KARACHI, June 6: Corporate leaders, exporters and businessmen are confident of gaining immensely from the fiscal measures announced in the 2005-06 federal budget, which should stimulate production, boost exports and lead to further improvement in the overall business-friendly environment in the country.

But there are a few businessmen who noticed budget speech of the State Finance Minister Umar Ayub on Monday missing any reference to the back breaking double-digit inflation, the yawning trade gap touching almost $5 billion, the current account deficit and the unpredictable international oil prices, which are all fraught with the consequences that can upset the much touted macroeconomic stability achieved in last five years at the cost of sweat and blood of the poor people of Pakistan.

“A $16 billion export business in 05-06 year is well in sight,” Naseer Vohra, the Chairman of the Emerging Trade Partners said while pointing out to the zero rate sales tax relief given to the textiles and other export sectors. “This has spared us of so much problems,” he said.

Vohra is confident of an all round improvement in industrial production because of the incentives offered in terms of duty reduction on raw material, machinery and equipment and other fiscal relief. A surge in production leads eventually to rise in exports.

Aziz Memon, a big name in garment export was also confident of making big strides in the business during next year. “The government has increased withholding tax by 0.25 per cent to 0.75 per cent,” he said while making a point that sparing the exporters from refund hassles and increasing the tax is not a bad deal at all.

Exporters however hope that the government must be aware of the measures being taken by India, China, Bangladesh and other countries to boost their exports particularly of textile that is bound to impact Pakistan’s business. “India has devalued its currency by 7 per cent to help the exporters,” Aziz Memon disclosed while quoting a Dubai newspaper.

Ali Ashraf Khan also an exporter and a plain speaking social scientist warned of the oncoming inflationary wave. “An increase of 25 to 30 per cent on package of about two million government employees is bound to bring more pressure in the market and on the poor people,” he said.

“It is all a bluff,” he rejected all claims of growth in the national economy. He said fudging figures is normal with Pakistan’s ruling elite. He looks the adjustment of rates in custom duties sales tax and the income tax “more cosmetic and misleading and failed to address the real issues of the economy.”

Even if all government assertions on macroeconomic stability and economic growth in 04-05 are accepted than there is also double digit inflation after eight years. Arising from built up of liquidity in the market, the State Bank is trying to curb it by measures that is forcing banks to push up lending rates.

Then there is an unprecedented trade gap of almost $5 billion, which is being met by $4 billion remittances. This amount of remittances may not be available next year and it could go up to unmanageable heights.

Ali Ashraf fears that cumulative effect of inflation, plus the deficit in current account could put tremendous pressure on Pakistan currency and it could have massive destabilizing effect on the national economy. “There is not a word on it,” he said.

Then there is the issue of unpredictable international oil prices for which the government has not prepared any contingency plan.

The oil prices in the world market moved up from $30 to $52 a barrel in 04-05 for the reasons known to all. The same reasons still prevail and in fact there is an apprehension that situation in the Middle East may aggravate. Market analysts are predicting oil prices may touch even $100 a barrel.

How is the government making preparation to meet this challenge? Government encouraged banks and leasing companies to boost automobile marketing and in 05-06 budget is promoting import of cars.

Budgetary situation will be clear on Tuesday when the economic team of the government spells out the impact of the measures taken in the budget.