The Commerce Ministry has reportedly urged the Finance Ministry either to rationalise the value of rupee or clear exporters pending refunds of billions of rupees forthwith, well-informed official sources told Business Recorder. The Commerce Ministry tabled these demands before the Monetary and Fiscal Policy Board which met last week with Finance Minister Ishaq Dar in the chair. The Commerce Ministry was represented by Additional Secretary Rubina Athar.
Replying to a question, the sources said the Commerce Ministry did not express any reservations over the prevalent monetary policy. "We are doing serious and threadbare analysis on the decline of exports including statistical regression analysis based on data in which it is observed that one of the major factors behind the decline in exports is rupee overvaluation and decline in the value of euro internationally. This factor has made Pakistani products less competitive compared to other countries," the sources added.
The Commerce Ministry, sources said, presented this analysis to the Monetary and Fiscal Board along with reasons behind the decline in exports. According to sources, unit price of Pakistani products especially raw materials have declined in the international market. For instance, the prices of cotton and yarn have shown major decline per unit due to which exports are showing a negative growth.
"We have recommended that if the government is unwilling to act with respect to rupee value, all the pending refunds of exporters should be cleared forthwith and the zero rating regime for exporters revived," the sources maintained. The Commerce Ministry appreciated the Finance Ministry for taking action due to which export refinance rate has lowered to 6 percent during the last one decade.
The Commerce Ministry recommended that Exim Bank and Land Port Authority (LPA) should be established immediately, adding that the Commerce Ministry has offered fullest co-operation in this regard. "While appreciating the measures taken by the Finance Ministry we have urged the resolution of issues faced by exporters," the sources concluded.
In an internal meeting, the Commerce Ministry's bureaucrats, in their presentation, argued that overvaluation of the rupee, energy crisis, law and order in Karachi, port handling by ANF and slowdown in the economies of China, European Union (EU) and the United States are the principal reasons for the decline in the country's exports. Pakistan is facing worst scenario in exports at a time when the Commerce Ministry is in the process of formulating another three-year Strategic Trade Policy Framework (STPF) 2015-18.
According to sources, China's economy slowed by 20 percent during the first two months of current year due to which Pakistan's exports to China have declined by 33 percent. China's slowdown effect on Singapore has been recorded at 33 percent, Europe 9 percent, India 30 percent and the US 20 percent. "Pakistan is not the only affected country as an overall sluggish trend in trade has been witnessed across the globe," the sources stated.