Karachi, March 10, 2023 (PPI-OT): Mr. Irfan Iqbal Sheikh, President FPCCI, has stressed that it is the collective wisdom of the entire business, industry and trade community of Pakistan that resumption of IMF’s Extended Fund Facility (EFF) program even after the now long-pending staff-level agreement (SLA) cannot solve Pakistan’s economic woes; and, the country will continue to be on the tenterhooks of a default for the foreseeable future.
Mr. Irfan Iqbal Sheikh informed that one should be aware of the fact that Eurobonds account for only 4 percent of Pakistan’s external debts as opposed to the much higher ratios for the countries that have defaulted; and, achieving debt restructuring on all other major external debts after the program restructuring should not be an issue for a prudent economist or a finance minister – on the back of economic cost of the floods.
Mr. Irfan Iqbal Sheikh added that the only answer here is pro-business reforms, policies and economic agenda – enabling the business community to increase exports; unleash import substitution; build foreign exchange reserves; enhance the external debt repayment capacity; create jobs and generate tax revenues to fund country’s development needs.
Mr. Irfan Iqbal Sheikh apprised that FPCCI has reached a conclusion that Pakistan needs continuity in economic policies to restore investment sentiment in the country; and, the economic agenda setting should be unanimously agreed by all the political parties for the next 15 years.
Mr. Irfan Iqbal Sheikh explained that the country faces a deficit in upwards of $20 billion in the next 18 – 24 months alone to meet its external liabilities; and, there is no way that even another IMF program can offer that much of financing. Therefore, the government should sit with the business community to chalk out a plan to enhance exports and earn precious foreign exchange reserve in the logical, incrementally sustainable and tangible manner.
FPCCI Chief expressed his profound concerns that SBP is still expecting the business community to wait for the gradual lifting of import curbs; even after the staff-level agreement (SLA) is clearly in sight. The industry, production and exports will continue to suffer through this approach that makes no economic sense, he added.
Mr. Irfan Iqbal Sheikh reiterated that access to finance and export financing must be made possible at an affordable rate. He maintained that textile industry can easily earn $25 billion in a year; IT and ITeS $5 billion and remittances can touch $35 billion; if the right economic agenda can be set in consultation with trade and industry stakeholders. The three aforementioned targets can be achieved in the very short-term, i.e. less than a year, through the right policies – and, these would be hard-earned cash to stay in the country, not the loans, he added.
Mr. Irfan Iqbal Sheikh reiterated that the government should admit its failure that it could not get any waiver, leverage or concession despite the country has suffered one of the worst, wide-spread and economically costliest floods in the modern human history – resulting in the well-documented losses of $30 billion.
Mr. Irfan Iqbal Sheikh added that the first priority of the government, after the 9th tranche of the ongoing EFF of IMF, should be to approach multilateral and bilateral lenders for the debt restructuring to create breathing space for the economy before 10th and 11th reviews take place, which are expected to be conducted collectively; so that, rupee can be stabilized after taking some pressure off in terms of reduced repayments in foreign exchange; policy rate can be brought down and bringing down the repayment of domestic debt; imports of raw materials and machinery can be resumed to their normal levels and fiscal space can be created for development projects in infrastructure, energy, agriculture and special economic zones (SEZs) through reducing the debt repayment allocations for the upcoming 2 – 3 years.
For more information, contact:
Head Office,
Federation of Pakistan Chambers of Commerce and Industry (FPCCI)
Federation House, Main Clifton, Karachi, Pakistan
Tel: +92-21-35873691-94
Fax: +92-21-35874332
Email: info@fpcci.org.pk
Website: http://fpcci.org.pk/