The Pakistan Industrial and Traders Associations Front (PIAF) chairman has warned the authorities that the balance of accounts should not be at the expense of industrial growth. PIAF Chairman Faheem ur Rehman Saigol noted that the State Bank of Pakistan reported that the current account deficit (CAD) was 86% lower in November than it was in the corresponding month last year, coming in at $276 million as opposed to $1.92 billion. This reduction was caused by a sharp decline in imports, while exports only slightly increased.

According to him, the government's restrictive import regulations, together with the high cost of doing business brought on by repeated rises in fuel prices and energy tariffs, have almost stopped industrial activity. He regretted the ongoing delays in the import of raw materials and said that enterprises are closing, which is increasing unemployment across the country.The CAD decreased by more than half in the first five months (July to November) of the current fiscal year, from $7.2 billion to $3.1 billion, with imports decreasing by $4.8 billion and exports remaining largely stable.

He said that administrative measures to manage the low foreign exchange reserves have significantly reduced imports, which has had a negative impact on economic activities. According to the PIAF chairman, the lack of letters of credit (LCs) is destroying industrial activity and causing a large increase in unemployment since businesses are unable to acquire the raw materials required to keep their production machinery in motion.

He stated that the emerging situation has severely affected industrial activities as well as exports, which would have a devastating impact on the already troubled economy and the lives of millions of poor people due to massive layoffs. He also expressed his deep concern over the non-issuance of LCs and a severe gas crisis.How long can a manufacturer continue to pay salaries and wages to the majority of the idle workers if he is unable to operate at full capacity because imported raw materials and replacement parts are unavailable.

According to him, the reserves have dropped to a four-year low of $6.7 billion, heightening the possibility of missed international payments and missed repayments of foreign debt.He said that in November 2022, the CAD reached a 19-month low, with a 32% drop in imports compared to the same month the previous year. However, there was a 13% and 14% decline in exports and remittances, respectively.

He said that unexpectedly, in November, total imports ($4.26 billion) were outspent by cumulative export profits and worker remittances ($4.35 billion), indicating that the balance of payments has greatly improved recently, which is essential to reducing the danger of default. The government must allow the interbank exchange rate to reflect the demand for dollars. According to him, this strategy will lessen dollar hoarding in the kerb market.

Because the open market dollar rates are higher than the interbank rates that the firms must accept, he said it is regrettable that exports are down as a result of the global recession and remittances are also declining.The opposition and the government must begin talking about Pakistan's economic future. He advised that they avoid making the International Monetary Fund's programme political. Additionally, it is essential to strengthen ties with China, Saudi Arabia, and the US. He thought that the three nations might prevent a financial default for Pakistan.

Credit : Independent News Pakistan-WealthPk