President, Employers’ Federation of Pakistan(EFP) has offered the government a comprehensive solution to pull the country out of the economic quagmire, informing the government that deteriorating balance of payments, high inflation, declining foreign reserves and political uncertainty have created a worrying economic situation, and due to the current economic situation, Pakistan is moving towards a national crisis, so immediate take measures and implementation of strict policies to overcome these crises is a matter of urgency.
In a statement, President, Employers’ Federation of Pakistan(EFP), Ismail Suttar said that EFP strongly believes that Pakistan is heading towards a national crisis due to the current economic condition. Worsening Balance of Payments position, high inflation, depleting foreign reserves and political uncertainty have led to an alarming economic situation. Immediate action and implementation of strict policies to curb this crisis is the need of the hour. It is devastating that Pakistan has been consistently running a consistent trade deficit since 2003.
“Under the previous government, Pakistan experienced a surge in exports due to economies recovering globally from the impact of Covid-19. Furthermore, due to weakening of the PKR, Pakistani exports performed better in the international market. However, due to recent events such as the Russia-Ukraine war, commodity prices have sky-rocketed globally”, he said, adding that this has resulted in Pakistan paying large amounts from Forex Reserves towards energy import that has led to immense pressure on it.
Ismail was of the opinion that currently the energy import bill has doubled to $15 Billion as compared to $7.5 Billion from last year. With this trajectory, Pakistan is headed for an economic crisis that is looming more likely by the day. As a result of such economic uncertainty and worsening BOP position, the Employer’s Federation of Pakistan would like to suggest some doable measures to mitigate this impending crisis. These measures can be implemented on a temporary basis till the BOP position improves.
EFP president proposed the solutions, which are the ways Pakistan can shorten the trade deficit gap, saying that immediate ban for at least 2 years or heavy duties on imports of non-essential, luxury goods. Immediate ban for at least 2 years or heavy duties on imports of fully manufactured automobiles, and also ban for at least 18 months or heavy duties on the import of mobile phones.
Ismail Suttar also proposed that policies to regulate Pakistani auto-manufacturers, strict ban on import of cars above 1300 cc, strict quotas on amount of CBU’s allowed for import. Sharp increase in the price of petroleum products and targeted subsidy on amount of petroleum products an individual can consume for less income citizens. Ban on leisure travel for at least 18 months, while government should introduce a mandatory comprehensive electric automobile policy.
He added that currently, the economic crisis coupled with political uncertainty is rapidly eroding investor confidence in Pakistan’s economy. This has resulted in less foreign direct investment (FDI). An improvement in Pakistan’s BOP position will help gain investor confidence and reduce the pressure on our Forex Reserves. With such high debt repayments, constantly strengthening dollar and a surge in global commodity prices.
“Pakistan needs to take drastic emergency measures to avoid a crisis similar to the ongoing Sri Lankan and Nepali economic crisis. The nation is in dire need of a government that must put national interest above personal party agenda as even though these measures may be unpopular with the public, they are necessary to avoid a national economic crisis”, he added.
