LAHORE
\nThe Ferozepur Road Industrial Association (FRIA) has warned the high cost of doing business has been hurting the economic growth, as the inflation rate bounced back, hurting the trade and industry the most, who faced the brunt of a staggering increase in gas prices.
\nThe FRIA senior vice chairman Shahbaz Aslam said that the failure to reform the tax system is a major factor behind heavy domestic and foreign borrowings by the government.
\nShahbaz Aslam said that the most serious threat to the economy in the current fiscal year would be inflation, because it is already hitting economy due to continuous raise in oil prices and depreciation of local currency. Quoting the Pakistan Bureau of Statistics, he said that the Consumer Price Index surged to 29.2 percent last month compared to a year ago.
\nThe increase was more than market expectations and has lessened the prospects for a cut in the interest rates, which stand at the country\u2019s highest ever level of 22 percent.
\nThis reading, the first announced by the PBS after the recently concluded International Monetary Fund talks, in which the global lender also cut the inflation forecast for Pakistan to 22.8 percent, may strengthen the IMF\u2019s view of keeping the policy rate unchanged until core inflation starts easing out.
\nHe predicted that inflation would remain high and may even increase further due to market frictions caused by relative demand and supply gap of essential items, exchange rate depreciation and recent upward adjustment of administered prices of petrol and diesel.
\nThe PIAF and FRIA leader called for keeping check on government expenditure and high cost of debt servicing to contain budget deficit, as the Pakistan\u2019s federal budget deficit projection has been revised to history\u2019s highest to over Rs6 trillion, highlighting the unending fiscal woes that have pushed the country into a debt trap despite putting additional burden of billions of rupees on industry in the current fiscal year.
\nExpressing serious concern over the high jump in country\u2019s budget deficit, FRIA SVC said the revision has been made in light of agreement with the International Monetary Fund, which exposed the massive underreporting of expenditures at the time of budget presentation by the finance ministry.
\nThis is a highly unsustainable level and has already pushed the country into a situation where debt restructuring seems to be the only viable option. The PIAF EC member maintained that the failure to reform the tax system and increase revenue collection is a major factor behind heavy domestic and foreign borrowings by the government.
\nIn view of the low level of available FX reserves, the debt management strategy of Pakistan may have to be revisited, to ensure the stability of Pakistani rupee and restoration of international capital markets\u2019 confidence in the economy of Pakistan.
\nHe expressed surprise at the impact of the gas price hike, stating that it has surpassed market expectations. His analysis suggests that PBS included fixed costs, such as meter rent, in the weekly inflation calculation in addition to the gas tariff hike.<\/p>\n","protected":false},"excerpt":{"rendered":"
LAHORE The Ferozepur Road Industrial Association (FRIA) has warned the high cost of doing business has been hurting the economic growth, as the inflation rate bounced back, hurting the trade and industry the most, who faced the brunt of a staggering increase in gas prices. The FRIA senior vice chairman Shahbaz Aslam said that the […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-392675","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"\n