Former Vice President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Muhammad Ali Sheikh on Wednesday said the IMF bailout package will bring economic stability to Pakistan by mitigating the current financial crisis.
Every government had envisioned short-term plans to suffice their own political agenda and compromised national economic interests resulting in a default-like situation, he said.
Although the IMF has agreed to revive a bailout package of US 6.0 billion, it will provide temporary relief to cash-strapped Pakistan which is on the brink of a payment crisis, he added.
In an interaction with the business community, Muhammad Ali Sheikh said that an IMF loan is needed in urgent situations but it is considered a solution to the economic challenges in Pakistan which is wrong.
Presently, inflation in Pakistan is the highest in the region after defaulted Sri Lanka which has made life difficult for the man on the street while exchange rate erosion is threatening the entire economic system, he observed.
The rise of the dollar has added almost Rs7000 billion to the debt and liabilities but politicians seem unconcerned at this critical juncture, he lamented.
He urged the Government to adopt an apolitical approach and revisit policies based on solid economic grounds that could help attain sustainable development rather than short-term measures to safeguard the political agenda.
The business leader expressed apprehensions about the harsh conditions imposed by the IMF, which compelled the Government to revise energy tariffs, introduce super tax and make other tough decisions, which would consequently slow down economic growth.
Muhammad Ali Sheikh said that the government may withdraw rebates and subsidies and could review the fixed energy cost for export-oriented industries under the IMF
conditions, which would not only make export products uncompetitive in the international market but also negatively affect the export targets.
Withdrawals of rebates and subsidies would save almost a billion dollars but it would hit industrial and agricultural production, jobs and revenue, therefore, it will not be a wise decision.
He further added that such initiatives would further widen the trade deficit, compelling the Government to borrow more from international financial institutes.
The Government should boost industry-led growth based on science and technology. If the subsidies and rebates for the Greenfield Industry are withdrawn and the tax on the IT industry continues, there would be scarce chances for achieving the export target, he warned.
