BMP urges govt to implement fiscal, energy reforms to strengthen fragile economy

LAHORE :The Federation of Pakistan Chambers of Commerce and Industry’s Businessmen Panel (BMP) has asked the government to focus on the implementation of fiscal and energy reforms to strengthen the economy, besides ensuring the sustainable growth, as the aftershocks of the IMF programme are being felt by the trade and industry now.

FPCCI former president and BMP Chairman Mian Anjum Nisar emphasized the need for consistent economic policies to restore macroeconomic stability and market confidence, as $1.5 billion production losses have been estimated on account of loss of only cotton crop due to recent flooding. So, the government must have to provide electricity and gas at competitive rates to the export as well as the domestic industry, besides ensuring continuous power and gas supply to the industry, he demanded.

He highlighted that Pakistan is among the countries most affected by climate change causing devastating damage to infrastructure and agriculture production.

He said that the trade and industry have been enduring the IMF programme since decades, but never before has it been so devastating, as the difference this time is the country’s extremely fragile economy and the Fund’s non-negotiable condition of withdrawal of all subsidies with no exemptions or waivers.

The Businessmen Panel Chairman said that Pakistan’s precarious financial situation has landed it into a deep debt trap where an overwhelming part of tax revenue is consumed in debt servicing alone.

The debt policy states that as of 30 June 2022, Domestic Public Debt reached Rs 31.3 trillion as compared to Rs 26.2 trillion on 30 June 2021. The key drivers for increase in public debt are primary deficit of Rs 2.42 trillion, interest expense of Rs 3.18 trillion and share of adverse performance of exchange rates that stood at Rs 3.764 trillion. Similarly, on external front, Pakistan’s External Public Debt is recorded at $88.8 billion as on June 30 2022 as compared to $86.5 billion on 30 June 2021.

Mian Anjum Nisar said that Pakistan’s external public debt is sourced from three major contributions, with around 48 percent from multilateral loans, 30 percent from bilateral loans, and 22 percent from commercial sources like banks, Eurobonds and Sukuks. He said that the increased level of external debt can pose a great risk to fiscal framework of an economy especially when current account deficit is high, foreign exchange reserves are at low levels and the exchange rate is under pressure.

Pakistan’s GDP growth since 2018 is continuously declining and rated as lowest in the region. The revenue targets are being met through oppressive and indirect taxation measures which on one hand are raising the cost of doing business and on the other, making it tough for small and medium enterprises (SMEs) considered as backbone of economy, to carry on their operations.

Copyright Business Recorder, 2022