AT long last, Prime Minister Imran Khan has acknowledged what neutral experts had been repeatedly pointing out that the decision of the Government to allow massive devaluation of rupee was the main factor behind the unprecedented inflation that is hitting all segments of the society. In an interview, he said devaluation of rupee had impacted prices of petroleum products, pulses, ghee and other imported items, which gave rise to inflation adding that the value of dollar surged from Rs107 to Rs160 during the current government’s term that had also pushed the prices up.
The devaluation is always done on the pretext of exchange rate reforms, so-called artificial overvaluation of rupee and prospects of meaningful growth in exports but history tells us that the country ended up as a loser after every wave of devaluation. Governor State Bank of Pakistan Reza Baqir, while announcing monetary policy for the next quarter, justified the move by claiming that now the current account is in surplus due to implementation of the market-based exchange rate regime and that the increase in the central bank’s foreign exchange reserves to $13 billion from $7 billion is not because of foreign loans. This might be true but experience of the masses shows the devaluation has added more misery to their life than bringing any worthwhile or sustainable relief for the country. It is mainly because of devaluation of rupee that despite record fall in the prices of oil in the international market, the prices of the commodity were dangerously high in Pakistan. The Prime Minister has justified a hike in the prices of POL products arguing that the government was compelled to pass on the impact of oil prices to consumers to avert additional debt burden on the country but ignored the reality that apart from devaluation the Government also increased taxes on oil at a time when these should have been reduced. It is, therefore, time the Prime Minister gets input from non-partisan and unbiased experts on rationality of the strategy of devaluation as well as selling of national assets to bridge budget deficit and take corrective measures in the long-term interest of the country.