ISLAMABAD  - The Pakistan Industrial & Traders Association Front (PIAF) Chairman Faheem Ur Rehman Saigol has said the trade and industry had to be kept solvent and protected from default for which prudent measures would have to be taken, such as slashing of imports along with strict monitoring of the central bank of forex companies to help stabilize the rupee, as the country’s total liquid foreign exchange reserves declined by $206 million during last week due to external debt servicing.

PIAF Chairman Faheem Ur Rehman Saigol pointed out that the strategy of curbing imports was not growth-friendly, as the PIAF does not believe in the import substitution model and is in favour of export expansion. This is where we should plan to focus our efforts to take this forward for sustained economic growth. He said that our tax to GDP percentage is very low at 9.2 percent. We have to do better in order to achieve economic stability but we will undertake reforms in a gradual and orderly fashion in this regard.

Referring to the weekly forex report, he said that total liquid foreign exchange reserves held by the country stood at $14.209 billion as on Jul 29, 2022 compared to $14.145 billion on July 22, 2022. During the week under review, the SBP’s reserves decreased by $ 190 million to $ 8.385 billion due to external debt and other payments. Net foreign exchange reserves held by commercial banks stood at $ 5.823 billion, down by $16 million in a week. He said that it’s a positive indication that the rupee has started to appreciate against greenback majorly due to less import and partially owing to the SBP’s strict monitoring of the foreign exchange operations, suspending the operations of several branches of some exchange companies for violation of SBP regulations. He expected that with controlled import bill and lower trade deficit, the rupee is expected to gradually strengthen. He said that the rupee depreciation has been overdone and driven by only sentiments. The rupee has overshot due to concerns about domestic politics and the IMF program. The local currency had fallen by 23 percent in 2022 and 8 percent during the last two weeks on fears of delay in the IMF program, falling FX reserves and increased political noise. However, now it has started the recovery and is likely to gain further in the coming days, he hoped.

He said that the actions taken by the SBP along with other good news, helped to improve the exchange rate in the interbank and open currency market. He said that lower than expected imports for July and the IMF Resident Representative’s statement that Pakistan has met all prior conditions helped rupee to gain 6 percent to Rs 224. He said that Charter of Economy is imperative for the economic survival of Pakistan and all political parties must realize the gravity of the situation and sign it in greater interest of the nation and country. He said that political instability had played havoc with the country. The unprecedented appreciation of dollar is the main cause to destabilize the economy which is directly influenced with the prevailing political uncertainty, he said, adding that the value of their capital had recorded a steep decline and their assets had now been reduced to almost nil. He said the government was playing a role of silent spectator while dollar appreciation coupled with heavy taxation, hike in interest rate, tariff of electricity, gas and patrol had further increased their cost of production and they had been forced to close down their businesses to save them from further losses.