IMF prescription to wipe out middle class: FPCCI
07 October, 2013
LAHORE: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Sunday said the International Monetary Fund-influenced contractionary policy of the government will result in negative growth rate, making life difficult for the poor while wiping out the distressed middle-class.
"The shrinking middle-class of Pakistan will collapse under the painful austerity measures and unmatched fall of the rupee as prescribed by the IMF, while it is difficult to measure the miseries of the poor, already living in hell," said FPCCI President Zubair Ahmed Malik. He said the middle-class is facing reduced disposable income and will try to make lifestyle adjustments, compromising on quality of food, standard of education and health, which will trigger many crises in the years to come.
The FPCCI chief said that as the rupee heads towards 110 to the dollar again, almost 10 percent cheaper than it was a few months ago, the industries depending on the disposable income of the mediocre would experience defaults and foreclosures. He said that prices of consumer goods which are imported or use imported raw materials are rising steadily, hitting the salaried class that will soon find it difficult to survive without other sources of income, which seems to be a far cry for the majority.
"People will be paying more for everything because of the mismanagement of the economy that has led us to high budget and trade deficits and inflation," Zubair Ahmed Malik observed. He said that the rural economy which has remained largely cushioned over the years due to the rural agenda of all major political parties will also face problems despite the fact that countryside poor do not travel frequently or spend on non-essentials. Reducing expenditure cosmetically and stress on enhanced revenue generation in the absence of any serious initiative to broaden the tax net or push rural nobility to pay taxes will leave urban taxpayers at the mercy of collectors while its overall impact will be economic contraction, said Malik.
He said high inflation would not only slow the growth but spur layoffs and delay creation of new jobs, hitting the vulnerable, including poor, lower middle to middle income earners. "The recent deal with the IMF which is against the manifesto and the claims of the ruling party, will never improve the current state of the economy rather deteriorate it," Malik noted, adding that the solution lies in expansionary policy.
One of the reasons behind resistance to the recent measures is little credibility the authorities enjoy, he said. Similarly, the IMF has failed to address the crisis in flexible and innovative way which can lift troubled economies without serious human and economic costs, the business leader said. "Masses and business community will never subscribe to the idea of taking a suicide pill under the guise of a bitter pill based on the ill will of the IMF, as nobody wins in the current set of policies except the lender," Malik opined.