OPINION: Who is making money in Pakistan? |
There are reports of factory closures, at least 150 over the past two years with the majority of the remaining units operating at 50 percent capacity as per a textile industry source — a trend that is fuelling unemployment in the country.
Industry attributes these trying conditions to high input costs compared to regional competitors — higher borrowing costs in spite of a decline in the discount rate to 10.5 percent, higher taxes even though most of them are indirect which are passed onto the consumers, and ending subsidised electricity/gas rates to achieve full cost recovery, conditions under the International Monetary Fund’s (IMF’s) ongoing programme.
To add insult to injury given that 75 to 80 percent of all revenue is from indirect taxes, whose incidence on the poor is more than on the rich, poverty levels have reached over 42 percent in the country, a rate comparable to some Sub-Saharan African countries.
And yet, there is overwhelming evidence that money is being made in Pakistan. The question is which sector/group is making money? And an equally relevant question is: have the influential elites’ stranglehold on making money been snipped due to the extremely harsh IMF conditions that include anti-corruption and governance measures, or have they managed to sustain the status quo?
Those operating in the private sector - the rich industrialists, the rich landlords - are post-7 billion dollars Extended Fund Facility (EFF) programme approved by the IMF on 10 October 2024 facing some serious challenges, given that the Fund has challenged the fiscal and monetary incentives meted out to these elite groups by previous administrations.
The Fund report asserts that the: “the state’s support of businesses through subsidies, favourable taxation arrangements, protection and governmental price setting has undermined the development of a dynamic and........