The new government has received mostly bad news, but perhaps one of the worst [pieces of news it received was that the slump in the cement sector has not just continued, but worsened. The despatches of cement for the year have fallen to 3.26 million tonnes, a 19.22 percent decline form the previous year’s 4.3 million. This comes after a decline of 14.8 percent the month before. Cement offtake is one of the key indicators of economic activity, for it indicates private investments in construction, which is mostly real estate, both residences and for commercial purposes. If factories of any kind are being set up, they will require cement. The government is an important consumer of cement, which is an essential component of development activity. If investors are fighting shy of making a commitment, and if the government is cutting back on development spending, the cement industry is bound to be in trouble.
Perhaps unfortunately, the All-Pakistan Cement Manaas to revive the industry. It seems that APCMA has not factored in the IMF factor. Even it lacks a Finance Minister, the Shehbaz government has already begun negotiations with the IMF, for the final. tranche of the present Stand-By Arrangement as well as for a new package. One of the first things the IMF does is cut down on spending, and the government then cuts development spending. A revival of the cement industry through government development activity thus seems problematic. The government should realize that it cannot do much to influence the economy, except prevent development spending being cut.
There is the possibility of exports, and indeed the latest figures show that exports have grown by a phenomenal 73 percent. That does not wholly balance the inflation and interest rate factor raising costs, but it is hoped that these two will come down soon, rendering the pre-pandemic expansion better justified. Exports are made easier by the decline in local demand, but the global inflationary conditions are affecting foreign markets as well. The government should be aware that the revival of the economy will show itself in the increased consumption of cement.
In that case, APCMA will not need to look to the government for any specific help for revival.
