Anjum Nisar says industry harmed by high cost of doing business, discouraging investment
\n Islamabad
\nThe Federation of Pakistan Chambers of Commerce & Industry\u2019s Businessmen Panel (BMP) has warned that extensive borrowing, including the recent IMF $7 billion financing for Pakistan, is unlikely to put the country\u2019s economy back on track, placing significant responsibility on the government to pursue reforms for long-term stability.
\nThe FPCCI former president and BMP Chairman Mian Anjum Nisar said that with continuous hike in cost of production in the country, what the Pakistan\u2019s economy really needs is persistent and sound economic management, asking the authorities for undertaking economic reforms and improving the regulatory environment for better Ease of Doing Business level to boost foreign investment so that financial stability can be achieved in the long-run.
\nHe said that Pakistan\u2019s industry had been harmed by the high cost of doing business, which discouraged investment in capacity and capability and called for easing the burden of heavy taxes on the power sector.
\nMian Anjum Nisar stated that the constant increase in power tariffs on the pretext of fuel adjustment had increased electricity prices and added to the already high cost of trade and industry. Seeking comparable energy tariffs for domestic industries in order to capture the global market, he stated that due to high electricity rates, power theft became rampant as the tariff was unaffordable to consumers.
\nPakistan had reached a staff-level agreement with the IMF in July for the 37-month loan, the 25th since 1958, but delays in securing a final approval created market uncertainty.
\nPrime Minister Shehbaz Sharif, currently attending the United Nations General Assembly in New York, hailed the decision, insisting that the government was committed to implementing reforms demanded by the deal. He said he also hoped that this would be Pakistan\u2019s last IMF program.
\nEconomic analysts said that while Pakistan has stabilised after a prolonged period of volatility, much work needs to be done. The agreement, in the short term, will create space for the government, but if the medium-term outlook is to improve, then the government needs to pursue structural reforms that create both fiscal space for Islamabad and assuage concerns about debt sustainability, they said.
\nPakistan\u2019s debt, which poses the biggest strain on its $350bn economy, requires $90bn in repayments over the next three years, with the next major tranche due in December.
\nForeign reserves with the central bank currently stand at $9.5bn, sufficient to cover just over two months of imports.
\nThe senior economists said that the loan primarily aims to ease Pakistan\u2019s debt repayments.
\nWhile much needed, a program built around rollovers, expensive borrowing from commercial banks to fill in financing gaps is hardly to bring any sustainable solutions to Pakistan\u2019s economic and financial challenges, they added.
\nPakistan is the IMF\u2019s fifth-largest debtor, owing more than $6bn as of September 25, according to the lender\u2019s data, after Argentina, Egypt, Ukraine and Ecuador.
\nAnalysts say one challenge before Pakistan will be to build a broad political consensus around the reforms needed under the IMF deal, including taxes, raising energy tariffs and allowing market forces to determine the Pakistani rupee\u2019s value.
\nPolitical stability will define the fate of the program and the economy. Implementation of the reforms agenda outlined in this program, such as no subsidies from provinces, taxes on the agriculture sector, privatisation a very high level of commitment from different political parties ruling in respective provinces, they said.
\nGovernment policies, including artificially protecting the value of the rupee, as well as a catastrophic flood in the country in late 2022 meant that by May 2023, inflation soared to as high as 38 percent, while foreign reserves fell to $3bn.
\nWithout addressing fundamental dysfunctions, the country will almost certainly falter. Long-term possibilities are immense, but they remain untapped, they said, referring to the political schisms in the country and the risks they pose to a unified approach towards reforms.
\nHe urged the power ministry to identify system constraints and communicate targets to all concerned departments in order to launch a wartime effort to upgrade the transmission system.
\nHe urged the completion of all ongoing power projects well ahead of schedule. He stated that business-friendly policies must be adopted, similar to those adopted by other neighbouring countries in the region.
\nHe suggested that the amount specified in trade policy be used to promote exports by providing incentives to trade and industry and by exploring new markets. According to him, Pakistan\u2019s electricity prices were already on the high side, which was the primary reason for the country\u2019s price hikes. He stated that providing affordable electricity would assist in lowering production costs, thereby benefiting the public. He stated that rising imports and a widening trade deficit posed a serious threat to economic growth and must be addressed urgently.
\nHe accused all previous governments for extensive borrowing of forex during last five years to meet local expenditure, which had increased the burden of foreign debt of Pakistan substantially, instead of making serious efforts to enhance the ranking of Ease of Doing Business Index of Pakistan, as it is must to attract foreign as well as local investment and high economic growth.
\nThe BMP chief stressed the need for reducing cost of doing business, besides evolving a new price control mechanism, as huge taxation, rising oil prices and constant jump in electricity and gas tariffs have lifted the inflation.<\/p>\n","protected":false},"excerpt":{"rendered":"
Anjum Nisar says industry harmed by high cost of doing business, discouraging investment Islamabad The Federation of Pakistan Chambers of Commerce & Industry\u2019s Businessmen Panel (BMP) has warned that extensive borrowing, including the recent IMF $7 billion financing for Pakistan, is unlikely to put the country\u2019s economy back on track, placing significant responsibility on 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-434331","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"\n