President Pakistan Businessmen and Intellectuals Forum (PBIF), President All Karachi Industrial Alliance (AKIA), Senior Vice Chairman of the Businessmen Panel of FPCCI and former provincial minister, Mian Zahid Hussain on Wednesday said recently announced monetary policy is too aggressive. An interest rate hike of 1.5 percent by the central bank is over and below the expectations of the experts and the business community but it will choke the economic growth at this critical juncture, he said.
Talking to the business community, the veteran business leader said that the monetary policy after a poorly negotiated deal with the IMF, will hit manufacturing, agriculture, exports and jobs while it will deprive the private sector of much-needed credit resulting in defaults and litigation. He said that another interest rate hike is expected which will be disastrous for the economy. He added that private banks will find it attractive to lend to the government which is risk-free while the private sector will be able to get loans at 15 to 16 percent interest which is unsustainable.
The former minister noted that that business community was already facing problems like increased cost of doing business, inflation, devaluation etc. and now the interest rate hike will add to their difficulties.
Mian Zahid Hussain said that the government will also come under pressure as it will not be able to seek loans from the central bank and borrowing from commercial banks would be a costly option which will hurt all other sectors. Steel, cement, fertilizer and other sectors will lose while the banking sector will thrive on the high policy rates and they will ignore the private sector due to risks associated with it.
The business leader noted that interest rates have touched eight-year high to 12.25 percent which will not only hit production and make increasing exports impossible. The development will not only discourage industrial sector but also hit the new investments as inflation would grow in the backdrop of depreciation of local currency against the dollar, increase in petroleum prices in the international and domestic markets, and a further increase in power and gas tariffs in the near future which will increase poverty, he warned.
Mian Zahid asks PM to reject gas price hike
President Pakistan Businessmen and Intellectuals Forum (PBIF), President All Karachi Industrial Alliance (AKIA), Senior Vice Chairman of the Businessmen Panel of FPCCI and former provincial minister, Mian Zahid Hussain on Monday said proposed gas price hike will damage masses and economic activities. Prime Minister Imran Khan should reject OGRA’s proposal to hike the gas price by 47 percent for SNGPL and 28 percent for SSGC, he said.
Talking to the business community, Mian Zahid Hussain said that the government has already increased gas tariff by 133 percent therefore another hike cannot be justified.
The veteran business leader said that an upward revision in gas tariff will also increase the tariff of electricity and erode the buying power of the masses which are already reeling under runaway inflation. Gas is almost half of the country’s energy mix which should not be subjected to frequent fluctuations lest it compromises production and exports, he warned.
The former minister noted that the government has increased prices of petroleum products, medicine, edibles while the currency has been devalued therefore masses should not be burdened through another hike in gas prices. He noted that losses of gas companies and thefts have reached billions of rupees while inefficiency and mismanagement have plagued these utilities. These companies should introduce reforms to reduce losses and stop punishing honest customers for their own shortcomings.
Mian Zahid Hussain said that frequent price increase is not a sustainable solution for the problems confronting SSGS and SNGPL, therefore, the distribution companies should try to put their own house in order. He said that the government should give target to reduce theft, line losses and operational costs to the management of gas companies and their success should be determined in light of the results. The latest proposal, if accepted will jack up the monthly bill of people using 50 cubic meters of gas by Rs515 while those using 100 cubic meter of gas monthly will have to pay an additional amount of Rs1500.
Economy is moving to wards stabilisation: Mian Zahid
President Pakistan Businessmen and Intellectuals Forum (PBIF), President All Karachi Industrial Alliance (AKIA), Senior Vice Chairman of the Businessmen Panel of FPCCI and former provincial minister, Mian Zahid Hussain on Friday said government wasted nine months to inaction which severely damaged the economy. Serious threats being faced by the economy have retreated and now it is moving towards stabilisation, he said.
Mian Zahid Hussain said that the dollar cannot keep a nuclear Pakistan as a hostage for long as the rupee is gaining its value against the US currency.
Talking to the businessmen, the veteran business leader said that tough decisions have been taken, bitter pills have been swallowed and now the government should start working to improve the economy so that the masses and the business community can take a sigh of relief.
The former minister noted that revenue and exports are stagnant for last ten months while investment has been reduced by 50 percent because former rulers were criticised for blunders but nothing was done to improve the situation. Inflation is rising, the rupee has lost worth and interest rate hike has shaken the economy while imports have been reduced for which credit goes to the policies of the government, increase cost of imports and price hike. The deficit of the first nine months of the current fiscal stands at Rs29 trillion, foreign loans have been increased by ten trillion rupees while debt on every citizen has increased by Rs33 thousand. If the government failed to honour its commitments with IMF it will have to pick the begging bowl after three years, he warned.
Mian Zahid Hussain said that Saudi decision to give oil worth $3.2 billion will reduce pressure on the rupee and the government and improve the balance of payments situation.
Talks for oil on deferred payments have also been initiated with UAE which if materialised will also help to improve the economy. Pakistan will have to spend around fifteen billion dollars on oil imports and the government is trying to get half of it on deferred payments which are a good decision, he said. The loans would be returned as soon as the economic situation improves.