KARACHI: A Pakistan Business Council (PBC) delegation, led by its Chairman Muhammad Aurangzeb met the Governor of the State Bank of Pakistan (SBP) to discuss economy and offer suggestions for alleviating some of the challenges facing businesses.
The delegation conveyed its satisfaction over the steps taken by the government and the central bank to revive the IMF programme.
It stressed the importance of continued engagement with IMF, taking measures to limit imports by enhancing reliance on indigenous fuel and for the government to engage sovereign wealth advisors to help re-profile debt.
Together, these would provide space for fundamental reforms which PBC has been advocating. PBC welcomed the narrowing of exchange rate spreads. However, in light of political and economic uncertainty, as the US$ is likely to remain a store of value, it recommended dollar-linked instruments as alternative to hoarding dollars.
PBC also suggested floating rates for Naya Pakistan Certificates to maintain their continued attractiveness in face of global monetary tightening. SBP appreciated both the proposals and agreed to take up these proposals with the Federal Government.
PBC proposed that businesses able to import on 180 days plus deferred payment terms be offered forward cover at a cost. This would reduce the immediate pressure on foreign exchange reserves and save the government the cost of borrowing as well carrying the exchange rate risk, which it currently does without compensation.
PBC was informed that the SBP was examining the feasibility of a scheme for providing foreign exchange hedge in consultation with the GoP. PBC also recommended that the SBP starts to consult business bodies on a second priority list of importable items to provide transparency and enable businesses to plan. Within this list, groups that generate substantial export earnings be given reasonable priority.
The meeting concluded with the Chairman PBC appreciating the Governor SBP and his team’s challenging tasks and assuring him of full cooperation by PBC and its over 100 leading member companies that contribute 40 percent of the country’s exports and generate a third of the total tax revenues.
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