Foreign exchange inflows

February 14, 2019

With the Saudi Arabian Prince’s arrival in Pakistan along with high-powered delegation the government expects more foreign exchange inflows. IMF fund is also on the card. The government has unquestionably earned respite from the economic pressures it inherited. It is encouraging the government is giving special emphasis to promotion of investment in the country as this is the only course through which exports can be enhanced, jobs can be created and the economy can be wriggled out of the crisis like situation. Already good news are emanating that Saudi Arabia and United Arab Emirates, which have recently extended financial relief package to the country, are contemplating further investment in the country with the Saudi investment is reported to be to the tune of 20 billion dollars including $10 b oil refinery. When Prime Minister Imran Khan chaired a second meeting on the ease of doing business, he was informed that the number of taxes had been brought down from 47 to 21 to facilitate the business community. Chairman BoI Haroon Sharif also informed the meeting that a new system of value added tax refund would be in place by March which would significantly reduce time in obtaining the VAT refund, adding that efforts were also being made to improve the risk-management system to reduce the number of physical audits. It was also decided that ease of doing business offices would be set up at federal and provincial levels for the purpose of removing bottlenecks and facilitating investors for smooth business operations. Indeed all these are important steps and a step in the right direction to encourage the investors, the domestic or the foreign, to invest in different sectors of the economy. Nonetheless, the government also needs to give the energy situation and their tariffs more serious thought if it really desires to attract maximum investment from different sources. The people are once again plagued with the power and gas crisis while increase in their tariffs will also hinder efforts directed towards industrialization. There is need to immediately address the bottlenecks in the energy sector and reduce their tariff so that the products produced domestically are also competitive at the international markets. This is the path through which we can enhance our exports and earn valuable foreign exchange. It remains to be seen how PTI leadership and its entire government machinery which has remained totally fixated on certain subjects since coming to power will find time to deal with crucial issues faced by the country. Successive governments’ attempts to accelerate economic growth have not led to the promised trickle-down effect.

 This will be a challenge that the PTI government will have to face as it embarks on its plan to reform the economy.