KARACHI: Anticipating negative economic growth by the end of FY23, the business community has warned of a steep increase in unemployment especially in export-oriented sectors.

Based on the data and economic performance during the first eight months of the current fiscal year, the World Bank, International Monetary Fund and the Asian Development Bank have cut Pakistan’s growth to 0.4-0.6pc for FY23.

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Irfan Iqbal Sheikh on Friday said the country’s exports and export-oriented industries must be protected at all costs, otherwise, the entire economy would collapse.

He asked the State Bank of Pakistan (SBP) to soften the terms of the Export Finance Scheme (EFS) and Long-Term Financing Facility (LTFF) and extend loans at 10pc to enable exporters to fulfil their pending orders feasibly.

Business community fears economic contraction may unleash layoffs

The rationale behind FPCCI’s proposed National Economic Agenda for the next 15 years is to bring all political parties on board for continuity in economic, industrial, trade, taxation, monetary, agricultural, IT and SME policies, he said.

Mr Sheikh has also proposed a broadened tax base and simplified taxation system in the upcoming Budget 2023-24.

Meanwhile, Lasbela Chamber of Commerce and Industry (LCCI) President Ismail Suttur has raised concerns over the circular issued by the central bank aimed at discouraging exporters holding foreign exchange reserves in offshore accounts to gain the advantage of the rupee devaluation.

The SBP Circular No. 02 of 2023 in Para 33A Chapter 12 of the Foreign Exchange Manual regarding delayed export proceeds would result in an unnecessary burden on the exporters which would mark a negative impact on trade and exports, he asserted.

The circular requires exporters to bring their delayed export proceeds to Pakistan by April 30, failing which the banks would mark a lien on export proceeds realised by the exporter. This change would lead to a significant financial burden on the exporters, he added.

Mr Ismail said the global economy is currently going through a recession due to which negative affect on the importers and delay in payments is commonly observed.

Many importers are facing tremendous difficulties to pay timely. Under such circumstances, imposing additional regulations on the exporters would not only be unfair but also highly impractical, he added.

He highlighted that the circular lacks any clarity on how an exporter can justify to the banks that the delay in export proceeds is due to the buyer’s inability to pay, and not a deliberate attempt by the exporter.

Published in Dawn, April 15th, 2023