Advisor to the Prime Minister on Commerce, Industries and Production and Investment, Abdul Razak Dawood on Wednesday accused some "big" firms of selling forward dollars and seeking billions of rupees from national kitty to cover losses. "A few firms made a commercial decision to take risk and sold forward US dollars. They are now asking government to cover their losses of Rs 15 billion," he said, in a tweet.
Insiders claim the parties who sold dollars in the market are mainly from textile sector and hail from Karachi, Lahore and Faisalabad.
"I feel this is not fair as it was a business decision which did not work out. It was also discussed at the highest level and my views were supported. It has therefore been decided that the government will not compensate these firms from taxpayers' money," Dawood added.
Commenting on issues being faced by the business community, he said that during Wednesday's National Command & Operation Centre (NCOC) meeting on Covid-19 problems faced by businessmen were placed before it and action will be taken for resolution of these problems.
Insiders further claim that over the last few months, exporters had sold forward dollars at approximately Rs 160. However, as orders are deferred or cancelled, those firms are receiving no dollars in sales to settle this forward. There was no harm if the dollar had remained at its value. However, the sudden upsurge in dollar value means that exporters have to pay the difference out of pocket as a loss.
The firms argue that this is something they cannot afford in the given circumstances, and will likely be paying penalties or even default. The firms, insiders claim, requested the government to reduce these losses for the textile export sector to stay afloat. Those firms also stated that they stand behind the GoP to minimise unemployment, but they need assistance to help bridge the loss.
The estimated losses will be approximately Rs 12 to 15 billion. The total forward booking is estimated to be about $ 3 billion. If this value is closed out today, the average difference on these booking is about 3% which equals $90 million or approximately Rs 15 billion.
The firms asked the Prime Minister Advisor on Commerce to use the reserve fund which has Rs 100 billion to cancel these contracts and to settle with the commercial banks as soon as possible.