Import touches alarming high of $6.3b in June
LAHORE: Pakistan former finance minister Dr. Hafeez Pasha has warned of difficult time ahead, as the country has witnessed a single month’s record highest import figure of $6.3 billion in June this year while the current account deficit remained $1.3 billion in this period.
Addressing an economic session on ‘Pakistan Economy-Challenges & Solution’ organized by the Pakistan Industrial and Traders Association Front (PIAF), he predicted that the total annual import figure would touch the level of as high as $70 billion which is impossible to manage with the export of just $25 billion.
The ceremony was also addressed by FPCCI former president Mian Anjum Nisar and PIAF Chairman Mian Nauman Kabir.
Former finance minister pointed out that the next year current account deficit will surpass the figure of $6.7 billion, as the country would have to enhance payment in its debt servicing by at least 35 percent, which is alarming. He appreciated the record remittances of $29.4 billion sent by the overseas Pakistanis, but alarmed that the remittances will decline next year as Pakistan spends around $3-4 billion annually on foreign travels which have been saved this year, lifting the figure of remittances.
FPCCI former president and Businessmen Panel Chairman Mian Anjum Nisar, while addressing the seminar, asked the authorities to focus on further accelerating exports, besides keeping some check on unbridled imports of luxury items.
He observed that the economic managers will have to chalk out a long-term plan for import substitution and increasing exports so that Pakistan could become self-reliant. He also emphasized the need for adoption of international best practices for priority sectors and consultations with international experts to achieve success.
While addressing the meeting, PIAF Chairman Mian Nauman Kabir said that fiscal sustainability has become a major issue of the Pakistan economy, as its servicing debt accounts for more than one-third of its federal budget.
He stated that Pakistan’s trade deficit keeps on widening despite a much-trumpeted increase in exports, which were, in fact, not sufficient to match the huge surge in imports. He said that government has spent interest payments on debt Rs3.06 trillion while spending only Rs600 billion on subsidies and Rs100 billion for COVID-19 vaccinations.
Mian Nauman Kabir said that Pakistan’s reliance on debt is a violation of the country’s Debt Limitation Act. He said the low exports volume and rising trade deficit were chronicle issues which should be resolved permanently.
Dr. Hafeez Pasha, during a question-answer session, told the trade and industry’s representatives that another National Action Plan should be initiated that was launched against terrorism. The Pakistan Army remained successful to eradicate terrorism from the country but it is reemerging in the country now, as incidences of violence are rising in Balochistan while Lahore recent bomb blast is also horrifying.
“We are resilient nation as we have approached the IMF 22 times in 74 years history of Pakistan but our economy never collapsed,” he said. He added that Pakistani nation remained successful in all kinds of crisis but this success story has not been sustainable for the long-term. “When I was the finance minister the US ambassador warned me that he would stop the USAID fund for Pakistan because I was promoting Pakistan products and trade,” he recalled.
He stressed the need for at least 7 percent GDP growth rate to absorb the large number of unemployed youth, eradicate poverty and to manage the rising public debt. For this purpose, the country needs an equitable taxation system and high growth in exports, he added.
Dr Hafeez Pasha also raised objection over the calculation of GDP growth figures and said that the last fiscal year growth was reported as minus 0.47 percent but actually it had dropped to negative 2 percent because of massive contraction in the economy. He said that the Pakistan Bureau of Statistics needs to be strengthened, so that they could calculate official figures accurately.
He said that our industry contributes more than 70 percent in tax revenue, as industrial sector gives almost Rs3.5 trillion taxes in various forms. On the contrary, the Rs.25 trillion’s real estate sector pays just 12 billion tax which is totally unjust. In the same way 22 percent agriculture land which is owned by just 1 percent of landlord elite, shares only Rs2.5 billion in tax revenue.
On this occasion, Dr, Hafeez Pasha also announced to launch his new book “The Charter of Economy” from the platform of PIAF.