Former Finance Minister Sartaj Aziz has dispelled the possibility of depreciation in the rupee value and pointed out that misreading of the IMF report on Pakistan economy has put pressure on the money market. He expressed these views while addressing the participants of a four-day Asian Development Bank (ADB) Workshop for Economic Journalists, here on Monday.
Sartaj was referring to the IMF report that was quoted by a section of press suggesting 10-percent devaluation in Pak rupee to meet the widening current account deficit, which the IMF had clarified that it has never suggested any such devaluation in its report on Pakistan economy.
However, Sartaj Aziz believed that a small adjustment in the exchange rate could be helpful in narrowing down the gap between exports and imports of the country. He was of the view that even if the government goes ahead with the 10-percent devaluation, it would cause marginal increase in Pakistani exports, as we do not have export surplus to capitalise from the devaluation. "There were many other means to tackle the prevailing situation: increase tax base by collecting the hidden taxes. Such practices are presently under operations in the world economies," he added.
On subsidy to the textile sector, he called it a tricky issue and said that the textile sector was in a 'low value-added kind of state'; it would have to opt for high value addition.
He further said that remittances filled the trade gap last year and similar arrangements could be made for this year as well. "During the last year trade imbalance was covered by the privatisation of Pakistan Telecommunication Limited (PTCL) and earthquake funds, as a huge amount of the foreign exchanges was transferred in Pakistani account, but such incidents did not take place every year," he added.
He underlined the need for increasing productivity in industrial sector and bringing down the cost of doing business for the maximisation of exports. He was of the view that the trade deficit has been increased and forecast this year would be around 10 billion dollar.
On inflation rate, he averred that inflation rate in Pakistan was much higher than the average world inflation rate; to attain the higher growth rate, it was imperative to decrease the inflation rate. For economic journalists, he suggested that they should specialise in economic reporting, as this was the age of specialisation.
Later, renowned economist Dr A.R. Kemal, the moderator of the workshop, explained the objectives of the programme. This is the third media workshop organised by the ADB in collaboration with Ministry of Finance; earlier similar workshops were held at Islamabad and Karachi.