EXPRESSING concern over the upward revision of interest rate by the State Bank of Pakistan (SBP), business leaders believe that together with the lingering confrontational parliamentary politics and the potent threat of violent clashes between political rivals in the streets would cost the already fragile national economy a tad too much.

Cautious with their choice of words, they do convey their displeasure with the political class which, in their opinion, acts on impulses while discounting the need for a united stance in dealing with the mounting economic challenges.

Some leaders are vocal and see the restoration of the National Assembly as a step in the right direction, but others refrain from offering a comment at all. They just want that the prevailing uncertainty to come to an end.

Irfan Iqbal Sheikh, President, Federation of Pakistan Chamber of Commerce and Industry (FPCCI), said he was worried over GDP growth rate prospects in the current scenario of political turmoil and interest rate hike. “Things will take time to settle, but the Supreme Court decision has cleared the fog and shown the direction to get back to the normal.”

Though cautious with their words, business leaders are clearly unhappy over the failure to give the economy precedence over politics

Mentioning the Asian Development Bank (ADB) projection of a 4pc GDP growth rate against the government target of over 5pc, he feared greater deceleration if the government failed to contain the spike in the rising cost of production which is hurting the competitiveness of exports.

“Expensive dollars, rising logistical costs and global recession are already big challenges for local manufacturers aspiring for a bigger share in the local as well as export markets. The interest rate, the highest in the region at 12.25 per cent, will simply seal their fate. The SBP needs to review its decision and bring the cost of borrowing to the regional average,” he said.

He hinted at efforts of building the research and development capacity of the apex business body to assist the government in crafting a consensus economic plan to break out of the low-growth cycle.

Musadaq Zulqarnain, a reputable business leader, was clear and precise. “In any democratic country, the constitutional supremacy is non-negotiable. The Supreme Court decision is a victory for the Constitution. SC buried the doctrine of necessity after a long time.

“Having said that, in order to address the numerous problems, especially the economic meltdown, the country needs a government with a fresh mandate and one would expect that the new leader of the National Assembly will move towards fresh general elections for national and provincial assemblies in the shortest possible time.”

Khurram Mukhtar, Patron-in-Chief of Pakistan Textiles Exporters Association, thought it would have been better had the SC taken notice of the political defections which created doubts in the minds of the people about the quality of the democratic order.

“Yes, it’s good that the SC has acted, but the issue of floor-crossing should have been addressed at the same time.”

Nasser Hayat Magoon, former president of FPCCI, was happy that the SC decision has brought an end to the confusion over the legality of the government’s conduct on April 3 in the National Assembly. “At least, the uncertainty is over now which was damaging the country as it was left directionless.”

Majyd Aziz termed the SC decision ‘judicious’, but warned that the ouster of the prime minister through a no-confidence vote in parliament could set a precedence for a government change before it completes the term with adverse consequences for the economy and the country.

Abdul Aleem, Secretary-General, Overseas Chamber of Commerce and Industry, expressed his concerns over the quality of economic diplomacy.

Regarding the choice of the parliamentary leader after the ouster of Prime Minister Imran Khan, he said: “Considering the immediate challenge to the economy, our wish will be to have someone with experience and good reputation, preferably an economist/technocrat, familiar with ways to deal with the international financial community. The immediate challenge is to re-align the fundamentals, take bold decisions to re-align prices to a realistic level, remove subsidies on items, like petroleum products, broaden the tax base and build the confidence of market stakeholders. The economics must take precedence over politics.”

Discussing the reluctance of some leading lights of the business community on the evolving political situation, the former prime minister and a leader of PML-N, Shahid Khaqan Abbasi, was pragmatic. “The businessmen always want to be on the winning side of the political divide so they steer clear of any controversy. It is logical. In their position, I would do the same. Nothing can protect businesses from a hostile government.”

Published in Dawn, The Business and Finance Weekly, April 11th, 2022