KARACHI: Expressing concerns over the country’s worsening balance of payments (BoP) position, the business and industry representatives on Monday urged the government to take urgent steps to avoid any “national crisis”.

They claimed that the economy cannot sustain the current level of trade deficit, which is expected to reach $50 billion by the end of this fiscal year.

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Irfan Iqbal Sheikh emphasised that the government should tangibly incentivise and subsidise industrialisation, import-substitution, and exploration of new import markets for competitive imports, IT exports and small and medium enterprises (SMEs) in the export-oriented industries for near-term gains. Access to finance should be made affordable to create an enabling environment for businesses to remain competitive in the regional and international markets, he added.

He said the growth rate in imports is double that of exports, which has nullified the diligent hard work of the exporters in the current fiscal year to earn the precious foreign exchange for the country.

The time has come to take tough decisions swiftly to support exporters as the State Bank of Pakistan’s foreign exchange reserves of $10.5bn are not even sufficient to cover two months of imports, he said.

The government had estimated that the total imports in FY22 would be $55.2bn but it had reached $65.5bn in just 10 months. This phenomenon needs to be thoroughly assessed and analysed in the broader national interest and strategic measures should be put in place to ensure the economic security of the country, the FPCCI chief added.

Employers’ Federation of Pakistan (EFP) President Ismail Suttur requested Prime Minister Shehbaz Sharif to take urgent steps to avoid a national crisis due to Pakistan’s worsening BoP position.

Rising debt repayments and constantly increasing import payments are fueling Pakistan’s BOP crisis. The EFP president said Pakistan’s current monetary imbalance has been caused by an excessive rate of credit creation.

Ismail said one of the main reasons for incurring such a deficit is Pakistan’s heavy reliance on petroleum product imports, followed by a further hike in commodity prices in the ongoing war between Russia and Ukraine. In such a situation, Pakistan needs to plan as the economy cannot sustain such high costs any longer.

Published in Dawn,May 10th, 2022