Suleman Chawla, the Acting President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), has expressed concerns about the lack of direction and consultative process between the government and the business community in Pakistan.
He has also criticized the long waiting period before the revival of the IMF deal.
The concerns raised by the FPCCI are significant, as a lack of direction and consultation with the business community can hinder economic growth and development. The delay in the revival of the IMF deal can also impact the country’s economy, as it can affect investor confidence and the stability of the financial sector.
It is important for the government to engage in constructive dialogue with the business community to develop policies that are conducive to economic growth and to ensure that there is transparency in decision-making processes. Additionally, it is crucial for the government to work towards securing the necessary funding and support from international organizations such as the IMF to ensure the stability of the country’s economy.
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Suleman Chawla, the Acting President of FPCCI, has reiterated the organization’s stance on the importance of regional trade. According to Chawla, most major economies in the world have a significant share of regional trade, with upwards of 70 percent, while Pakistan’s trade with regional countries has not been able to take off and may even be in reverse gear.
Chawla, the Acting President of the FPCCI, has raised concerns about the decline in Pakistan’s exports and remittances. According to Chawla, exports to nine regional trade partners have declined by 18.3 percent in the first eight months of FY23, and overall textile exports have declined by 11 percent, with a contraction of 30 percent in February 2023 on a month-on-month basis. He also noted that the decline in Pakistan’s exports has been steady over the last eight months.
This is a worrying trend for Pakistan, as exports and remittances are crucial sources of foreign exchange for the country. The decline in exports can be attributed to several factors, including a slowdown in global demand, supply chain disruptions due to the COVID-19 pandemic, and competition from other countries.
To address this issue, the government of Pakistan can consider implementing policies and initiatives that can help to boost exports, such as providing incentives for export-oriented industries, improving access to credit and finance, and investing in infrastructure to improve the competitiveness of Pakistani goods in the global market. Additionally, the government can work towards addressing the challenges faced by the country’s remittance industry, such as reducing transaction costs and improving the efficiency of remittance transfer processes.
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He expressed strong concerns about the decline in Pakistan’s exports. Chawla has highlighted that the decline in exports is not only incremental but also systemic, as the decline in exports has been consistently observed over several months. According to Chawla, on a year-on-year basis, October 2023 saw a 3.25 percent decline in exports, November saw a 17.6 percent decline, December saw a 16.3 percent decline, and January 2023 witnessed a decline in exports to the tune of 15.4 percent.
These figures are a cause for concern, as they indicate that the decline in exports is accelerating and could have significant implications for Pakistan’s economy. To address this issue, Chawla has emphasized the need for a broad and effective consultative process to identify and address the root causes of the decline in exports. This could include engaging with key stakeholders in the export industry, such as exporters, industry associations, and government agencies, to identify challenges and develop solutions
He raised concerns about the decline in remittances in Pakistan. According to Chawla, remittances experienced a 32-month low in January 2023, with a mere $1.89 billion in inflows. He believes that this should have sent shivers down the spine of the country’s economic managers, as remittances are a crucial source of foreign exchange for Pakistan.
Chawla also highlighted that if the government had managed worker’s remittances well and if they had not declined by 20 percent on a year-on-year basis, Pakistan’s total foreign exchange reserves would have been close to $15 billion currently. This would have been a decisive factor in the successful materialization of the IMF’s 9th review.
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The decline in remittances could have several causes, such as changes in migration patterns, economic conditions in the host countries, or changes in government policies. To address this issue, the government of Pakistan can consider taking measures to support the remittance industry, such as reducing transaction costs, improving the efficiency of remittance transfer processes, and incentivizing remittances through targeted policies and initiatives.
Additionally, it is important for Pakistan to diversify its sources of foreign exchange and reduce its dependence on remittances. This could involve promoting exports, attracting foreign investment, and developing new industries that can generate foreign exchange for the country. By taking these steps, Pakistan can work towards building a more sustainable and resilient economy.
The FPCCI has demanded that the Pakistani government bring forth transparency and clarity regarding its management of the external account and what is hampering the IMF staff-level agreement (SLA). According to Suleman Chawla, the Acting President of FPCCI, the lack of direction and non-existent consultative process between the government and the business community are major concerns.
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Furthermore, Chawla demanded that the government outline the subsequent steps for the stabilization of the economy after and if the IMF deal is finally struck. This is crucial as it will provide clarity and certainty for businesses, investors, and the general public, which will help to boost confidence and restore trust in the economy.
Overall, it is essential for the Pakistani government to work towards improving transparency and communication with the business community and the public. This will help to build trust and confidence in the economy, which is essential for its long-term stability and growth.