KARACHI: Karachi Chamber of Commerce & Industry (KCCI) president Muhammad Idrees, while expressing deep concerns over devaluation of rupee against dollar which hit a new all-time high by crossing Rs180.5 in the inter-bank market, warned that the rupee devaluation was going to have a deep impact on the inflation as it was raise the cost of doing business which was going to not only make Pakistani goods uncompetitive in the export markets but also make them unaffordable in the local markets as the impact of rising dollar value will be passed onto end-users.
KCCI president noted that Pakistani rupee has lost around 2 percent since the beginning of 2022 while in 2021 the local currency had lost around 11 percent in the inter-bank market from Rs159.2 while hitting Rs176.51 by the close of the year. “On 11th March 2022, the foreign currency reserves held by the SBP were recorded at $15.83 billion while the overall liquid foreign currency reserves held by the country stood at $22.28 billion.
Moreover, the country’s current account deficit of $11.6 billion in the seven months of the current fiscal year was too high as compared to $1.028 billion a year earlier which was really worrisome”, he said adding “severe devaluation of rupee has raised the cost of doing business and fostered the inflation, therefore, it is really crucial to review the current strategies being pursued by the economic managers.”
Muhammad Idrees stated that the rupee devaluation against dollar was being attributed to mounting pressure by opposition parties to oust Prime Minister Imran Khan through a vote of no-confidence and the tumultuous geopolitical situation in Ukraine.
“Although Ukraine situation is beyond our control but the political uncertainty in Pakistan needs to handled prudently and it has to be ensured by the policymakers that the ongoing political situation should have a minimum impact on the economy” he said, adding that unfortunately, the most pressing economic issues were being ignored by federal ministers who were giving no attention to serious economic crises and remain completely engaged in politics only in order to stay in power.
He feared that the economic crises including energy crises, devaluing rupee against dollar and rising trade deficit etc. would push the economy to a point of ‘no return’ and may even put Pakistan’s survival at stake.
“All the efforts made during the past couple of years to maintain GDP growth of 5 percent plus will go wasted if political uncertainty is not promptly handled”, he added.
He said that the government needs to understand that the share of exports in GDP stood at around 10 percent while the rest of 90 percent was local trade and imports hence the devaluation is hurting and has reached to a level where it has become unbearable.
He stressed that the emerging situation has to be efficiently addressed and handled very carefully otherwise, the excessive devaluation will continue to increase the cost of doing business, which would terribly affect the industrial performance, raise unemployment and open the floodgates of inflation, particularly for the middle and lower segments of the society, besides making the already poor poorer due to unbearable inflation. “The inflation monster needs to be effectively controlled.”
Muhammad Idrees stated that the Karachi Chamber, being well aware of all the forthcoming economic challenges likely to be suffered by the country, has been constantly approaching federal ministers from time to time so that these issues could be extensively discussed, changes in policies could be suggested and a practical plan of action could be mutually agreed upon in the larger interest of the country but unfortunately, none of these ministers have bothered to respond to KCCI requests while some of them postponed several meetings even after confirming which clearly indicates that economy was no more in their priority list and they all remain confined to politics only. “I urge politicians, lawmakers and economic managers to pay more attention to economy than politics.”
He hoped that the Federal Government realizes the gravity of the situation at the earliest and accordingly take steps to stop further devaluation of rupee against dollar otherwise some of the key economic indicators which have shown growing trend, will soon start descending.
Copyright Business Recorder, 2022
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