PBF urges PM to address artificial control of exchange rate

KARACHI: The Pakistan Business Forum (PBF) has strongly urged the Prime Minister Shehbaz Sharif to address the artificial control of the exchange rate, asserting that the current dollar rate is being kept artificially high. Economic indicators suggested that the fair value of the dollar should be around PKR 260.

PBF Chief Organiser, Ahmad Jawad called on the Prime Minister Shehbaz Sharif to take immediate notice of this situation. “A correction of even PKR 20 in the rupee’s value could significantly reduce both public debt and inflation,” Jawad stated. He emphasized that historically, Pakistan has failed to restore the rupee after depreciation, creating long-term instability.

Even the Current Account Surplus (“CAS”) of $2,106 million during the Jul-June period of FY25, compared to a Current Account Deficit of $2,072 million in the same period of FY24.

The Forum noted that the current exchange rate of PKR 283 per dollar is unsustainable for the economy. Meaningful economic relief, they stressed, can only be achieved if the rupee is stabilized.

Jawad also pointed out that inflation has dropped to 4% and the Consumer Price Index (CPI) is down to 3%, making the current interest rate of 11% unjustifiable. PBF has urged that the upcoming monetary policy, scheduled for July 30, should bring the interest rate down to at least 9%.

The Forum also revealed that the government is paying 11% interest on domestic debt totalling PKR 50 trillion; 5–6% higher than the current inflation rate. This discrepancy imposes an annual burden of approximately PKR 3 trillion on the national exchequer, which could otherwise be used for public welfare and infrastructure development. Lower interest rates would also boost Pakistan’s export potential in global markets, the Forum stated. The IMF itself recommends that interest rates be kept closer to the prevailing inflation rate.

PBF further stressed the need to diversify Pakistan’s export base beyond textiles, advocating for the exploration of new industries and markets. Additionally, the Forum urged the State Bank of Pakistan to ensure access to credit for the business community in Balochistan in the upcoming monetary policy.

Jawad concluded by expressing concern over the growing frustration among the business community, citing a lack of attention to the challenges faced by productive sectors. He expressed hope that the Monetary Policy Committee will adopt a growth-friendly and pragmatic approach in its meeting on July 30th.

Copyright Business Recorder, 2025