'Increased interest rates in other countries may reduce remittances'

KARACHI: Chairman of National Business Group Pakistan and president Pakistan Businessmen and Intellectuals Forum, Mian Zahid Hussain expressed concern that increased interest rates in other countries and improved travel conditions can reduce inflows of remittances and hit forex reserves for which steps should be taken.

He said the exchange rate eroded substantially but exports were not improved according to the expectation however some export orders were diverted from Indian and Bangladesh to Pakistan providing some relief. Meanwhile, the import of spare parts, edible oil, cotton, and some food items have surged putting pressure on forex reserves, he observed.

He said corona virus restrictions have damaged the business of illegal money transfer prompting overseas Pakistani to send money through legal channels. Pakistan will continue to get good amount of remittances unless the travel restrictions are removed and the hundi business is revived, he said.

Mian Zahid Hussain said apart from the efforts of the government and SBP, very low-interest rates in other countries has prompted people to invest in Pakistan in the Roshan Digital Account.

He said people living abroad are sending more money to their near and dear ones due to unprecedented inflation so that they can remain afloat.

He lauded the decision of the State Bank of Pakistan (SBP) to keep interest rates unchanged at seven percent however said that a further reduction of two percent in the policy rate will trigger economic activity and improve revenue.

Mian Zahid Hussain said that current account deficit was 20 billion dollars when the incumbent government came to power. Twelve billion dollars were borrowed from three countries, rupee was depreciated, import bill was reduced and exports were increased to improve situation.

Copyright Business Recorder, 2021