The Pakistan Business Forum (PBF) on Monday urged Prime Minister Shehbaz Sharif to examine what it described as the “artificial control” over the currency exchange rate, claiming the current value of the dollar against the rupee is higher than its actual value.
In a statement, PBF Chief Organizer Ahmad Jawad said economic indicators suggested the fair value of the dollar should be around Rs. 260. Urging the prime minister to take immediate notice of the situation, he said lowing the dollar to its actual value could significantly reduce both public debt and inflation. He asserted that Pakistan had historically failed to restore true value of the rupee after each round of depreciation, facilitating long-term instability.
Maintaining that the prevalent exchange rate of Rs. 283 to the dollar was unsustainable for the economy, it said “meaningful” economic relief was only possible if the rupee stabilized.
Jawad noted that inflation had declined to around 3%, raising questions over the 11% basis policy rate enforced by the State Bank of Pakistan (SBP). He urged the central bank to lower the interest rate to at least 9% in its upcoming monetary policy committee meeting on July 30.
The statement stressed that the government is paying 11% interest on domestic debt, or 5-6% higher than the current inflation rate. “This discrepancy imposes an annual burden of approximately Rs. 3 trillion on the national exchequer, which can otherwise be used for public welfare and infrastructure development,” it said, adding lower interest rates would also boost Pakistan’s exports. It observed the International Monetary Fund (IMF) had also recommended interest rates be kept close to the prevailing inflation rate.
The PBF emphasized the need to diversify Pakistan’s export base beyond textiles, advising a search for new industries and markets. Additionally, the State Bank of Pakistan should ensure access to credit for the business community in Balochistan in the upcoming monetary policy, it said.
The statement concluded by expressing concern over growing frustration among the business community due to the lack of attention to challenges faced by productive sectors. It hoped the upcoming MPC meeting would adopt a growth-friendly and pragmatic approach.