Business confidence plummets as default looms
KARACHI: Despite the fact that the nation has agreements in place for repaying external loans as part of the International Monetary Fund (IMF) loan program, the majority of firms are still concerned about the dangers involved with failing to make payments on international debt, according to a Gallup Pakistan survey.
Businesses have little faith that the caretaker administration would offer practical remedies to the issues they are already experiencing, such as rising inflation, reduced energy bill subsidies, and a depreciated currency. Over 500 firms participated in the study, and over half of them stated that they had to cut costs to survive the country’s high inflation during the second quarter, which ended on June 30, 2023 Of these, slightly more than half (49%) express high concern. The study results show that 17% of respondents are not at all bothered.
Remember that Pakistan received a $3 billion IMF bailout in late June 2023, and by mid-July 2023, its foreign exchange reserves had increased to $8.72 billion thanks to $4.2 billion in inflows from the Fund and friendly nations. The reserves, however, are now again running low as a result of the current account balance’s return to deficit in July after four months of surplus. The majority of Pakistan’s businesses, according to the most recent study, are “not hopeful at all” that caretaker Prime Minister Anwaar-ul-Haq.
The survey’s findings indicated that receiving inflated electricity bills was the second-largest concern facing businesses, after rising inflation readings. The rupee’s devaluation, the increase in the price of petroleum products, and taxes, they claimed, continued to rank as their top three irritants. The second quarter of 2023 saw a two percentage point increase in the future business situation score, but the overall rating remained minus 20 points.
Published in EDP BLOGS on September 5,2023.
