SBP urged to take steps for stopping rupee devaluation

KARACHI: Vice President of Pakistan Businesses Forum (PBF) Ahmad Jawad has urged the State Bank of Pakistan (SBP) to control the continuous nosedive of the Pakistani rupee against the US dollar so that Pakistanis could get some relief from the unprecedented inflation amid recent dip in oil prices.

The oil prices tumbled about 6% to a four-week low on Friday over worries about interest rate hikes by major central banks. Brent futures fell $6.69, or 5.6%, to settle at $113.12 a barrel, while U.S. West Texas Intermediate (WTI) crude fell $8.03, or 6.8%, to settle at $109.56.

Ahmad Jawad said the devaluation of the rupee during the PTI government in the name of a “market-determined” exchange rate was a blunder and now the PML-N government is continuing the same mistake. The IMF’s focus on just exchange rates without structural reforms to boost exports is wrong and misplaced and will not resolve our deep-rooted problems.

He said Pakistan cannot afford a “dollarised” economy; therefore, the government should control dollar flights without any further delay.

“Dollarisation is a situation when the local currency loses its stability as a medium of exchange due to hyperinflation or instability and the same is happening in Pakistan,” he said.

He stated we stay in large part a rentier financial system depending on outside help, with little incentive to remove the shackles.

Political instability perpetuated by the frequent interruption of the democratic political process has been one of the major reasons for the absence of a long-term reform strategy needed for sustainable economic growth. There is a need for continuity in policy. That can only happen if all political forces and military establishments agree on some basic charter of the economy.

Ahmad Jawad said we have to increase our agriculture yield, adding currently India is 35% ahead of us. We have to announce an agriculture emergency in the country and give incentives to farmers for using modern applications to save water. He said if we cannot boost agriculture timely soon we will become net food importers and then economic crises would go out of control.

It is also necessary that we expedite our efforts in an attempt to devise a comprehensive communication strategy and precautionary mitigating measures to tackle this menace. Our country is already water-stressed, and lack of water may lead us to water scarcity by 2025, he said.

Copyright Business Recorder, 2022