Daily Times

KARACHI: There is an immediate need to thwart threat of insolvency like situation to the country and current economic condition does not allow Pakistan to increase development spending, expressed by financial experts and prime export sector people.

They said the government could lessen pressure on rupee dollar parity and forex reserves by utilising overseas Pakistanis remittances in judicious manner.

Commenting on Moody’s rating for Pakistan, they said that the country has hardly three-and-a-half months import bill amount, which it has to provide in shape of L/Cs, food import bills, edible oil import bills and crude oil bills.

Representatives of Pakistan Tanners Association, Pakistan Apparel Forum, Pakistan Yarn Merchants Association, All Pakistan Marble Mining, Processing, Industry and Exporters Association, All Pakistan Business Forum, sectors were of the opinion the foreign exchange reserves have declined to around $2.5 billion and if the current poor economic conditions of the country can not be brought under control due to continuous borrowing by government from central bank, lowering down foreign reserves, no further direct foreign investment hopes in the next coming months, Pakistan would likely to ask international donor agencies for a fresh loan.

But seeking loan for repaying fresh loan is a greater risk for the fragile economy.

This will probably put some pressure on local currency value against dollar and forex reserves position, said Fazal Ahmad foreign currency experts in Houston.

Agha Saiddain said the circular debt has also spiraled up due to loop holes and shortcomings in governance and regulatory mechanisms. In July to March 2017, it swelled to Rs 52 billion. Similarly, trade deficit remains stand at Rs 294,200 million to date.

Ghulam Rabbani was of the view that on the import front, petroleum products being a major import commodity contribute 34 percent to total imports.

Absence of foreign inflows in the economy and higher tendency in non- productive expenditures by the government on political grounds is also affecting rupee value negatively.

The fundamental weakness in the balance of payments is the continuous decline in the net capital and financial flows.

Overseas Pakistani workers remitted an amount of $8,206.39 million in the first seven months (July to January) of the current fiscal year showing a growth of 10.36 percent or $770.41 million.

Sanaullah Khan said progress on economic growth never looks very sustainable as there always exist notable trade imbalance in country’s imports and exports.

Besides important sectors of agriculture and the conservation and optimum utilization of its resources, such as water, has never been duly addressed, he viewed.

Despite the acquisition of Generalised System of Preferences plus status of European Union, Pakistan was yet to cross the milestone of $30 billion worth annual export, resulting in increased trade deficit.

Ibrahim Qureshi opined that poor governance and regulatory frameworks remained unattended, and incumbent governments were never look serious to address these intangible indicators.

There is dire need for improved, somewhat reformed design of the present complicated tax system, which alongside creating deficit of trust between the taxpayers and the tax administration.

The onus of government’s inept and disruptive policies remained stand failure to pass benefits onto the business and industry.

Shakeel Ahmad said the short supply of natural gas to fertilizer plants will force the country to import urea more than 5.0 million tonnes worth $52.30 billion.

The country would have to spend approximately Rs 452 billion annually on import of urea if the government further cuts the supply of gas to plants that have production capacity of 6.9 million tonnes urea.

The agriculture sector of the country represents 21.4 percent in the gross domestic product and also ensures food security of 190 million population of the country.

Promoting foreign direct investment, increasing the share of direct taxes in revenue and lowering the slab of indirect taxes would help achieve key economic targets set for next fiscal year.

Export oriented manufacturing sector of the country contributing more than 15 percent to country’s Gross Domestic Products.

Moody has predicted that Pakistan’s external debt will grow $79 billion by June 2017 and it retained Pakistan’s position at B3 rating.