KARACHI: Our Economic Frame Work faces serious challenges which need to be redressed by broad based reforms.
There are multiple challenges like the challenges of Energy Tariff, Circular Debt, External and Domestic Borrowing, Declining of Exports, Huge increase in Inflation / Interest Rate, Supply Chain Management, Health & Education Sector and burden of heavy income tax on Salaried Class said Ateeq Ur Rehman (economic & financial analyst).
He said we are one of the highest tax paid energy consumers in the world, whether it is a household or industry everybody is facing this serious challenge and we see no relief on it in the nearest future. The pilling up of Circular Debt of Electricity and Gas is another burden of our Economy which has become one of the sources of extremely high Energy / Gas Tariffs.
The Industrial Tariffs are rising rapidly and consequently the 50% of production expenses of an Industry is comprised of the Electrical / Gas Cost added Ateeq.
He said the Debt Management through Debt Servicing is another serious challenge. In past Bank Borrowing apart from External Borrowing has been doubled. The outstanding debt has been found at a record high of 78% despite regular debt and interest payments. Pakistan faces a very high Fiscal Deficit.
He said that 90% of Export oriented Industries, General Industries, Import Substitution Industries, Value added Industries, SMEs are main sufferer of Shortage of Energy and huge increase in prices.
This is devastating and create further anxiety to the Economy specially SMEs. SMEs do not have sufficient resources and normally work on marginal profit. Consequently SMEs are forced to close their Units, a Small Scale Industries are dead. In our Country, general Inflation is soaring; it has surpassed almost 45% and expected to raise more.
The inflationary pressure has brought down middle class to lower class. The Interest Rate is one of the highest in the region and the access to finance is very difficult with the high cost of credit.
The Supply Chain Management is not a new challenge but it has now become erratic under the present global circumstances. In Shipping, due to liner diversions, Asia to Europe Shippers are facing two majors problems, huge increase in Sea Freight plus additional payments and longer transit times. Traders are facing exorbitantly
high shipping charges and also unnecessary working day charges.
He said the paucity of Free and Quality of Health Services and unaffordable Education fees is a serious challenge for majority of Population. The proposal for Doubling Tax Collection from Salaried Person is hurting the Middle and Upper Middle Income Groups.
The Salaried Class is already buried under Heavy Taxation and with the increase in their salary with the change in payment slab is very upsetting for them. This great Challenge needs to be revived for a relief to the salaried class.
Facing these challenges is robust, we can replenish them by good governance and persistent efforts / planning said Ateeq.
Copyright Business Recorder, 2024
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