ISLAMABAD: As the annual inflation rate has hit the new high of 38.42% for the previous week the Federation of Pakistan Chambers of Commerce and Industry’s Businessmen Panel has warned that a bailout from the International Monetary Fund (IMF) alone was unlikely to put the country’s economy back on track, as the minibudget would further deteriorate the financial situation in the country.
Amidst continuous of hike in cost of production in the country, what the Pakistan’s economy really needs is persistent and sound economic management, observed FPCCI former president and BMP Chairman Mian Anjum Nisar. He asked the authorities for undertaking economic reforms and improving the regulatory environment to boost foreign investment so that financial stability can be achieved in the long-run.
The Businessmen Panel (BMP) chief stressed the need for reducing cost of doing business, besides evolving a new price control mechanism, as huge taxation, rising oil prices and constant jump in electricity and gas tariffs have lifted the inflation to decades high level in Feb 2023.
Mian Anjum Nisar warned the authorities that inflation above 6 percent can hurt economic growth and a careful policy is required to keep it in control. He said that the pace of inflation is skyrocketing at a time when the economic activity is slowing down.
As the oil prices have been increased by another Rs12/liter and power tariff has gone up further the BMP chairman stated that the government has dropped a fuel bomb on the businessmen after it suffered an electric shock to meet the conditions of IMF for the revival of the stalled loan program- a recipe to shake the trade and industry.
The FPCCI former president said that the decision would prove detrimental to the industries due to high cost of doing business and will also open the floodgates of inflation. In addition to making the electricity bills costlier and unaffordable for the consumers, the hike in base tariff would escalate prices of all household goods being widely used in every household, he added.
He termed the increase in tariff unlawful and a violation of NEPRA’s own rules and regulations, as any increase in tariff has to be determined and implemented only after holding public hearings but unfortunately they have solely decided to raise the tariff without holding public hearings, he argued.
He condemned the National Electric Power Regulatory Authority’s decision to increase electricity tariffs, stating that the burden of power theft, mismanagement, and inefficiencies cannot be shifted to consumers on the pretext of fuel adjustment.
Mian Anjum Nisar said that Pakistan’s industry had been harmed by the high cost of doing business, which discouraged investment in capacity and capability and called for easing the burden of heavy taxes on the power sector.
Anjum Nisar stated that the constant increase in power tariffs on the pretext of fuel adjustment had increased electricity prices and added to the already high cost of trade and industry. Seeking comparable energy tariffs for domestic industries in order to capture the global market, he stated that due to high electricity rates, power theft became rampant as the tariff was unaffordable to consumers.
He urged the power ministry to identify system constraints and communicate targets to all concerned departments in order to launch a wartime effort to upgrade the transmission system.
He urged the completion of all ongoing power projects well ahead of schedule. He stated that business-friendly policies must be adopted, similar to those adopted by other neighboring countries in the region.
He suggested that the amount specified in trade policy be used to promote exports by providing incentives to trade and industry and by exploring new markets. According to the BMP Chairman, Pakistan’s electricity prices were already on the high side, which was the primary reason for the country’s price hikes. He stated that providing affordable electricity would assist in lowering production costs, thereby benefiting the public. He stated that rising imports and a widening trade deficit posed a serious threat to economic growth and must be addressed urgently.
Mian Anjum Nisar said that the recent increase in fuel and electricity rates will add to the miseries of the businessmen, who are already feeling the heat of runaway inflation. He said that increase in fuel prices and tariff rates would also bring about another flood of inflation in Pakistan as it would increase the cost of doing business in the country.
The Pakistan Bureau of Statistics reported that inflation hit the 48 years’ highest level in Feb. The likely acceleration in the index would bring more misery for the trade and industry which was facing difficulties in meeting soaring cost.
He asked the government to inform the IMF that due to floods, tight monetary policy, high inflation, and a less conducive global environment, the economic growth rate might slow down in the range of 1.5% to 2% – a pace that was even lower than the population growth rate and would cause more unemployment in Pakistan.
IMF bailout alone cannot put economy back on track: BMP