KARACHI, Oct 23: Traders, industrialists and analysts have unanimously voiced their support to government plan to seek IMF help to avert default as a last option.
Bankers and traders said their hearts sink with the fall of foreign exchange reserves as fear of default deepens.
Over 60 per cent foreign exchange reserves of the country evaporated in just one year, while outflows still continue, creating desperation among the businessmen, worried at the economic future of Pakistan.
The government has approached International Monetary Fund to avoid default.
“The default is disastrous for both the country and the economy,” said Arshad Vohra, former chairman of All-Pakistan Textile Mills Association (Aptma) and a garment exporter.
“We should go for IMF to avoid default,” he said, adding that default would destroy image of the country and Pakistanis would not be able to trade with the world.
Bankers and traders said if the government defaults, banks will not open L/Cs of Pakistani importers and even exporters, which will eventually cripple economy.
They said there would be complete erosion of trust in Pakistan.
“Harsh conditions of IMF will hit our economy and we will have to pay the cost of our highly undisciplined economic management,” said Saleem Zaman, another exporter.
He said IMF conditions will slow down economy while thousands of jobs cuts would also be the part of the IMF realities.
A senior analyst who avoided to be quoted said the IMF option was much better than default. He said the default would be a life-time disastrous step. It must not be chosen, he said.
“Both short and long-term impact of default will rock the country’s ability to survive in the cut-throat competition of the world market,” he said.
Bankers said the falling foreign exchange reserves have created immediate problem of oil import. The State Bank on Thursday issued latest figure of foreign exchange reserves which fell to $7.32 billion, including $4.036 billion of the State Bank.
Despite fall of oil prices which reached $66 per barrel from $147 per barrel just six months before, oil import bill is unbearable for the State Bank which pays dollars for oil imports.
The government’s attempt to get oil facility from Saudi Arabia and Iran seems to have failed which finally forced it to contact the IMF as the lender of the last resort.
“It is unwise to even think about default. IMF will give bitter pills but still gives chance to survive and revive,” said a senior banker.
Pakistan entered into nine different agreements with the IMF during the period 1988-2000.
Former Governor of State Bank Dr Ishrat Husain wrote that except for the last stand-by arrangement (SBA), most other arrangements were not fully implemented and consequently almost half of the agreed amount remained undrawn.
However, last SBA in early days of Musharraf government bitterly hit economic growth with a good result of lowering of inflation and budgetary deficit.
