Thursday, December 8

Govt asked to prevent approaching economic meltdown

KARACHI: Former President of Islamabad Chamber of Commerce and Industry (ICCI) Dr. Shahid Rasheed Butt on Friday asked the government to take urgent steps to prevent approaching economic meltdown.

He said spending spree by the government, increasing inflation, ballooning current account deficit and exchange rate loss has exposed weak economic policies and economic governance. A weak rupee, increasing imports and falling foreign investment is resulting in economic issues which require immediate steps lest it results in an economic collapse, he said.

Talking to the business community, Shahid Rasheed Butt said that development through borrowing and subsidies has backfired resulting in a serious threat to the limping economy. He said that efforts must be initiated to thwart an economic meltdown which includes policy response like limiting imports and jacking up interest rates.

He noted that importers were giving the impression that increased imports will result in augmented exports which has proved wrong, as it has contributed to trade imbalance. Independent economic experts have been warning about the policies to appease voters which has created an economic bubble that can erupt any time, he warned.

He said that overreliance on remittances is wrong, Roshan Digital Account has attracted only two billion dollars despite attractive interest rates and the only option seems to be borrowing through floating bonds which will require almost twenty percent interest rates putting pressure on fragile finances.

The market intervention and policy rate hike by SBP has failed to stop the fall of the rupee and while increased inflation is becoming a threat to the political future of the government but it cannot take unpopular decisions due to upcoming elections, he observed.