Delay in taking vital decisions fuelling inflation, says PBIF head

KARACHI: Delays in important decisions are fuelling inflation which could increase from the current 13 percent to 23 percent, Chairman of the National Business Group Pakistan and President of Pakistan Businessmen and Intellectuals Forum (PBIF) Mian Zahid Hussain has warned.

He further said that Pakistan needs $ 41 billion in the current financial year while presently foreign exchange reserves are barely enough for 45 days of imports. It is impossible to stabilise the situation in the presence of existing policies.

So far the government has failed to convince the International Monetary Fund (IMF) to provide $ 900 million and the friendly countries are in no mood to finance our deficits.

Regarding the conflicting statements, he said that the government claims to keep inflation at 11 percent but at the same time it will be raising the price of oil and gas. It has also hinted at imposing heavy taxes on oil, gas and other commodities which will increase inflation further.

It has been claimed that the growth rate will be kept at 5 percent but at the same time reduction of imports has also been announced. If imports are low, the growth rate will also be affected as most of the revenue comes from imports.

An increase in tax revenue has also been claimed but if imports are less then tax collection will also be reduced. The government has allocated Rs 800 billion for PSDP in which a lot of deductions will have to be made to balance the budget.

Zahid Hussain said it does not benefit a country with a sinking economy to violate the agreement with IMF in the budget. Continued violation of the agreement with the lender is an irresponsible act which should be addressed as soon as possible.

He said that the ambiguities and contradictions in the budget should be removed immediately so that it could become a workable document.

Talking to members of the business community, the veteran business leader said that the country was on the brink of disaster but important economic decisions were still being taken on political grounds, which was astonishing.

Many issues, including those pertaining to revenues and expenditures, remain unclear in the budget, while the IMF has reservations about oil subsidies, current account deficits and direct taxes, he added.

It is impossible to get a loan from the IMF unless the government responds to the reservations of the lender.

Zahid Hussain said that Finance Minister Miftah Ismail has admitted that IMF is not happy with some budget proposals but still no adjustment is being made, which is worrisome as it is affecting the economy and the value of the rupee.

Copyright Business Recorder, 2022