KARACHI: Irfan Iqbal Sheikh, President FPCCI, Monday said the economic and business environment has reached a point where the business community finds the demand of imposing an economic emergency justifiable to put an end to the economic uncertainty.
He added that businesses cannot operate profitably under such harsh and unfavorable conditions.
Irfan emphasized that the policy rate must be aggressively brought down to 7 percent from its current level of 12.25 percent to make access to finance affordable for the private sector to keep the economic activities afloat.
He also noted that the step will bring down the short-term debt servicing of the government by Rs. 300 billion; and, provide breathing space to the government for the better fiscal management.
The FPCCI chief has proposed the simplification of personal income tax slabs down to 5 – 7 from the current 11 slabs. Interestingly, the IMF has also recommended the same and can add up to Rs. 200 billion to the tax collection in a couple of years.
Irfan noted with concern that the budgetary deficit is also increasing due to the incessantly loss-making State-Owned Enterprises (SOEs) and now it is absolutely imperative to reform and restructure them decisively; as their share in budgetary deficit has reached to 23 percent.
Irfan has also called for an increase in FED on cigarettes and carbonated drinks to serve the dual purpose of generating revenues and protecting the general public in general and the workforce in particular from health hazards that have been unleashed on them by smoking and diabetes-causing sweetened drinks. He added that if FED is raised on cigarettes to 70 percent, Pakistan can generate up to Rs. 240 billion additional revenues.
FPCCI President has also expressed his willingness to engage with the government in a consultative process to take on the economic challenges collectively in the broader national interest. However, he reiterated his stance that policies should not be announced in a vacuum without consulting the business, industry and trade community – as they are the real stakeholders.
Additionally, he has called for a pro-business federal budget 2022 – 23; enabling the private sector to invest in the economy, set up new industry, increase exports on an expedited rate, generate employment and contribute towards revenue collection in a healthy manner.
Meanwhile Acting President of Korangi Association of Trade and Industry (Kati) Farrukh Qandhari said that in view of the current situation, we are facing a flight of investment from the country, which is making the situation more worrying.
He further said that only the development of industry in the country can take Pakistan out of its economic woes.
Farrukh Qandhari hoped that the new government would take care of the situation and make decisions that would not lead to further borrowing to cover the deficit.
He further said that instead of the country and the nation being indebted, decisions should be taken which would be popular among the people and industrialists and will stabilize the economy.
He expressed concern over the current account deficit reaching a record high of over 13 billion US dollars in the first nine months of the financial year 2022.
During the same period last year, the deficit was 275 million dollars, which increased hundred times in one year, bringing the economy to the brink of collapse.
He said that the current account deficit was 1 billion dollars in March alone, up from 369 million dollars compared last year.
The Acting President Kati said that in such a scenario, saving the economy is a huge challenge for any government and it is impossible to move the economy in the right direction without taking historic or revolutionary steps.
Farrukh Qandhari said that the government should ban unnecessary imports and provide incentives to increase exports.
He said that the current account deficit could not be eliminated without increasing revenue.
Acting President Kati said that it was difficult to increase the demand for Pakistani products in the global market without increasing industrialization and reducing production costs.
He said that Pakistanis living abroad are playing an important role in managing the national economy but there are still many problems.
Copyright Business Recorder, 2022