ISLAMABAD, July 20: The All Pakistan Business Forum (APBF) Wednesday urged the government to control rupee instability against US dollar which added trillions of rupees to the public debt and created unstable economic conditions, reports WealthPK.

In a statement, APBF President Syed Maaz Mahmood said a steep fall in rupee value against the foreign currencies not only added trillions of rupees to the public debt, but also caused high inflation as the local currency was quoted at 223 presently – a massive depreciation of Rs8 or nearly 4% against the greenback.

APBF Chairman Ibrahim Qureshi feared that the political climate of the country had become unpredictable, reducing the level of investment and affecting the economic growth. He suggested that the government as well as the opposition parties should talk out issues. Qureshi said that economic growth and industrialization was not possible without stability of rupee, as US dollar had been appreciating for the last several months because of the higher current account deficit (CAD) and burgeoning import bills.

Qureshi said that the market-based flexible exchange rate system, resilience in remittances and other factors could help contain the current account deficit in a sustainable range of 2-3 percent of GDP in FY23. Syed Maaz Mahmood added that it seemed that the authorities had let rupee depreciate to discourage rising imports and encourage exports in an attempt to narrow down the widening trade deficit that posed a serious threat to the domestic economy.

He expressed fear that rupee might move down in search for its value fit for resuming the IMF $6 billion loan program which had been on the hold for the last more than six months, but it would impact negatively on the country’s overall economy. The APBF president said for the last couple of months, dollar had appreciated by Rs37.15 against the local currency which lifted the cost of imported products and created uncertainty about the exchange rate stability.

Syed Maaz Mahmood said trade and industry had no idea as to what was the real exchange rate needed by the central bank and which was the end point for depreciation of rupee. “This situation might create unstable economic conditions, generate higher risks, and lower investment. Inflation is one of the key sources of uncertainty. The high rate of inflation leaves the nation uncertain about potential investments,’’ he added.

Maaz said the country was facing a huge economic loss because of wrong statements and irrational attitude of political players. He said a week of stalled economic activity cost the country around $500 million and $2 billion per month and a poor economy like Pakistan could not afford a loss of even one million dollars to exports.

He said at a time when the country was facing severe internal and external challenges, the situation was bound to affect the national interests. Though the exporters would get some benefit against their export proceeds, the overall economy will face a tough time, as the cost has been rising and finally it will affect consumption, which is the main wheel to run the economy.

Credits: INP-WealthPk