KARACHI: Pakistan Businesses Forum (PBF) says country is facing severe economic challenge with unprecedented loss of value of our currency against dollar on a daily basis.
Prime Minister Shehbaz Sharif should immediately activate the National economic council on the lines of NCOC and on-board all political parties, he said adding services chief’s of the armed forces should also to be made a part of it, so as to make day to day decisions on Pakistan’s economy. “It’s now and never. One must understand survival of the economy is imperative.”
PBF Senior Vice President, Muhammad Riaz Khattak said Pakistan’s economy is ungovernable now and unfortunately the main stream political parties are yet to give any out of box solution that how to run the country’s economy in an effective manner. Every government come and takes fresh borrowing and place new taxes for public.
He said reliance on domestic and foreign borrowing and bailouts has landed Pakistan in a classic debt trap where more had to be borrowed to pay off the old debt. It also left the country living from one IMF tranche to another.
“Moreover it’s far now a style of every new government to come in power and hold a first press conference and state an identical line that country is verge on financial default”. It’s time for government to start buying gold, he suggested.
PBF Vice President, Ahmad Jawad asked where we are heading? The country debt to GDP stood at 70% which is alarming; from August 2018 to till date the rupee depreciation were highest in our 75 years of independence.
The rupee dropped Rs 107, an unprecedented drop; never witnessed such depreciation in any other country. Private banks are opening the L/C’s on the rate of 242 and above for the oil companies.
He said government can no more sit idle and let rupee sinking; dollar against rupee is going uncontrollable worth Rs 229.88 as on July 25th. It’s height of the government indecisiveness.
If dollar is not controlled, the petroleum and electricity prices may further increase and could go to unbearable levels.
“We have underestimated the severity of the crisis and complexities. Now it seems to be getting out of hand. Free Float policy must be recalled”.
Criticising the finance ministers for their so-called “hard decisions”, Jawad said they just passed on everything on to the public.
As rentier ruling elite created a rentier economy. That is why the structural sources of the country’s chronic financial imbalances have remained unaddressed: a narrow and inequitable tax regime, the energy sector’s circular debt, bankrupt public-sector enterprises, a broken public finance management system, an overvalued exchange rate, heavy regulatory burden and a narrow export base, he said in his scathing remarks.
He also demanded for reducing benchmark interest rate, which has been increased to 15 percent, in order to save the economy from troubles. This hike would affect the dwindling growth of business activities and cause further slump in the economy.
PBF Vice President said that the benchmark interest rate in Malaysia was 2.25 percent, Indonesia 3.5 percent, China 3.7 percent, Bangladesh 4.75 percent and India 4.9 percent, but it was 15 percent in Pakistan and it was not possible for private sector to compete effectively for promoting trade and exports.
It may also note, India central bank prepared to spend $100bn more defending rupee, but we don’t have such option.
As India’s is prepared to sell a sixth of its foreign exchange reserves to defend the rupee against a rapid depreciation after it plumbed record lows in recent weeks.
The rupee has lost over 7 percent of its value in 2022 and weakened past the psychological level of 80 per U.S. dollar.
Copyright Business Recorder, 2022
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