Page 18 - TEXtalks. January-February 2023

18

Govt presents

‘mini budget’

amid scrambling

for IMF loan

The high depreciation of the rupee against the dollar has made Pakistan even cheaper in
labor wages than Bangladesh. Still, the inflation that would follow after the implementation of
the mini-budget would make local inputs expensive for the industry.
The increase in petrol rates and regular increases in the central bank policy rates would
continue to increase the cost of production of all exporting sectors. The basic textile sector
would come under immense pressure if gas and power rates are enhanced. This is not part
of the mini-budget but is part of conditions imposed by the IMF that wants additional taxes
levied, subsidies withdrawn and power and gas tariffs enhanced.

The agreement with the IMF has not yet been finalized. It is unlikely that the current gas and
power tariff agreed by the Pakistani government with textile exporters would stand. The IMF
has only recently forced the Bangladesh government to increase its gas tariff by 176
percent. The increase in gas or power tariffs particularly hurts the spinners, weavers, and
processors in the basic textile sector. The apparel sector consumers with relatively less
power and energy would not be impacted much.

The All Pakistan Textile Mills Association-North has urged the government to adopt a uniform
price of $7 per million British thermal units (mmBtu), demanding that different gas rates for
the export-oriented industrial units of Punjab and Sindh be abolished.

January/February 2023