Trade and industry to resist expected GST hike: FPCCI
ISLAMABAD :Federation of Pakistan Chambers of Commerce & Industry’s (FPCCI) former president and BMP Chairman Mian Anjum Nisar said Sunday International Monetary Fund’s (IMF) demand to consider increasing the GST rate by 1% to 18% in the current fiscal year would prove to be highly inflationary and 1% increase would push the prices of all goods upwards.
In a statement on Sunday, Nisar announced to resist such destructive and harsh move, as the country’s debt servicing cost might escalate to alarmingly Rs5.2 trillion, with inflation accelerating to 29% and economic growth rate slowing down to 1.5 percent in the current fiscal year.
He expressed his dissatisfaction about the government’s ability to raise $8 billion from capital markets and foreign commercial banks in these challenging times.
He said that the government has already spent Rs2.56 trillion on debt servicing during July-December period of the current fiscal year. The central bank last month increased the interest rates to 17%, which might not help contain inflation but will surely further bleed the budget.
He raised questions about the inflationary impact of the planned increase in electricity prices to lower the circular debt. The government’s estimates were that due to further increase in the electricity prices, inflation could jump to 29%.
The Pakistan Bureau of Statistics reported that inflation hit the 48 years’ highest level of 27.6% in January. The likely acceleration in the index would bring more misery for the trade and industry which was facing difficulties in meeting soaring cost.
He asked the government to inform the IMF that due to floods, tight monetary policy, high inflation, and a less conducive global environment, the economic growth rate might slow down in the range of 1.5% to 2% — a pace that was even lower than the population growth rate and would cause more unemployment in Pakistan.
He said that the agriculture sector would contract, the industrial sector might show nominal growth but the services sector was likely to grow around 3%.Compared to old estimates of generating about 1.5 million new jobs, the government had now realized that the additional jobs in the current fiscal year might not be more than half a million.