FPCCI urges Dar to initiate budget consultations amidst delayed IMF programme

KARACHI: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Saturday expressed concerns over the prolonged delay in budget consultations, citing the stalled International Monetary Fund (IMF) programme as the underlying cause.

The FPCCI has invited the finance minister to initiate consultations for the upcoming budget 2023-24.

FPCCI President Irfan Iqbal Sheikh said, “Less than a month is left in the announcement of budget as it has been slated for presentation on 9th June.” The FPCCI wants to present and discuss its proposals on industrial, trade, shipping and transportation; taxation, SME, agriculture, IT and ITeS; monetary and fiscal policies with the government.

Budget-making is the opportunity where we can have meaningful course correction – based on ground realities; regional and global business environment and national interest.

The FPCCI chief also expressed his shock that the International Monetary Fund (IMF) has resorted to arm-twisting as it has raised – for no reason – the external funding requirement from $6 to $8 billion.

Sensing that the friendly countries have promised up to $5 billion in funding or roll-overs to Pakistan, and the country pretty close to fulfilling the last condition, it had asked the IMF for a $1 billion relaxation, when the target was $6 billion.

“This is unfair and unethical,” Sheikh said, and called for the international community to take notice.

The IMF’s stalled Extended Fund Facility (EFF) programme was valid only till June 2023; but, contradictory to that, they have suddenly raised the external funding requirement from $6 - $8 billion for the next 7 months.

“It has no justification and is tantamount to undermining the whole budget-making exercise of a country of 230.1 million,” Sheikh said.

He emphasised that the government’s economic and financial team must be crystal clear now that the IMF programme is not going to materialise before the upcoming budget – which is only three weeks away. The government must prepare its budget accordingly.

“We, at FPCCI, have been observing that the government was making its budget on the basis of a resumed IMF programme, but given the fluid circumstances, it now has to make major adjustments in the budget within the short period of three weeks,” he added.

The FPCCI president maintained that the only solution that can steer Pakistan out of the crisis is indigenous with few basic principles.

Simplification and broadening of the tax base should be the first principle, instead of squeezing the existing tax filers and harassing business and industry.

The government should also provide targeted subsidies to the five export-oriented sectors (i.e. textiles, IT and ITeS, leather, sports and surgical goods) in electricity and gas tariffs, and make it competitive via the regionally competitive energy tariff (RCET).

It should encourage remittances through bridging the gap between banking channels and open markets and protecting the assets of overseas Pakistanis in the country. Incentivise industrialization, export substitution and revival of sick units.

Make all economic policies in consultation with real stakeholders of the economy, i.e. business, industry and trade community of Pakistan.

The government should also ensure that all political parties sign a national economic agenda and plan for the next 15 years to ensure continuity of economic policies and protect it from political meddling.