SBP, govt not intervene to bring dollar down
Finance Minister Miftah Ismail said Saturday that Pakistan’s economic hardships would continue till September but expressed hope of reviving the economy after obtaining loans from global institutions and friendly countries.
In a press conference after meeting the Karachi Chamber of Commerce and Industry (KCCI), the finance minister said that the coalition government had taken tough decisions — cutting subsidies and broadening the tax base — after coming into power — and apologised to the businessmen for it.
“We will face difficulties till September. You will have to pay your share of tax no matter what […] and I apologise for the difficulties everyone is facing, but my primary objective is to save the country from default,” Miftah said.
The finance minister said that economy is moving in the right direction due to the “prudent policies” of the government and steps that are being taken to stabilise it.
And for bringing the economy on the right track, the finance minister said the government had to take tough decisions of withdrawing subsidies on petroleum products and power.
The finance minister also confirmed that the United Arab Emirates (UAE) was investing in the country’s stock exchange — in its bid to expand bilateral economic ties.
Addressing the earlier Karachi Chamber of Commerce and Industry, he said he disagreed with a KCCI member’s stance that he had something to do with the dollar’s declining value. “Neither the State Bank nor I have directly intervened (to bring the dollar down). It falls on supply-demand,” he stated.
The rupee has been on an upward trend against the dollar in the interbank market, gaining Rs16.26 since July 29.
During his address, Ismail also doubled down on the government’s decision to curtail imports for the next three months, stating that it was a necessity.
“We have imposed a ban on CPU cars, mobile phones and home appliances which we will not remove till September. The restrictions on [import of items with H S Codes starting with] 84 and 85 are with reason,” he said. However, the minister said authorities were working on identifying items used by exporters for manufacturing products and their import would not be stopped.
He assured that the government had not stopped payments on any letters of credit that had been opened in the past and would not do so in the future as well.
The minister noted that the country’s imports last year stood at $80 billion while its exports were a mere $31bn. The country’s current account deficit was $17.5bn while the trade deficit, after subtracting the remittances, stood at $18bn, he said.
“If you create such a wide deficit, there will be pressure on your rupee. Today, Bangladesh has increased the price of petrol to 308 (per litre). They are also under pressure. There is a very challenging environment globally.”
Ismail said Pakistanis should live within their means and in a dignified manner instead of asking for loans. “If we have exports of just $30bn, then we should not import as much. If we do not have products to sell to the world, we should not buy things from it either.”—INP