LAHORE – The Ferozepur Road Industrial Association (FRIA) has called for a solid economic plan from all the stakeholders to speed up growth, terming the current fiscal year as the uncertain one in view of deteriorating energy crises following the tough conditionalities of the International Monetary Fund, making this period more complicated and unstable for the economy.
FRIA senior vice chairman Shahbaz Aslam 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 remained very depressed amidst high inflation, low exports, depleting foreign reserves and continued uncertain position of the local currency. The FRIA leader said that almost all indicators of the economy continued to show poor performance, 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.
FRIA senior vice chairman 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 program 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.
Shahbaz Aslam 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. He foresees this year full of challenges for businesses and industries in Pakistan due to political uncertainty on global and local fronts. The 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 industrialization within the country.
He observed the negative economic indicators and uncertainty over resumption of the International Monetary Fund program 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 urged the policy makers to concentrate on increasing tax-to-GDP ratio which was the lowest in Pakistan in the region in 2023. The FRIA 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.
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