LAHORE: The Lahore Chamber of Commerce and Industry (LCCI) has termed successful negotiations for a $3 billion deal with the International Monetary Fund (IMF) a good omen for the country’s economy.

The LCCI has also appreciated the efforts by Prime Minister Shehbaz Sharif in maturing the deal through repeated contacts with the IMF chief.

“While the funds may not be disbursed all at once, the agreement will dispel speculations of a potential default, thereby putting an end to the detrimental effects of rupee devaluation, brain drain and capital drain,” said Kashif Anwar, the LCCI president, in a statement on Saturday.

In light of this development, Kashif Anwar urged the authorities to focus on two key areas for economic reforms. Firstly, he called for efforts to expand the tax base, which would increase the government’s revenue and contribute to overall economic stability.

Secondly, he stressed the need to address the disparity between the rates of the US dollar in the open market and the interbank. This discrepancy has created challenges for businesses and has had a negative impact on the economy.

Expressing his opinion on the ideal exchange rate, Kashif Anwar suggested a range of 175 to 200 rupees per dollar. He argued that such a rate would have multiple benefits for the economy. Firstly, it would help reduce inflation, which has been a pressing concern in Pakistan.

Secondly, it would contribute to lowering the high interest rates, which currently stand among the highest in the world. This reduction would not only alleviate the burden on borrowers but also make the cost of doing business more affordable.

The LCCI chief further elaborated on the potential positive outcomes of this exchange rate adjustment. He explained that it would lead to a decrease in the cost of imported goods, particularly fuels and raw materials.

This, in turn, would have a cascading effect on the prices of finished goods, resulting in a more affordable and competitive market.

Moreover, he highlighted that a favourable exchange rate would alleviate the strain on businesses by reducing their dependence on imported resources and increasing their ability to rely on domestic alternatives.

The LCCI president also emphasized that the successful IMF deal would enhance the trust and confidence of other donor agencies and financial institutions. This, in turn, would open up opportunities for increased funding for Pakistan’s development projects.

He noted that the inflow of funds from these institutions would play a significant role in accelerating the country’s economic growth.

In light of these significant developments, Kashif Anwar called upon all political parties in Pakistan to set aside their differences and sign a charter of economy.

He underscored the urgency of this action, emphasizing that it was crucial to break free from the recurring financial challenges that have hindered the country’s progress.

Anwar urged political leaders to unite in their commitment to long-term economic stability and growth, transcending party lines for the greater benefit of the nation.

“The LCCI remains optimistic about the potential for Pakistan’s economic stability and growth in the wake of the successful IMF deal. We also reiterate the importance of implementing necessary economic reforms, addressing the exchange rate disparity, expanding the tax base, and fostering unity among political parties to navigate the country towards sustainable economic development,” he said.

“As Pakistan stands at a critical juncture, the successful conclusion of the IMF deal serves as a stepping stone towards overcoming financial challenges and realising the country’s economic potential. With concerted efforts and a collective commitment to reform, Pakistan can look forward to a brighter future marked by increased economic stability and prosperity for all its citizens,” the statement concluded.

Published in Dawn, July 2nd, 2023