricity rates, gas shortage, price spiral, mismanagement and bad governance, becoming the hallmarks of the government.
He observed the negative economic indicators and uncertainty over resumption of the International Monetary Fund program continued to push the rupee towards a new historic low against the US dollar especially in first half of the calendar year of 2023.
He said that massive fall of rupee value continued to damage the economy, as the rupee witnessed a huge depreciation; one of the highest devaluations of local currency in Pakistan’s history in this period.
Mian Anjum urged the policy makers to concentrate on increasing tax-to-GDP ratio which was the lowest in Pakistan in the region in 2023.
The BMP leader warned if the government failed to take appropriate measures for economic revival, the trade and industry will face a complete shutdown, asking the government to convene a conference, taking the business community onboard.
The FPCCI former president observed that besides increasing exports and controlling imports the government will have to take administrative measures, as a large demand of cash dollars are seen in the market. He argued that this devaluation of the currency was dictated by the IMF through prior actions and it has nothing to do with macroeconomic fundamentals.
He said that there was a complete breakdown of economic policymaking, as the country’s fiscal policy had become subservient to monetary and exchange rate policies.
He said that the monetary tightening and exchange rate depreciation resulted in higher inflation, public debt and debt servicing. The empirical evidence showed that the one percent monetary tightening hiked the inflationary pressure by 1.3 percent in the case of Pakistan, he added.
The government needs to devise a strategy on war-footing to increase foreign investment in Pakistan so as to stop the upward trajectory of the dollar, he added.
The rupee during through the whole year remained uncertain, as the uncertainty pertaining to the IMF program was causing pressure on the Pakistani rupee while the country’s foreign exchange reserves have also declined, which was another source of concern for investors, he said.
He added that the SBP’s move to impose fines on exporters delaying receipt of payments proved ineffective. While demanding a clear roadmap for the revival of economy, the BMP Chairman termed the country’s financial crisis as a nerve-shattering for trade and industry.
There was a consensus among the business community that there was a lack of coherence in the government policies and things on economic front went shaky instead of moving for the last several months.
Copyright Business Recorder, 2024