Former President of the Islamabad Chamber of Commerce and Industry (ICCI), Dr. Shahid Rasheed Butt, on Sunday, said that the IMF loan of seven billion dollars would pave the way for other loans, which will temporarily save the country from bankruptcy. It is claimed that this will be the last loan from the IMF, but the ground realities are different. He said that borrowing will continue even after this loan, as there seems to be no intention to change the damaging policies.
Shahid Rasheed Butt said in a statement issued here today that the country will remain indebted, and unrest, as well as unemployment, will continue to rise because of the wrong priorities of the policymakers. The business leader said that for rulers, importers have always remained more important than all other sectors, including the troubled export sector.
This priority has doubled the volume of imports compared to exports. For decades, he observed that the interests of shopkeepers had been put before everything else, including economic development, for political reasons. He noted that promoting imports and supporting shopkeepers have left the industrial sector in limbo and triggered deindustrialization in a country with a rapidly increasing population.
He said that keeping the shopkeepers happy at any cost will continue in the future. A new mini-budget is also being introduced to appease the IMF, which will cause hardships to the public, the industrial sector, and the taxpayers, but traders would be spared.
He feared that 700 billion rupees would be squeezed from the taxpayers through the mini-budget due to the incompetence of the tax-collecting institutions.
Shahid Rashid Butt said that business activities would not be restored by a two per cent reduction in the interest rate, and in case of a further cut, inflation would increase. He said that internal and external debt, unaffordable pension debt, and financial mismanagement in the energy sector have peaked.
He observed that due to the landlords’ favoritism toward the shopkeepers, no government is prepared to take the tough decisions necessary to revive the economy, which greatly increases the burden on the industrial sector.
The authorities always prefer to ignore the signals from the economy and do not take the right actions at the right time because they choose to be engaged in internal politics.
Politicians prefer shopkeepers for the sake of votes, which has paralyzed the industry; now, Pakistan imports goods worth two dollars compared to every dollar earned and relies heavily on remittances, leaving little room for sustainable growth.
He said that Pakistan continues to face comprehensive structural challenges. Government debt is rising, the rupee is losing value, inflation is high, and foreign exchange reserves are short. A significant share of government revenue has to be used to repay loans.
The tax ratio is meager even by regional standards because the masses must trust the tax collectors. This means the government needs more financial scope to invest sufficiently in vital social services. To give the young population adequate job prospects and opportunities for participation, Pakistan’s economy would need to grow by a minimum of seven percent a year. Pakistan has significant economic potential, including abundant resources, low labor costs, a young population, and a growing middle class, but this potential has never been tapped.
He warned that the rulers’ failure has driven the people into deep despair, the youth are fleeing the country, and popular discontent is manifesting in political instability, destabilizing the country’s political landscape.
