Rupee depreciated by 32% in one year. Political stability, tough decisions needed to arrest rupee decline. Govt not ready to reverse energy subsidies.


(May 23, 2022)

Chairman of National Business Group Pakistan, President Pakistan Businessmen and Intellectuals Forum, and All Karachi Industrial Alliance, and former provincial minister Mian Zahid Hussain on Monday said without political stability and tough decisions it is impossible to stop the fall of the rupee.

All attempts to stabilize the rupee without making unpopular decisions will prove self-deception and a waste of time, he said.

Mian Zahid Hussain said that the rupee has depreciated by 32% against the US dollar in the last one year and this trend is unlikely to stop because of inaction.

Talking to the business community the veteran business leader said that the balance of payments has deteriorated because of the devaluation of the rupee while a huge increase in import bill, current account deficit, the unsatisfactory situation of foreign exchange reserves, delay in agreement with IMF and political instability is taking a toll on the economy.

Mian Zahid Hussain said that petroleum subsidy is also a cause behind the weak rupee while inaction is tantamount to stabbing the economy in the back.

All the steps taken by the central bank and other stakeholders to stabilize the rupee were a waste of time and money, as policies would have to be improved instead of changing the rules and raiding currency dealers to improve the economy.

Imposing a ban on the dollar would increase its hoarding and would make it more profitable for buyers and sellers than usual.

The value of the dollar is directly related to the IMF talks in Doha, the main point of which is the elimination of energy subsidies while the government is not ready to take a decision in view of the current political situation as it will have to pay a heavy political price.

If the talks fail, it will be very difficult to stop Pakistan from becoming another Sri Lanka, he said, adding that in these circumstances, it will be a challenge to make the next budget while there are only 15 days left for it.

He observed that all the political parties should try to reduce the instability in the greater interest of the country instead of increasing it and sit together and work out issues and other details related to the forthcoming elections, otherwise the situation will be out of their hands.