ISLAMABAD - Amidst a persistent economic downturn and a weakening currency, the Pakistan Business Forum (PBF) has put forth a proposal to tackle the nation's financial challenges. The forum has called for a 15 percent rebate on all active and upcoming export orders for the duration of one year. This strategic move is aimed at bolstering exports and enhancing the inflow of dollars from both exports and remittances, which could provide some relief to the rapidly depreciating Pakistani rupee.
The PBF's initiative comes at a critical time when the country's central bank reserves are dwindling, currently providing an import cover for merely two to three months. This situation underscores the urgent need for external funding to maintain economic stability.
Chaudhry Ahmad Jawad, the Vice President of PBF, emphasized that a clear policy on the rupee is necessary to support traders and industries during this period of economic instability that has persisted since January 2023. Jawad drew attention to the stark contrast between Pakistan's faltering export figures and Bangladesh's flourishing Ready-Made Garment (RMG) sector, which saw a significant 16 percent growth in exports, amounting to $18.33 billion as opposed to Pakistan's $15.86 billion in the previous year.
The devaluation of the rupee has been attributed by PBF officials to speculative trading and insufficient regulatory oversight, compounded by mismanagement in the forex market. The Real Effective Exchange Rate (REER) of the dollar against the rupee is deemed to be less than Rs250, a value influenced by these market issues.
Muhammad Naseer Malik, Chairman of PBF Punjab, pointed out the difficulties in securing external funds given the limited central bank reserves and high yields in international Sukuk and Eurobond markets. His concerns were mirrored by PBF Balochistan Chairman Engr Daroo Khan Achakzai who stressed on increasing dollar inflows through exports and remittances to mitigate the current account deficit.
Additionally, PBF Secretary General Punjab, Arif Ehsan Malik, highlighted growing taxation pressures and rising input costs as further obstacles to economic growth. He proposed measures to curb dollar smuggling into Afghanistan and suggested incentivizing expatriates for conducting banking transactions.
The pending review of Pakistan's program with the International Monetary Fund (IMF) was also underscored as a pivotal step for disbursing an anticipated $1 billion and for securing additional support from other financial institutions. These concerted efforts outlined by the PBF aim to navigate Pakistan through its ongoing currency crisis and restore economic equilibrium.
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