ISLAMABAD - The Federation of Pakistan Chambers of Commerce and Industry’s Businessmen Panel (BMP) has called for solid economic plan from all the stakeholders, terming the new year of 2024 as the uncertain one in view of deteriorating energy crises following the tough conditionalities of the International Monetary Fund (IMF) amidst upcoming elections, making this period more complicated and unstable for the economy.
The FPCCI former president and BMP Chairman Mian Anjum Nisar said all political parties should provide their economic stability plans to avert further losses and delays, warning that numerous global issues are impacting world economies. He said the upcoming government should prioritise resolving the energy crisis by providing sufficient and affordable electricity and gas to industries. The import bill should be reduced by imposing bans on luxury products. He highlighted controlling inflation to ensure affordable living costs for the masses and containing the cost of production for businesses at a local level. He pleaded for formulating economic plans aimed at reviving growth in large-scale manufacturing, small and medium-sized segments, the service sector, and exports.
He stressed the need for a revisit of the economic policies, as the economic indicators throughout the 2023 remained very depressed amidst high inflation, low exports, depleting foreign reserves and continued uncertain position of the local currency. FPCCI former president Anjum Nisar said that almost all indicators of the economy continued to show poor performance during 2023, including volatile exchange rate, unprecedented hike in markup rate, repeated increases in electricity rates, gas shortage, price spiral, mismanagement and bad governance, becoming the hallmarks of the government. He observed the negative economic indicators and uncertainty over resumption of the International Monetary Fund programme continued to push the rupee towards a new historic low against the US dollar especially in first half of the calendar year of 2023.
He said that massive fall of rupee value continued to damage the economy, as the rupee witnessed a huge depreciation; one of the highest devaluations of local currency in Pakistan’s history in this period. Mian Anjum urged the policy makers to concentrate on increasing tax-to-GDP ratio which was the lowest in Pakistan in the region in 2023. The BMP leader warned if the govt failed to take appropriate measures for economic revival, the trade and industry will face a complete shutdown, asking the government to convene a conference, taking the business community onboard.
The FPCCI former president observed that besides increasing exports and controlling imports the government will have to take administrative measures, as a large demand of cash dollars are seen in the market. He argued that this devaluation of the currency was dictated by the IMF through prior actions and it has nothing to do with macro-economic fundamentals. He said that there was a complete breakdown of economic policymaking, as the country’s fiscal policy had become subservient to monetary and exchange rate policies. He said that the monetary tightening and exchange rate depreciation resulted in higher inflation, public debt and debt servicing. The empirical evidence showed that the one percent monetary tightening hiked the inflationary pressure by 1.3 percent in the case of Pakistan, he added. The government needs to devise a strategy on war-footing to increase foreign investment in Pakistan so as to stop the upward trajectory of the dollar, he added. The rupee during through the whole year remained uncertain, as the uncertainty pertaining to the IMF programme was causing pressure on the Pakistani rupee while the country’s foreign exchange reserves have also declined, which was another source of concern for investors, he said.
Media reports called for a fully-fledged and sound plan with a highly competent team to handle local challenges forthwith, but unfortunately, they have no solid plans or directions. The 2023 could be divided into two parts, as a tough time was witnessed until June when there was no IMF programme, and the country was near default. Then the IMF program came, the caretaker setup took over, and the first review of the IMF went better, he said, adding that the second review of the IMF on track would be good. He said when it comes to the second half of 2023, it has brought macro-wise stability relatively.
He foresees the new year full of challenges for businesses and industries in Pakistan due to political uncertainty on global and local fronts. Although 2024 is considered the year for general elections, fears are looming for a possible political crisis in the country. The incumbent government should come up with drastic measures to give confidence to local industrialists-cum-entrepreneurs and foreign investors through industry-friendly and investment-friendly policies. In this regard, the interest rate should be gradually reduced to boost economic activity and industrialisation within the country.