Govt, economy losing billions daily

KARACHI - The Federal government and the national economy of the country are suffering billions of rupees losses every day due to long march and political bedlam that have paralysed routine business and foreign trade in most of the parts of the country except Sindh province.
Details gathered by The Nation showed that the Federal Board of Revenue is losing more or less Rs 3 billion worth daily tax revenue because of political chaos that has caused a big blow to business.
Keeping in mind the expected tax collection of Rs 1.30 trillion in FY09, the Federal Board of Revenue's average income of revenue per day amounts to Rs 4.33 billion. The daily tax collection by the FBR had been estimated on the basis of working days, 300 in a year.
In the first eight months the Federal Board of Revenue had reported 20.7 per cent growth in the tax collection which amounted to Rs 706 billion from July-February FY09, against Rs 585.3 billion collected during the corresponding period of the last fiscal.
In remaining four months the FBR would have to raise Rs594 billion taxes to meet the annual target of Rs 1.30 trillion that had been revised downward from Rs 1.36 trillion. The monthly collection stands in the range of 148.50 billion in remaining four months of this fiscal that seems quite difficult in view of collection of only Rs 76 billion in the month of February.
If the long march and ongoing political mess linger on well ahead of March 16, it is being anticipated that the Federal Board of Revenue would lose more than 25 billion rupees worth tax revenue in the month of March and the average target of raising 148 billion revenue in this month would become impossible.
As the business activities have faced a serious blow during the past few days of protests and shutter-down while the transportation of goods/consignments had virtually paralysed with the start of long march due to the blockade of roads with containers, forcibly seized by the police, the tax collection, foreign trade and routine business would suffer a big setback and losses that would magnify the economic slowdown during the opposition parties march against the government.
This setback to the routine economic activity would not only decelerate the economic growth, industrial production, but also lead to unemployment and heavy losses to the exporters, importers, manufacturers and the other businessmen and may lead towards negative growth in the GDP in FY09.
A probe by The Nation showed that the quantum of average daily foreign trade (exports/imports) amounts to 160 million dollars. The average size of exports in a day stands around 34 million dollars (in case of 20 billion dollars annual exports) while the imports amount to 126 million dollars, if the imports stay around the revised estimate of 38 billion dollars in FY09.
The overall economic slump in the global markets and domestic hostile political climate would, indeed, lead to a serious damage to the foreign trade of the country, especially exports.
Meanwhile, economic experts and industrialists are giving different views about the number and percentage of industrial losses which was supposed to plunge the overall size of external trade, to be executed during the course of current month. Currently, the exporters and industrialists are in the process of evaluating the production and revenue losses, they are being faced since the crisis began.
However, they are quite clear in thinking that the anticipated pace of contraction in foreign trade would affect the balance of payment position of the country, hurting the growth in country's revenues including financial inflows and capital account that would impacted Pakistan's export growth during the ongoing and forthcoming month or so.
This most probable downward trend in the exports could upset the current account balance by reaching trade deficit swell to a certain high level.
Dr. Ayub Mehar, Head of Research at Federation of Pakistan chamber of Commerce and Industry (FPCCI) while talking to The Nation said that the perpetual disturbed domestic political conditions would definitely affect the government efforts to bring improvement in the macroeconomic indicators.
However, he did not foresee a major decline of 50 percent in the volume of foreign trade out of the total trade in the period of March 2009. He predicts a meagre decrease in the total amount of external trade on daily basis.
He endorsed the logic that the business activities are being paralysed in most of the parts of the country, excluding Sindh (Karachi), as goods and consignments coming to Karachi from other parts of the country are not reaching the port because of blockade of roads and impounding of containers by the police to foil long march ahead of lawyers sit-in to be taken place in Islamabad on March 16, 2009.
Discussing the impact of the potential consequences of this turmoil on the business and industrial community he said, "This situation is being delayed the industrial goods consignments which are set to be embark on Karachi port from the different cities of the country to the foreign destination while many foreign shipments have still anchored at Karachi harbour thus, delays in foreign shipments from Karachi to different cities of the country is being increased the cost of transportation and freight charges, storage charges and mark-up rates on Letter of Credits (LCs)", he said.
Despite this fact that some importers and exporters are not feeling hurt by this worst-ever law and order situation because they can afford it to some extent, he added.
In this tough regional and internal environment, to maintain political stability in the country has always been a big challenge for the government authorities and law enforcement agencies.
Now, at this stage when it seems that the situation is reaching to the point of no return between government and opposition, every one is looking at government that how it is prepared to respond this challenge.