Finance Minister Ishaq Dar is under heavy criticism from business owners and the public. Journalists have also taken a dig at him. His claims that the rupee’s real value should be below 200 have come under fire as well. But it doesn’t stop there — his own party members have been criticising him.
Former finance minister Miftah Ismail has been vociferously vocal against Dar and his policies. National Assembly Standing Committee on Finance and Revenue Chairman MNA Qaiser Ahmed Sheikh has criticised him, stating how Dar has remained inaccessible to the committee as well as the business community.
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Businessmen, who enjoyed cheap imports under Dar’s previous tenure, are now increasingly frustrated. Along with industry associations, they have begun criticising Dar for not paying heed to their issues, nor meeting with them.
They have criticised the veteran politician for dollar shortage in the market, which has subsequently brought many businesses to a standstill.
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Pakistan is facing a severe dollar shortage as state reserves deplete.
However, businesses involved in the import of ‘essential’ goods are also reportedly unable to open Letters of Credit (LCs).
The reason for this is the disparity in the dollar rate.
Currently, there’s one inter-bank rate where most banks do not have dollar supply, and then there’s the open market rate, where exchange companies are seen struggling with liquidity. For some reason, however, there appear to be plenty of dollars in the black market.
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But no matter how much Dar appears to be pulling strings in order to keep the dollar rate afloat – after all he has to keep his reputation intact – market mechanisms have shifted a bulk of the trading to the black market – where the actual value of the currency lies. Falling remittances is another effect of the policy.
Textile manufacturers, who previously accounted for about 60% of Pakistan’s total imports, made their frustrations known in a heated press briefing, blaming the government for not being able to open LCs in order to import raw material.
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Even to import material from the list of goods, officials state they have been unable to open LCs for even $5,000 for raw material or spare parts for machinery in some cases.
The same is the case with the pharmaceutical industry despite being placed high on the priority list of goods allowed for import.
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Industry officials say they are unable to open LCs because banks don’t have dollars, or atleast they appear not to.
The auto sector appears to be completely sidelined because cars are being considered as luxury goods. It should be sidelined for a while under the precarious condition Pakistan is. However, dilapidated infrastructure and lack of decent public transport in the country make cars and motorcycles essential goods.
The current situation requires Dar to give up Dar-onomics.
The government needs to settle this issue while keeping a vigilant eye on currency dealers and banks.
As for political capital, it is already exhausting. Getting back to market fundamentals will do more benefit than harm. Getting back the International Monetary Fund (IMF) programme, where the exchange rate is a keenly-debated topic, will do more benefit than harm.
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The article does not necessarily reflect the opinion of Business Recorder or its owners
The writer is a Reporter at Business Recorder (Digital)
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