KARACHI, DEC 29 – The Pakistan’s apex chamber has rejected the government’s move of raising energy cost up to 30% before the end of this calendar year to qualify for restoration of the stalled $6 billion IMF loan program, as it has just notified the power tariff increase of 18 paisas/unit on Monday (Dec 28) under this plan.
FPCCI president Mian Anjum Nisar lamented that the government has decided to hike power tariff by around 30% or Rs3.30/unit before Dec 31, 2020 in phases, leading the economy towards point of no return due to interference of International Monetary Fund in the Pakistani economy.
He said the authorities has started to implement this plan, as the Ministry of Energy has issued a notification to increase the power tariff from Rs13.35/unit to Rs13.53/unit which is applicable on consumers using more than 300 units and is effective from Dec 1, 2020. He stated the frequent raises in energy rates on behest of the IMF would make the Pakistani products uncompetitive in the international market. He said that industry is the main victim of this IMF interference, as donors’ involvement in the Pakistan’s economic matters and dictations to the policy makers for taking harsh measures would add to the economic miseries of the country.
Mian Anjum Nisar said that Pakistan is the most frequent customer of IMF and governments often depended on borrowing from IMF and accepted stringent conditions despite the fact that this institution is merciless money lender which always forced Pakistan to adopt bad policies like rupee devaluation, massive increases in the electricity and gas prices.
According to reports, the government has given go-ahead to the economic team to fulfill all the required prerequisites for revival of the stalled program under $6 billion Extended Fund Facility. The power tariff will be hiked in a gradual manner up to 30% in a bid to fulfill the IMF condition, which will destroy the local as well as export industry that is already facing high cost of production. The IMF program was stalled in Feb 2020 after the COVID-19 outbreak and the second review is now under completion.
He said that the IMF wanted the government to get the Electric Power Act bill in the National Assembly passed, enabling the government to pass on its cost of inefficiency and theft to the power consumers through imposition of surcharges, which is totally unjust.
The FPCCI President said that trade and industry is the backbone of the economy, which generates more than 90 percent of the government’s total resources. Therefore it can make a great contribution in turning Pakistan into one of the greatest nations in the world provided due facilitation and an enabling business atmosphere are ensured, he added.
Mian Anjum Nisar said that despite challenges due to the coronavirus, Pakistan’s economic performance remained encouraging, as the current account balance, foreign exchange reserves and stock exchange have improved significantly. Inflation is projected to stay in the range of 7.8% to 8.3% this month.
“All these positive indicators might take the reverse gear if the authorities take decision to hike the power tariff on IMF dictation,” he warned.
“How a country can take independent decisions and grow its economy when it is carrying the burden of billions of dollars debs and utilizing huge part of the federal budget for debt servicing”, he questioned.
He said that Pakistan would be loser in many heads if immediate measures are not taken to get rid of the massive loans which are the mother of most of the economic ills. He said that though it is a tough but not impossible task.
He said that business community understands well that there is no overnight solution of the economic problems but there is a dire need to set directions and to introduce economic reforms to get rid of dependence on foreign loans.
He said the biggest question is how to keep the momentum of growth in the wake of a less than targeted growth of the Agriculture and the Manufacturing sectors. The second one is the widening gap between exports and imports that could be contained by enhancing exports.
The apex chamber chief also stressed the need for developing regional, product specific and target oriented marketing strategy. New markets and new products need to be explored to reduce country’s dependence on few commodities and countries. Pakistan’s exports are highly concentrated in few items. Such concentration in few markets can also become a source for instability in export earnings.