The Businessmen Panel (BMP) of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has denounced the government for not keeping a check on foreign exchange market, as the State Bank’s foreign exchange reserves dropped by $237 million to $7 billion in the week ending Dec 1, because debt servicing on foreign loans continues to eat up SBP’s holdings.
FPCCI’s former president MianAnjumNisar said that the exchange rate looks stable, but increasing debt servicing costs without significant inflows have put the economy at risk, as that Pakistan’s economy was stuck in a low-growth trap with poor human development outcomes and increasing poverty.
The country’s total liquid foreign reserves stood at $12.1bn, including $5.09bn held by commercial banks, the central bank said. The SBP has now lost more than $1.7bn since mid-July.
MianAnjum said the economic conditions leave Pakistan highly vulnerable to climate shocks with insufficient public resources to finance development and that international experience suggests that domestic debt re-profiling did not always work unless associated with sharp and sustained structural reforms. He said the IMF had identified the need for reforms over three to four decades ago, but they were still pending
With the formation of the Special Investment Facilitation Council (SIFC), the government aims to bring up to $100bn in investments in the next three to five years, particularly from the Middle East.
Memorandums of understanding (MOUs) have been signed with the UAE, Kuwait and Saudi Arabia for billions of dollars, which has helped stabilise the domestic market while the stock exchange has been crossing one milestone after another.—PR
