As the Executive Board of the International Monetary Fund has completed the 1st review Stand By Arrangement, allowing for the disbursement of $ 700 million, bringing the total disbursements to $ 1.9 billion for Pakistan, the Federation of Pakistan Chambers of Commerce and Industry’s Businessmen Panel (BMP) has warned that a bailout from the IMF alone was unlikely to speed up economic growth, as the political instability and lack of reforms would further deteriorate the financial situation in the country.
FPCCI former president and BMP Chairman Mian Anjum Nisar observed that amidst the continuous hikes in the cost of production in the country, Pakistan’s economy needs persistent and sound economic management. He asked the authorities to undertake economic reforms and improve the regulatory environment to boost foreign investment to achieve financial stability in the long run.
The Businessmen Panel (BMP) chief stressed the need to reduce the cost of doing business; besides evolving a new price control mechanism, massive taxation, rising oil prices, and constant electricity and gas tariffs lifted inflation to decades-high levels in 2023.
Mian Anjum Nisar warned the authorities that inflation above 6 percent can hurt economic growth and that a careful policy is required to keep it in control. He said that the pace of inflation is skyrocketing when economic activity is slowing down.
As the oil prices have been increased and power tariff has gone up further, the BMP chairman stated that the government has dropped a fuel bomb on the business people 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 former president of the FPCCI said that the decision would prove detrimental to the industries due to the high cost of doing business and would 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 to capture the global market, he stated that power theft became rampant due to high electricity rates as the tariff was unaffordable to consumers.
He urged the power ministry to identify system constraints and communicate targets to all concerned departments 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 exploring new markets. According to the BMP Chairman, Pakistan’s electricity prices were already high, 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 said that rising imports and a widening trade deficit seriously threaten economic growth and must be addressed urgently.
Mian Anjum Nisar said that the continuous increase in fuel and electricity rates will add to the miseries of the business people, who are already feeling the heat of runaway inflation. He said that growth 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 48 years’ highest level in 2023. The likely acceleration in the index would bring more misery for the trade and industry, facing difficulties in meeting soaring costs. 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 to 1.5 percent.