KARACHI: Founder President Women Chamber of Commerce and Industry Quetta and Former Vice President FPCCI, Fehmida Jamali said historically, the Rupee has been devalued by over 2100 percent over the last 70 years which is wicked for this nation, says a Press release.
This most recent sequence of devaluations started in July 2017, when 3 percent depreciation was termed the worse fall in 9 years. Again there was a blame game between then Finance Minister (FM) Ishaq Dar, the State Bank of Pakistan (SBP) and the market stake holders.
Fehmida Jamali said common Pakistani is quite confused about the country’s economy. Blamed by international institutions for fudging its own economic figures, Pakistan finds itself in an increasingly volatile environment. Continuous speculation has added fuel to the fire, especially when seen in the backdrop of Pakistan’s political environment.
The government’s stance remains shaky, and its conduct has been dubious in both the political and economic spheres. Recently, it devalued the Rupee for the second time in the last three months. The accumulative devaluation now amounts to 9.5 percent, implying a $7.6 billion increase in loans – all without borrowing a cent. And to top all this, the rupee’s ordeal is not over just yet, there is likely to be another devaluation before July 18. So this means Pakistan has accepted the International Monetary Fund’s (IMF) precondition to let the rupee depreciate by over 4% to qualify for any fresh bailout package.
WCCI President further said present corporate tax rate of 34 percent which is now reduced to 31 percent is still highest in the region while 17 percent sales tax is also highest compared to 12 percent sales tax of the region. He suggested the tax should be reduced to bring it at par with other competitive economies and to provide incentive for strengthening of organized and documented sector.
She added already low tax base has further contracted as only 580,000 people and companies filed annual income tax returns in 2017, which is less than half of the returns filed in tax year 2016. They said that the narrow tax base and low tax-to-gross domestic product ratio has now started affecting socio-economic and security-related projects. 17 percent sales tax in Pakistan was among the highest in the region that has put extra burden on the common man and enhanced the cost of doing business in the country. In the coming budget, termed not the domain of the incumbent government, at least government should reduce GST to single digit level to provide relief.
The President also stated around 40 days left in the tenure of the incumbent government – the question remains – what can be done? Peculiar to our economy, factors which are likely to drive the Rupee in the foreseeable future include the geo-political situation, domestic environment, interest rates, trade, growth rate and inflation. “Pakistan desperately needed structural reforms in energy, public sector and taxation which never materialised over the last five years. There are no quick-fix solutions now, but the import bill has to be controlled through operative regulatory duties and other administrative measures”; she remarked. – NNI