LAHORE     -    Resident Representative of International Monetary Fund (IMF) Ms Teresa Daban Sanchez called on Lahore Chamber of Commerce & Industry (LCCI) President Almas Hyder on Thursday.

LCCI Senior Vice President Khawaja Shahzad Nasir, Vice President Faheem-ur-Rehman Saigal, Amjad Ali Jawa, Mian Zahid Javed, Haris Atiq, Shahzad Aslam and Atif Ikram were also present.

Economy of Pakistan, revenue collection, inflation, markup, trade deficit, agriculture sector and various other issues came under discussion during two hours long meeting. 

Ms Teresa Daban Sanchez said that Pakistan needed to carryout essential reforms for overcoming these crises.

“Lack of consistent policies create challenges”, she said, adding, more was needed to put the economy on right track.

She said that Pakistan would have to enhance its tax-to-GDP ratio and social spending which were relatively low. She said that there were understanding gaps that must be eliminated.

President LCCI said that no economy could grow in suffocation therefore IMF should not ask for tough conditions.

IMF and government would have to adopt pragmatic approach and should be kept in view the ground realities and economic scenario in Pakistan, he said, adding, Pakistan has been one of the most frequent users of IMF programs which have resulted in devaluation of currency, excessive inflation, slash in public expenditure and hike in interest rates.

He said that ever since the talk began about going to the IMF, Pakistan’s currency has seen a massive devaluation. There has been a devaluation of around 29% since August 2018 and 13% since May 2019.

Since the elasticity of exports and imports in Pakistan was less than 1pc, this devaluation has not helped in increasing the exports but has resulted in confusion in the private sector about the extent to which government would interfere to stabilise the exchange rate.

In this scenario, future planning was difficult. Leaving the exchange rate on the market would have negative repercussions for the economy, he said.

“It is a perception that inflation rate in the next financial year is projected to grow which means there would be more devaluation and hike in interest rates”, the LCCI President said, adding, increase in markup means no investment and expansion in industries.

He said that the hike in interest rates, by next year would push up borrowing cost to around 18-20% which would retard investment, capacity generation and hence exports.

He mentioned that during the economic recession in USA, the public sector spending was increased and interest rate was lowered down.