REAL STEPS URGED TO FACE CHALLENGES…THE FINANCIAL DAILY 19/01/2023

The Union of Small and Medium Enterprises (UNISAME) convened a meeting of its experts to discuss the financial challenges facing the country and give strong recommendations and suggest measures to the government for consideration and fast track implementation.

President UNISAME Zulfikar Thaver welcomed the participants and requested Shaukat Hassan Convener of Finance committee to give first his expert opinion on the strategy which needs to be adopted to overcome the crisis.

Shaukat Hassan said at the very outset that the first requirement is of political stability in the country and all political parties must work in this direction to save the country from economic turmoil.

He said, the other steps are:
Mobilizing funds from friendly countries;

Requesting overseas Pakistanis to contribute as well. Overseas Pakistanis and foreigners who have ties by virtue of birth and dual nationalities dearly love Pakistan and are keen to see Pakistan growing and financially stable;

Restrict imports of only the very essential goods and raw material be permitted and the import of all non-essential goods must not be permitted. In other words, restrict the imports to the level of exports;

Thaver added that complete austerity must be adopted in all ministries, departments and embassies and consulates abroad.

There is urgent and immediate need to stop wastage of electricity, fuel, food, gas and water by one and all. If necessary strict measures must be taken to implement monitoring and check;

Day time business activities be prompted and close out markets / shops after 7pm / 8pm (across Pakistan);

The other chronic issue is the huge debt burden and in 2023 about 23 odd Billion is due for payment out of USD 90/USD 100 Bn of total debt, large portion of which is due in next couple of years…It will be a challenge, rather impossible for any govt to meet these huge debt repayment capacity…Hence it is critically important that the Govt / SBP immediately mobilize its resources and contacts to find ways to spread these debts over longer period.

Through a task force, all Govt owned entities like PIA, Steel Mill, utilities etc. be brought under one umbrella company (Parent Co). If these entities cannot be run profitably then, there should be measures to sell these assets and generate income. However, efforts should be made to turn them around to be profitable and the efforts to utilize these surplus funds for debt repayments as a future strategy.

Increasing Taxes is not the solution since Tax increase may be short term solution but it is going to reduce the purchasing power of the common man and thereby shrink the economy further. Govt should look for ways to introduce Taxes on the segment, which can bear the burden, such, Individual / businesses having net income greater than Rs1.0Mn per month. A special one-time tax for debt servicing be considered for these segment instead of raising the taxes across the board. All such proceeds should go to an Escrow Account for Debt Servicing.

Govt should introduce financing schemes for overseas Pakistani to divert their foreign currency holding and invest in Pakistan…. through Bonds / Certificates etc.;

Explore the possibility of Rescheduling the Debts from shorter period to longer period either through refinancing or spreading the tenor through fresh funding from friendly countries like GCC, Turkey, China…

UNISAME Council members endorsed the view point of Shaukat Hassan said the government will need to co-operate with the IMF and follow their guidelines and seek their favorable considerations as without IMF it would not be possible to get back on our feet.

Integrated efforts are required on war footings to substitute imported goods with our indigenous goods and in this the PCSIR, EDB, SMEDA, NPO and all other related institutions must join hands. They emphasized that Pakistan as a nation must gear up to this challenge and start immediately. They said Iran after sanctions spent many years eating simply bread and tomato gravy, wearing clothes made of their own fabrics and leading very simple life.

The State Bank of Pakistan (SBP) must convene a meeting to chalk out the mechanism to avail suppliers credit to enable credit for import of raw materials, packing materials, essential goods and medicines.

The SME Bank must be merged with Exim Bank and not National Bank of Pakistan as indicated. The Exim Bank and SME Bank could jointly promote Escrow accounts and arrange for suppliers’ credits for many SME units. The members also suggested barter trade of our surplus items with those needed by us. Special emphasis was laid on import on deferred payment from China of chemicals, plastic granules, synthetic yarn and other raw materials in currency swap agreements. Likewise, with Iran we must work in this direction.

The meeting resolved not to be disheartened, discouraged or feel dejected and in fact remain determined to overcome and face the challenges bravely and sacrifice for their beloved country. It is time, that we all put Pakistan first, and come together to address the core issues.

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