Businessmen slam govt for failure to curb rupee’s free fall

Say economy is on verge of bankruptcy due to heavy borrowing

FAISALABAD/ KARACHI: Businessmen have voiced concern over the massive depreciation of Pakistani rupee against the US dollar, believing it will stoke inflation and increase the cost of doing business.

In a statement, Faisalabad Chamber of Commerce and Industry (FCCI) President Shabbir Hussain Chawla, while pointing to the fourth round of rupee depreciation since December 2017, urged the government to take immediate steps for stopping further currency weakness so that the economy could tackle the fast-growing foreign debt.

“A widening gap between imports and exports is an eye opener for policymakers, but neither the previous nor the current caretaker government has taken timely measures to check further rupee depreciation,” he said. Dismissing the strategy of fresh borrowing to pay installments of previous loans, Chawla said it had already pushed the economy down which was on the verge of bankruptcy.



“This trend is worsening day by day and the rupee depreciation will put more pressure on our fragile economy,” he said, adding the government must take bold, prudent and immediate measures to curb further decline in the rupee’s value.

He pointed out that appreciation of the dollar would further inflate Pakistan’s import bill, making exportable surplus costly and uncompetitive in international markets.

“Inflation will have a trickle-down impact and will make the life of poor miserable in addition to opening floodgates of unemployment,” he said.

Chawla suggested that Finance Minister Dr Shamshad Akhtar should take necessary measures at the ministry level in addition to sensitising people in order to discourage the use of imported goods. “It is imperative to cut the import bill to the minimum,” he said.

Separately, the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) said the recent hike in policy rate by 100 basis points to 7.5% and rupee depreciation would increase the cost of production that would further slow down the already numb industries.



FPCCI Budget Advisory Council Chairman Syed Mazhar Ali Nasir urged the State Bank of Pakistan (SBP) to avoid a tight monetary policy at this stage and go for an easy policy in order to control the faltering economy and sustain the overall growth momentum.

“The SBP’s move of increasing the policy rate will hit the overall economy hard as loans to the business community will become more expensive,” he said. Nasir was of the view that the recent hike in petroleum product prices and rupee depreciation would rekindle inflationary fears that would mainly impact the people who formed the middle and low-income groups.

“If the government wants to curtail imports, then it should impose regulatory duty on luxury items. There’s a need to curb import of goods like cars. Rupee depreciation and higher policy rate are not the solutions,” he said while speaking to The Express Tribune.

“Increasing the policy rate to 7.5% is not appropriate at this time when foreign competitors are coming to Pakistan, particularly in the backdrop of CPEC,” he added. The rising interest rate will also discourage domestic investors from participating in various mega projects.

Published in The Express Tribune, July 19^th, 2018.

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