KARACHI: All Pakistan Textile Mills Association (APTMA) on Friday urged all political leaders and decision makers to develop consensus on how to get out of the dire dire situation and pull the economy out of the current downward spiral.
APTMA President Rahim Nasir said political instability is a serious impediment to economic progress. “Not only does this shorten the horizons of policymakers, leading to suboptimal short-term macroeconomic policies, but it is also the cause of frequent policy reversals and leads to ongoing projects not being carried out,” said Nasir said.
“Stability and consistent policy implementation are essential for economic growth and for the export sector to thrive and contribute to dollar earnings to stabilize the balance of payments for a sustainable economic outlook.”
The APTMA Chairman said that the exchange rate is a major cause of concern for businesses and that currency instability has a significant negative relationship with Pakistan’s sectoral exports such as textiles. “A negative indication indicates that an increase in relative prices is to blame for the decline in export demand,” he said.
Pakistan has been in the grip of a debilitating exchange rate for some time now. The value of a dollar reached its highest level ever on July 27, 2022 when it hovered around 237 rupees. “In the long term, the sharp devaluation of the rupee is worse for exporters, especially textile exporters, as it increases input costs, making exports less competitive,” Nasir said.
He said it was time to abandon the widely held misconception that exporters welcome the devaluation of the rupee. “The central bank and government should focus on achieving a competitive exchange rate in the market and achieving real exchange parity. Dollars earned through exports are the most sustainable with the added benefit of not being forced to return them, no interest and the cheapest with only 3-4% cost, so focusing on export-generated dollars is a much better option than bonds, he added.
Moreover, the need for a long-term policy characterized by lower interest rates cannot be underestimated, and its implications for a better economic future that generates foreign exchange, jobs and international recognition cannot be underestimated. be denied. We need more investment in Pakistan, alongside comprehensive policy reforms that give investors and markets confidence. This need cannot be satisfied with an interest rate of 15%.
The current account deficit increased by 517% in FY22 compared to FY21, he pointed out and urged action to reduce the import bill by at least 5 billion dollars, in particular energy, by guaranteeing energy efficiency.
Surprisingly, oil imports increased by 50% in June 2022 in volume. Pakistan imported petroleum products worth $24 billion last year. Gas should be used for production purposes only. At present, the gas is also supplied to ceramics, steel and glass. Declare an energy emergency and introduce energy conservation measures that can save Pakistan’s economy in more ways than one.
He suggested that aggressive conservation would reduce import bills by more than 25% and save $6 billion. “Implement both tariff and administrative measures to reduce consumption and reduce domestic gas supply to reduce consumption and waste by 18% UFG.”
Nasir said single point energy supply of domestic gas and accelerated calibration of cooking burners to save 200 MMCFD of gas/RLNG and improve documentation.