KARACHI: Pakistan’s economic and political uncertainty remain a major concern for the business community as the macroeconomics of the country continue to deteriorate.
Johar Ali Qandhari, leading economic analyst and former chairman of Korangi Association of Trade and Industry (Kati) said that the country’s economic situation is not ideal at the moment owing to significant decline in the foreign exchange reserves held by the State Bank of Pakistan.
The foreign exchange reserves plummeted by $784 million to reach $6.72 billion, which is the lowest level in almost four years, he added.
The government has not been able to fulfill its promise of bringing the dollar below the level of Rs200, he said, adding that depletion of reserves is likely to make it more difficult for Pakistan to repay its foreign debts as the current reserves are not even sufficient for one month imports.
The central bank’s governor is saying that the debt repayment situation is completely under control and all external payments will be made on time, but apparently this appears to be a rhetorical statement, Qandhari remarked.
Amidst concerns regarding the country’s ability to repay the huge foreign debt, pessimism has been created in the market as the exchange rate has remained volatile during the current fiscal year.
It is believed that the government will have to earn an additional revenue of around Rs8 trillion to get the next installment of the International Monetary Fund (IMF), he said, adding that the government will have to pay a heavy political price for putting the burden of this additional revenue on people, which is the biggest obstacle in these efforts.
He informed that the greenback is up to Rs225 in the interbank market, but the banks are providing dollars to the importers in black, while in the open market, the foreign currency has reached Rs232.
He expressed dismay over the unavailability of electricity, gas and water in fixed quantities to industries, saying that without facilitating the importers and exporters, the exports of the country will take a hit and will further reduce inflows.
Pakistanis living abroad are also tired of sending dollars, which is why remittances are also on a declining trend, Qandhari said.
It is unfortunate that the political environment is tense where the government is not ready to negotiate with the opposition. The opposition also seems to be busy trying to destabilise the government and it is very rare that the government and the opposition are on the same page.
