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ISLAMABAD: Smuggling of the dollar, increase in trade deficit, non-materialization of funds from friendly countries as well as absence of investment have contributed to the ongoing pressure on the rupee.

This was stated by former Finance Minister Dr Hafeez Pasha while talking to Business Recorder on telephone.

“There has been no significant increase in foreign exchange reserves despite disbursement of $1.16 billion by the International Monetary Fund (IMF), which implies that the country has not yet received expected funds from friendly countries,” Dr Pasha pointed out, adding that the smuggling of the dollar and increase in trade deficit have exacerbated the problem.

Sadly, there is no good news for the economy as the market is down and investment has dried up in the country. He lamented that the government decision to lift the ban on luxury items subsequent to foreign pressure; and further the imposition of regulatory duty to control imports has not worked.

Pasha suggested that instead of imposing regulatory duty, import tariff is increased across the board by 30-40 percent on all items except medicines, books and essential items. Rationalization of tariff policy will only help deal with imports and increase revenue by Rs 400-500 billion revenue.

Rupee's woeful ride continues, depreciates to settle at 231.92 against US dollar

He explained that the average Most Favoured Nation (MFN) tariff in Pakistan is 11 percent compared to 14 percent in Bangladesh and 18 percent in India despite the fact that these countries’ have considerably more foreign exchange reserves than Pakistan.

The former finance minister observed that Pakistan has been unable to regulate its’ imports through tariffs whereas India and Bangladesh have done this successfully.

Former Adviser Finance Ministry, Dr Ashfaque Hasan Khan, however, stated that political instability is the root-cause of the problem as no one is certain what will happen from one day to the next and the government’s entire focus is on political issues instead of economic matters. “Everything seems in a freefall,” he added.

Copyright Business Recorder, 2022

Comments

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ASIF KHAN Sep 15, 2022 09:44am
IMF's usual prescription for developing countries is to let the currency fall, in order to remove or reduce the Trade Deficit. But empirical evidence shows that in the recent history, devaluation seldom helped to reduce the Trade Deficit. It seems the IMF is using the tool of Currency Depreciation just to transfer the real incomes of developing countries to the rich countries of the North.
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Hussain Naqvi Sep 15, 2022 10:45am
AslamoAlikum: Dr Ashfaque Hasan Khan knows the deep insight of Pakistan economy. Regards
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Abdul Rehman Sep 15, 2022 12:53pm
Every one has lost confidence in the economy as well as in the country. A booming economy 5 months ago has now on the verge of bankruptcy. This time responsibility of collapse is not only on stooges.
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Usman Pervaiz Malik Sep 15, 2022 01:41pm
Do whatever you can and kindly put economy on track
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Ayaz Mirza Sep 15, 2022 02:56pm
I am surprised that no one mentioned the delay in IMF funding.
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M Qasim Nisar Sep 15, 2022 04:49pm
Also comment on previous govt non compliance of IMF CPs.
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Qasim Khwaja Sep 15, 2022 05:40pm
The only issue with the rupee sliding is that we have a government which has no idea what they are doing.
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Razi Sep 16, 2022 09:00am
Luxurious life by our government is the main cause of PKR debacle. SBP, FBR, Finance Ministry, PM office have open flood gates for import of luxurious goods unabated, while curbing industrial plants, equipment and machinery. Sad story PM Sahib and MIftab Sahib. I cannot complain about SBP because they are poorly governed
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Seema Arif Sep 16, 2022 11:49am
ایک۔مکالمہ   KA: “The former finance minister observed that Pakistan has been unable to regulate its’ imports through tariffs whereas India and Bangladesh have done this successfully.” I wonder if that’s because of so many officials being corrupt from top to bottom, in Pakistan. The impact of that type of corruption would be much larger on a country with a smaller economic base to begin with, compared to India. SA: ایسا ہی ہو گا کیونکہ ہم خود غرض ہیں۔ ذاتی فوائد کو قومی مفاد پر ترجیح دیتے ہیں۔ ہماری تربیت ہی اسی ڈھنگ پر ہوئی ہے۔ پالنے میں ہی ہمیں باہر باہر کی گردان سنائی جاتی ہے۔ نہ گھر نہ سکول نہ ہی معاشرہ ہمیں باصول شہری بنانے کی کوشش کرتا ہے نہ ہی حب الوطنی سکھاتا ہے۔ اس سرزمین پر فرشتے بھی آجائیں تو ہارور ماروت کی طرح کرپٹ ہو جائیں گے۔ ظالم انسان بن جائیں گے اور وہ سب عمل دھرائیں گے جس کی مناعی ہے۔ ان کی سزا قیامت تک اندھیرے کنویں میں الٹا لٹکنے کی ہے جو خود انہوں نے منتخب کی دوزخ میں جانے پر اس سزا کو ترجیح دی۔ تو ہمارے لئے کیا ہے؟
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Khursheed Sep 16, 2022 02:06pm
Pasha sb. is great in giving ideas I heard his wife is 2nd on row in Finance Ministry why done he advise her .
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SAMIR SARDANA Sep 17, 2022 08:59pm
THE DISASTER IS CURRENCY SMUGGLING -PART 3 SO WHAT IS THE GENESIS OF PKR SMUGGLING,&DEPRECIATION ? IT IS IMPORT SMUGGLING ! THIS IS THE POISON PILL HOW TO KILL IT ? IT IS VERY SIMPLE ! ASK JEBELALI TO GIVE BL WISE DATA, OF ALL SHIPMENTS TO PAKISTAN - & CHECK WITH PAKISTANI PORT RECORDS. THE CARGOS,WILL NOT SHOW NO PROBLEM ! ASK THE DUBAI GOVTT TO CHECK THE MODE OF PAYMENT TO THE CONSIGNOR - &NAME OF PAYEEE CHECK THE NAME OF THE PAYEE, WITH THE CONSIGNEE ON THE BL TO PAKISTAN THE 2 NAMES WILL NOT BE THE SAME Y DID THE CONSIGNOR ACCEPT THE PAYMENT FROM A 3 RD PERSON,TO DISCHARGE THE DUES OF THE PAKISTANI CONSIGNEE TRACE THE PAKISTANI CONSIGNEE (AS THERE WILL BE EMAILS &CALLS LOGS,TO THE CONIGNOR) ,&ASK HIM TO EXPLAIN THE MISSING CARGO,&THE PAYMENT TO CONSIGNOR THIS IS PURE MONEY LAUNDERING ! THE DUBAI CONSIGNOR,WILL GO TO JAIL &NO DUBAI CONSIGNOR OR SELLER,WILL ACCEPT PAYMENT, FROM ANYONE ,OTHER THAN CONSIGNEE THAT WILL KILL THE CURRENCY SMUGGLING ! dindooohindoo
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Nisar Ahmed Sep 20, 2022 01:01pm
Once Imran Khan Govt can in power in 2018, he has to face same problem, which the new Govt of PMLN facing. They are enough poor in their roots either PTI or PMLN, that establishment and judiciary easily intervene them and converted the situation according to their best. Allah helps Pakistan. Nation needs to stand up for the safeguard of their own with existing leaderships, and leaderships get them realized that they are superior, please understand...!!!!
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