LAHORE: The State Bank of Pakistan has exposed the true state of the economy of the country in its third quarter report and made it clear to the government that it needs to take some practical steps immediately to redress the problems facing the public and business community in the country.
These views were expressed by the participants of the Jang Economic Session held on ‘SBP Report -- Solutions to Bring Improvement’ here on Tuesday. The discussion panel comprised famous economist Dr Nadia Saleem, Pakistan Engineer Congress (PEC) member Iftikhar-ul-Haq, Federation of Pakistan Chamber of Commerce and Industry former vice-president Hameed Akthar Chadha, Lahore Chamber of Commerce and Industry former vice-president Abdul Basit and Farmers Associate of Pakistan (FAP) director Rabia Sultan. The event was jointly hosted by Sikindar Hameed Lodhi and Intikhab Tariq.
Dr Nadia Saleem said that the SBP report had made it clear that Pakistan was dependent on external resources while the government was borrowing excessively from commercial banks, creating troubles for the private sector. She said the private sector was demanding short term loans for working capital and trade financing, which reflected that no long term policy existed in the country for both public and private sectors.
She said that now the SBP had banned commercial banks investment in the national saving schemes, adding to problems facing the private sector. To handle the situation, she suggested, the government should cut down on current expenditure, broaden the tax base and reduce the public sector enterprises losses. She said the demand side economy was growing while the supply side weakening, asking the government to introduce reforms accordingly.
Iftikhar-ul-Haq said exports had increased, agriculture sector registered growth and remittances and foreign exchange reserves had grown but it all was not sustainable. He said energy shortage was a result of policy failure of the government while no work was initiated for big hydel generation projects.
He said if the government sought grants from the Friends of Democratic Pakistan (FODP) for energy sector projects, it could get funds from them. To bring down the budget deficit, he said, the government had cut down the Public Sector Development Program (PSDP) rather than defense budget and operational expenditures, resulting in increase in unemployment. The government could increase revenue generation by Rs 200 billion by imposing the agriculture tax on 25 acre land farmers and another Rs 500 billion by bringing the informal sector into the tax net, he opined.
Hameed Akthar Chadha said the current economic situation was heading towards civil disobedience. He said Rs 93 per litre diesel was unaffordable for agriculture sector while industry could not operate even at Rs 65 per litre diesel.
He said Pakistani businesses had exports orders but were facing energy shortages. The increase in exports, as shown by the SBP in its report, was a result of private sector efforts while the government had done nothing in this regard.
Abdul Basit said imposition of 15 per cent flood tax would reduce the tax base and further discourage taxpayers to pay their taxes. It should be made compulsory for every businessman to be a member of their respective chambers and associations to broaden the tax base as the National Tax Number was needed for membership, he said, asking the government to seek special incentive packages from the World Trade Organization (WTO) and other international bodies for promotion of businesses and to stop their massive closure in Pakistan.
Rabia Sultan said credit of 25 million metric tons wheat sowing went to farmers while Rs 950 per maund price was not attractive now, due to the massive increase in diesel rates.
She said farmers would face tough time in next two cropping seasons due to quick increase in diesel and electricity charges. She said that DAP fertilizer price had increased by 40 per cent while urea-manufacturers had not passed on the subsidy (given by the government) to the farmers, as urea rates had reached Rs 1,200 per bag.
She said Pakistan cotton growers were competing with farmers of the developed nations, including the US, Australia and China, which protected their farmers by giving them subsidies. She said construction of Kalabagh Dam had now become an ego issue for the government while it was doing nothing for alternate energy resources for cheap energy generation.
