By Abdul Wajid Khan

ISLAMABAD, August 2 (INP-WealthPK): The Senate Standing Committee on Finance has taken notice of the complaints that some commercial banks are demanding higher rates from traders to open letters of credit (LCs) for imports, and directed the State Bank of Pakistan (SBP) to resolve the issue on an urgent basis.

The meeting of the Senate Standing Committee on Finance was presided over by chairman of the committee Senator Saleem Mandviwalla at the Parliament House. The meeting discussed the prevailing economic situation of the country in detail.

Member of the committee, Senator Zeeshan Khanzada informed the meeting that he was receiving complaints from the businessmen that commercial banks were not opening LCs on the official exchange rate, and refusing to provide US dollars.

The committee directed the central bank to resolve the issue and present a report within two weeks.

Minister of State Dr Aisha Ghaus Pasha said this is an important issue, which will be resolved.

Senator Danish Kumar underlined that the government must also take immediate measures to stop smuggling of dollars from Pakistan to Afghanistan.

Another member of the committee, Senator Mohsin Aziz said that owing to unprecedented rise of dollar value, pharmaceutical companies are not able to provide basic medicines to the public, and industries like automobiles and textile are closing their production, which may increase unemployment and hurt exports. He said the situation may lead the country towards default if the government failed to manage it.

Dr Aisha Ghaus Pasha informed the committee that major reasons for the depreciation of the rupee include increase in interest rate by the United States, global economic situation and indigenous factors. She said political instability has also worsened the economic situation.

She said that there was an extraordinary increase in oil import during the previous few months. The decrease in prices of petroleum products beyond market prices increased its demand, and ultimately it increased pressure on rupee. Half of the deprecation of the rupee is due to the appreciation of US dollar, while the other half of the depreciation is due to indigenous factors.

Dr Aisha said that the inflation rate in the US is at a 28-year high, and the extraordinary rise in dollar is mainly because of increase in US discount rate. In a short span of time, major currencies around the globe have depreciated against US dollar.

Moreover, on the matter of IMF bailout, she said that the staff level agreement has already been finalized, and the current bailout will be materialised by 25th of August, 2022.

“All prior actions of the program have already been completed. Economic uncertainty is ending and the situation will improve after the release of funds from the IMF. We will not let our imports increase above the combined volume of exports and foreign remittances. The government is implementing its management strategy to bring economic stability,” she explained.

Dr Aisha said the government has accelerated the process to get inflows of dollars from multilateral, bilateral and other sources, and negotiations are underway with friendly countries to get support. The government has managed resources for its external financing needs for the current financial year.

She said there is no chance of any default now, but LCs are being managed to control non-essential imports to decrease pressure on rupee. The SBP and all relevant departments of the government are doing good work to handle the situation.

Executive Director SBP Arshad Mehmood Bhatti said the current exchange rate of Pakistan is market based. The world is facing recession and countries are taking tightening measures to control the situation.

The SBP is taking steps to incentivise and increase exports and foreign

Credits: Independent News Pakistan—Wealthpk