LAHORE: Chairman of the Businessmen’s Group (BMP) of the Federation of Chambers of Commerce and Industry of Pakistan warned on Sunday that continued borrowing from the IMF and other multilateral sources poses a serious economic threat, Pakistan having taken on foreign loans of $9.43 billion in the first half alone. this exercise, suggesting that the economics team convince the lender to ease its terms so that the government can pursue its growth strategies through some industry incentives.
BMP Chairman Mian Anjum Nisar stressed the need to explore investment resources from the private sector as well as non-traditional regional partners through investment-friendly policies in the country.
He said the government is taking out foreign loans to build up the country’s foreign exchange reserves, which are shrinking due to the repayment of previous borrowings and financing of the current account deficit.
Foreign exchange reserves held by the State Bank have shrunk by just over $3 billion since August 2021. In just one week, reserves have shrunk by $562 million, mainly due to debt servicing international. Reserves held by the SBP have shrunk to $17 billion, which would come under further pressure over the next six months as Pakistan is due to repay $8.7 billion in the second half of fiscal 2022.
As the lending burden continues to rise, there is an urgent need to create strategic partnerships with international investors seeking impact investments, particularly in the areas of SMEs, industrial development, healthcare, education, logistics and climate finance, he urged.
The BMP chairman asked the government to be very vigilant about Pakistan’s external financing needs.
These requirements include the country’s short, medium, and long-term debt due in a fiscal year, plus the current account deficit. Pakistan’s external financing needs are expected to exceed $28 billion in FY2022. Additionally, there is also China’s $4 billion vault that needs to be renewed.
The former FPCCI chief says the country’s economy is suffering unprecedented damage under the government’s controversial deal with the International Monetary Fund as it wreaked havoc on industry by triggering a tsunami unbearable rise in the price of public services.
The government also indebted Pakistan until the crisis and has now dragged us into a situation that does not seem healthy. The government must give the SBP reasonable autonomy to do monetary policy, but do not open the country to the ups and downs of international capital and its dictation, he said.
The amount of loans increased after Pakistan received $3 billion from Saudi Arabia in December last year. The total amount of foreign borrowings was recorded at 9.43 billion dollars from July to December against 5.67 billion dollars for the corresponding period of the previous year.
According to the new data, Pakistan borrowed $2.03 billion from foreign commercial banks in the first half of the current fiscal year. The burst of commercial bank lending showed the country took $1.14 billion from Dubai Bank, $487.26 million from SCB (London), $61 million from Ajman Bank PJSC and $343.50 million to Swiss AG, UBL and ABL.
Among the multilateral development partners, mainly Asian Development Bank provided $1.062 billion, World Bank disbursed $965.73 million, AIIB $37.77 million and IDB (S-Term) 800, $69 million.
China disbursed $1.07 million in December; however, the country received $74.51 million in the first half (July-December) of the current fiscal year, the United States $32.60 million, Korea $3.23 million, the United Kingdom United $14.54 million and Germany $12.07 million.
According to reports, the government has pledged to the IMF to continue raising the petroleum tax on petroleum products to the maximum level this year to collect more than 510 billion rupees, instead of the budgeted target of 450 billion rupees. rupees. The oil levy target for next year has been set at over 600 billion rupees.
He said it is very unfortunate for trade and industry that the government has also promised the IMF that it will continue to make electricity tariff adjustments next year on a quarterly and annual basis through Nepra. continually increasing electricity prices.
The government has also pledged to make gas tariff adjustments and not consider tax exemption for the industry in the future, which has hit Pakistan’s economy hard. He stressed the need for structural reforms as well as broadening the tax base through ambitious tax policies and far-reaching tax structural reforms for high economic growth and generations of jobs.
Copyright Business Recorder, 2022