(April 15, 2020)
FPCCI’s Businessmen Panel SVP, President Pakistan Businessmen and Intellectuals Forum and All Karachi Industrial Alliance, and former provincial minister Mian Zahid Hussain on Wednesday said the central bank should announce a package for the business community enabling them to pay their utility bills and port charges.
The money will save many from bankruptcy and the funds can be returned to the government by December, he said.
Mian Zahid Hussain said that majority of the decisions of SBP appears to be in the right direction but the interest rate is very high which should be brought down to zero for the next three months.
Talking to the business community, the veteran business leader said many countries have reduced interest rates substantially to deal with the pandemic and doing it in Pakistan will discourage savings, trigger inflation, erode exchange rate and widen the current account deficit but there is no other option.
The country is facing reduced production, low demand, stagnant exports while remittances can fall therefore boosting economic activities is the only option to provide jobs and boost revenue, he said.
The former minister noted that the exchange rate has been eroded by eight per cent in one month which has raised concerns but the situation in some other countries so worse for which credit goes to SBP.
Turkey has seen its currency going down by 11.8 percent, the exchange rate in Indonesia has been eroded by 15.4 percent, Russia has witnessed an 18.7 percent fall, Mexican currency has been weakened by 24.4 percent, Brazil 24.8 percent while the currency of South Africa has lost ground by 25.4 percent.
He said that investors have pulled back 53 billion dollars from the bond market and 31 billion dollars from the equities market of developing countries leading to forex crisis in these countries which can be resolved by developed nations and IMF through a coordinated response.
Majority of the developing world is facing loss of production, revenue, exports and remittances which must be resolved by rich nations or run the risk of widespread conflicts.
IMF needs to change its quota system in favour of poor nations and reschedule debt otherwise many countries will see bankruptcies therefore the demand of PM Imran Khan should be taken seriously by the global community.