Holding back refunds hitting exports, economy

The Federation of Pakistan Chamber of Commerce and Industry (FPCCI) on Sunday said non-payment of refunds has become a threat to the export sector and the fragile economy.

The policy of blocking refunds to show improved revenue collection has taken toll on the external sector which was already reeling under energy crisis and other issues, it said.

The situation can be gauged from the falling exports which has pushed trade deficit to 30 billion dollars in the eleven months while the deficit of the last year's eleven months was 21.1 billion dollars, said Atif Ikram Sheikh, Chairman FPCCI Regional Committee on Industries.

He said that falling exports and increased imports can result in a balance of payments crisis, therefore, the government should change its attitude towards the export sector.

According to the law, refund claims must be cleared within 45 days but the authorities continue to block payments since years which has damaged the export sector, especially the textile sector, he added.

Atif Ikram Sheikh said that authorities continue to play havoc with exporters by blocking their refunds as the refunds are included in the collection to show growth which is deception with a high cost.

Holding back refunds creates liquidity crunch for exporters who are hardly surviving due to the high cost of energy and other problems, he said, adding that the situation can be improved if refund mechanism is fully automated.

He said that exporters are running from pillar to post since years to get refunds but they are not being entertained.

Delay in refund payments has closed many businesses while leaving others at the mercy of loan sharks which is slowly and surely killing the export sector.