Economic and political turmoil tops Pakistan’s headlines for in last a few months. Not surprisingly, Moody’s Investor Service downgraded Pakistan’s rating. risk outlook from stable to negative, citing heightened external vulnerabilities and ability secure additional external funding to meet their needs, as well as weak institutions and governance strength that add to the uncertainty around future direction of macroeconomic policy and current Program of the International Monetary Fund (IMF).
But for Mian Muhammad Mansha, one of most powerful businessmen in Pakistan, all these problems can be overcome if “we can tell the untold”. story of rich country, undeveloped business opportunities, change the world’s perception of us, and convince foreign investors that this is no longer business as usual attract foreign direct investment (FDI) ashore up our foreign exchange reserves and increase growth.
“Our problems will be resolved only when foreign investors start invest here. You can not build foreign exchange reserves with export alone. India has accumulated reserves of $650 billion, mainly through attracting FDI.”
In recent months, Pakistan has witnessed a worsening of its financial situation as the two-month coalition led by PML-N, tough decisions were delayed, including reverse of financially unsustainable fuel and power subsidies, for fear of political reaction with Imran Khan’s PTI on path to early elections, as well as increased uncertainty in in international markets on product super cycle generated by supply disruptions due to Covid and exacerbated by Russian invasion of Ukraine.
“You can not build foreign exchange reserves with only export; India has accumulated reserves of $650 billion mainly due to attracting FDI”
Despite a 40% increase in fuel price and a 47% increase in electricity prices led government a step closer to a much-needed deal with the IMF, which will help it access remaining $3 billion of existing loan and release funds from other multilateral and bilateral sources to prevent default, the transaction is not expected to be completed until it is realized of other preliminary actions in in next budget.
According to the famous economist Hafiz Pasha, the country needs about 37 billion dollars. in foreign funding during the fiscal year to meet his needs.
Mian Mansha advised government close the deal with IMF, privatize state-owned enterprises (SOEs) that cost taxpayers up up to 3.5 billion dollars a year in foreign direct investment, reopen borders with India, rise trade with in Afghanistan and beyond, improve business climate in country, providing policy sequence and build trade infrastructure for the nation back on in growth track. He of in view that all these actions need take without delay.
” government must play on front foot; business as usual I can’t work longer. These measures are necessary in order to change the image of Pakistan as a country where rule of the law is respected and investors are protected.
“Opening trade with India may help Pakistan has come off the so-called gray list and alleviate its economic hardships. If a government should carry out legal, judicial, governance and other reforms to change the image of Pakistan as an investor-friendly country, he should not think twice about it, chairman of This was reported to Dawn by Nishat Group and MCB Bank. in Interview.
“Growth is coming with picture of future perspectives of en economy. If we change our perception of country, it will change the way of thinking of (foreign) investors and give us growth next year.
“This time, coalition (as part of the parties with different political views in power; this gives us a great the opportunity to take a difficult and long-standing decisions that no political party ever been in position to do on own.”
Mian Mansha, who It has built its extensive business empire including textile, banking, automotive, cement, energy, dairy, agriculture, real real estate and other sectors of in economics is firmly convinced that coalition should produce quickly growth through it budget for in next year “without worrying about the budget deficit.”
he doesn’t agree with widespread view what will be difficult for Shehbaz Sharif government produce growth budget with his hands are tied by the IMF or not creating macroeconomic imbalances.
“My advice to those government beg, borrow or steal (dollars) to stabilize economy and outer sector (as soon as possible) and then move to fast growth.
“He has a lot of field for what. We should know that the IMF offers what good for en economy. The IMF does not prevent you from increasing economy or lower tax rates; he looks at the big picture and wants you to stop spending money on unproductive subsidies or on unprofitable state-owned enterprises or other things that create deep macroeconomic imbalances.
“One day economy starts to rise, it will generate much more tax revenue than you can hope to get from higher tax rates. Scarcity will no longer matter. We shouldn’t just look at budgets; this is just a small part of in economy.
“More economy exist outside in budget and public sector; we should grow it and tap into hitherto untapped potential of country and the opportunities it offers.
government It is reported that budget target deficit of 4.8 pcs. of the size of in economy or 3.77 trillion rupees in the IMF for in next fiscal year which the multilateral lender wants to be adjusted further through the combination of cut costs and mobilize additional revenue.
Fund also demanding that Pakistan fix next fiscal year tax collection target of Rs 7.25 trillion, which would require the introduction of of additional taxes of about 300 billion rupees, including withdrawals of exemption from agricultural tax and increase in burden on hired class, according to the report.
“Just like fuel and power price subsidies, SOEs also source of distortion in in market and economy. We should fix these distortions by privatizing them. This will bring not only economic dividends for in government but also improve quality of services provided on people, creating benevolence for It. Look at the benefits of privatization of banking and telecom brought to people.
“Privatization will boost growth, raise taxes, encourage market competition as well as attract direct foreign investment. Why not privatize now and unleash growth? Why wait? Having created trade and investment links with India and the privatization of public companies that we can incentivize growth and change our perception in in eyes of in world. If we show to world what do we mean businessno one going to invest,” he concludes.
Published in Dawn, The Business and Finance Weekly, June 6, 2022
