KARACHI: Extending a cautious welcome to the Staff-Level Agreement, the business community believes that the time has come to generate more resources to boost trade and industry instead of approaching the International Monetary Fund (IMF) again in April next year.
Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Irfan Iqbal Sheikh said the business community stood by the government to surpass its revenue generation target despite all odds — and, above all, the unbearable cost of doing business in the wake of higher electricity, gas and petroleum prices.
He, nonetheless, reiterated FPCCI’s stance that Pakistan must embark on a tangible, pragmatic and business-friendly plan to get rid of the IMF and its unnecessary and ruthless conditionality which evaporates any possibility of business and economic growth.
Pakistan can generate more resources by boosting trade and industry than knocking at the doors of the IMF again in April 2024 after the completion of the ongoing 9-month $3bn Stand-By Agreement in March 2024.
He questioned why the economic team of the government has still not been able to secure other sources of cheaper external financing from multilateral sources and international financial institutions (IFIs) like the World Bank, International Finance Corporation (IFC), Asian Development Bank (ADB)and Islamic Development Bank (IDB).
Due to the lack of institutional arrangements with IFIs, Pakistan will continue to rely on bilateral loans from friendly countries to complete the current IMF programme – while the country’s preference should have been investment, trade and industrial collaboration with friendly countries, he added.
He urged the government to tighten its regulatory oversight now over the speculative trading of dollars by commercial banks as the interbank market has shown depreciation of rupee over the last 17 sessions consecutively.
He supported the proposed 40pc tax on the windfall profits of the commercial banks for 2021 and 2022.
Pakistan Business Council CEO Ehsan Malik said in interactions with the IMF the council has consistently advocated equitable distribution of tax, energy and other targets that the fund imposes.
“PBC maintains that the front-loaded targets such as tax revenue or energy tariffs that it sets address the symptoms and not the cause of Pakistan’s problems which are weak political will and poor capacity of the FBR to broaden the tax base as well, theft, transmission and distribution inefficiencies of the energy sector,” said Mr Ehsan.
The burden of IMF’s measures falls unfairly on the formal sector and creates a greater incentive to evade by the informal sector, he remarked.
All Karachi Industrial Alliance chairman Mian Zahid Hussain said that the IMF loan was a short-term option to save the country from bankruptcy, while the poor and the middle class are forced to bear the entire burden of the IMF conditions as a large portion of the economy remains undocumented.
He said the country’s taxation system is flawed and the share of direct taxes is very low. Nobles and feudal lords are not burdened by the strict conditions of the IMF. Non-filers, non-taxpayers, or nominal tax-paying sectors also escaped the effects of strict conditions and only taxpayer sectors have faced the problem, he said.
Published in Dawn, November 17th, 2023