LAHORE, Oct 8: The Lahore Chamber of Commerce and Industry (LCCI) has called upon newly-appointed Adviser to Prime Minister on Finance Shaukat Tareen to come up with an immediate plan to restore the falling morale and confidence of the business community. Congratulating Tareen on his appointment in a statement issued here on Wednesday, LCCI President Mohammad Ali Mian said the economy was in dire straits at present. It was facing security challenges on the one hand, while the global financial turmoil was staring it in the eyes on the other.

The adviser would have to initiate a process of dialogue and consultation with business leaders to find out a solution as to the economic challenges. The business leaders were experts in their respective fields and knew the problems and their solutions. A true consultation process could, therefore give desired results.

He was of the view that tackling of fast increasing exchange value of the dollar would be biggest challenge for Tareen as it was not only eating up the foreign exchange reserves but had also raised the debt burden to unimaginable levels. The adviser would have to come up with an economic programme to check the fast decrease in foreign exchange reserves, falling rupee value and widening current account deficit which had shaken the confidence of the business community.

The LCCI president said the fast falling exchange value of the rupee had not only worsened the balance of payment position but had also raised the burden of Pakistan’s foreign debt and debt service liability. It would, he said, upset all the cost-price relationships in the economy, lead to galloping inflation, and would stall many ongoing projects due to rising costs.

Cut in rupee value would raise the industrial costs and reduce capacity utilisation as the industries were heavily dependent on imported raw materials for industrial goods and capital goods and components.

He said persistent decline in rupee’s value would cause a contraction in economic activity and consequential slide down in income tax receipts would raise the burden of foreign debt overnight. The government would not be able to stop smuggling as long as black-market transactions in foreign exchange continued.

The government should not only effectively utilise the human resources, which were abundant in Pakistan but were under-utilised, but also cut its expenditure to control the financial crisis by stopping all unproductive expenditure, whether it be public sector or private sector by exercising strong financial discipline.