competitiveness of the exports could be restored by allocating around Rs100-150 billion for export refunds on inputs that are provided by most regional economies. “This could be done by refunding all the taxes collected on fuels consumed in power production to the exporters.”
A realistic value could be assessed by the experts, he said, adding that the same is being done in India. The tax on diesel consumed for self generation of power by exporters in different processes is refunded. “Some provincial and local government taxes on exporting industries are not refundable, though,” he added.
These taxes should be abolished and federal government should compensate the provinces and local governments from special funds as was done when octroi was abolished during previous Nawaz era.
Lastly, all the struck up refunds and refunds created thereafter should be refunded with a specific time frame not exceeding 15 days in case of fresh refunds.
“On failure to do so, the FBR should pay interest amount at KIBOR plus two percent,” which should be paid on a monthly basis until the total amount is refunded, he said.
Furthermore, the refund officers should be made accountable for delay in refunds. If these steps are taken and implemented there would be no need for rupee devaluation. In fact, the rupee would start strengthening as the exports increase.
Economist Faisal Qamar said Pakistan as a country and its private sector as a whole are net importers.
In fact, the imports in Pakistan are almost double than its exports.
“A stronger rupee will keep in check the cost of all imports including crude oil, edible oil, industrial raw material and machinery,” the economist said, “On the other hand, a weaker rupee would force the government to increase the petroleum product rates at a time when crude oil rates are at its lowest in a decade.”
“We all know that under invoicing in Pakistan is rampant that is badly impacting domestic industries survival,” he said, “In case of weaker rupee would further increase the margins of those indulging in under invoicing.”
The inflation is more anti-poor than it is anti-rich. A weaker rupee would bring inflation back in the economy, while a stronger rupee would affect exports negatively only if the genuine drawbacks of exporters are not removed.