Zahid for import substitution, sell-off of loss-making SOEs to help resolve economic crisis

KARACHI: Chairman of National Business Group Pakistan and President Pakistan Businessmen and Intellectuals Forum Mian Zahid Hussain has said Pakistan is between the devil and the deep sea over stringent International Monetary Fund (IMF) conditions.

One reason for delay is release of loan tranche by IMF is lack of confidence, which will hit the budget making exercise.

Mian Zahid said that the ninth review of the IMF and the staff level agreement should have been completed last year, but the previous regime violated the agreement with the international organization due to which the ninth review was stalled.

He said that people are constantly being told that all the new conditions of the IMF have been fulfilled, and that the agreement will be concluded in a few days, but the IMF is changing the goalposts very frequently.

IMF is adding new demands to its list and asking Pakistan continuously to do more, he observed.

Among the reasons for the unnecessary harshness on the part of the IMF is the fear of this institution that after receiving the loan, affairs in Pakistan will continue to be run irresponsibly and the expenditure will not be controlled, which will result in the country’s bankruptcy.

Mian Zahid Hussain further said that the IMF is also worried that billions of rupees will be wasted to please the voters before the elections, which will further weaken the country’s faltering economy and it will result in disrepute of the lender if Pakistan defaults.

The business leader said that China, Saudi Arabia and the United Arab Emirates have assured loans to Pakistan.

Moreover, the Government is discouraging imports, resulting in a fall of 68 percent in the current account deficit in the last eight months and is expected to further decline in the next four months.

Import contraction is also reducing the revenue of FBR. Inflation has crossed 36 percent, the highest level in Asia, due to which the IMF is demanding a two percent more increase in the interest rates. He said that economic instability is increasing rapidly due to continuous delay in payment of loan instalments by the IMF. The current agreement with the IMF was signed in 2019 and expires next month.

According to the agreement, Pakistan was supposed to get a loan of six and a half billion dollars, but so far only 3.9 billion dollars have been received. The government has already accepted all IMF conditions on exchange rate, tax rate, energy price, subsidy reduction and interest rate hike but could not convince IMF to release loans.

In this most difficult economic situation, if the nation unites and implements the emergency program of import substitution and privatization of failed government institutions, then this vortex can be exited, he said.

Copyright Business Recorder, 2023