Foreign exchange crisis halts economic activities in Pakistan

Foreign exchange crisis halts economic activities in Pakistan

KARACHI: Foreign exchange crisis has halted economic activities in Pakistan, said President SITE Association of Industry Riaz Uddin on Wednesday.

In a statement he criticized the handling of the present situation in the country where the forex crisis has almost halted business activities across all segments of business, notably for the industries which pay almost half of the national tax revenue.

READ MORE: Pak-Iran businessmen stress finalizing free trade agreement

He was presiding over an emergent meeting called at the SITE Association of Industry to discuss the issues facing the industries, notably those who have fallen prey to haphazard actions of Govt / SBP.

The emergent meeting was attended by SVP Abdul Kadir Bilwani, VP Muhammad Hussain Moosani, Chairman of the Committee Saud Mahmood, Advisor Anwer Aziz and Members of the Committee.

Riaz Uddin said that the uncertainty created after the issuance of SBP’s EPD Circular Letter No.20 of 2022 on 27/12/2022, the issuance of another Circular No.03 on 13/1/2023 has further exacerbated the already volatile situation of forex availability.

READ MORE: Merchants demand waiver of demurrage, detention charges on polyester yarn

“Independence of the central bank now needs to be put into action, as provided in the SBP Act (amended 2022). The Central Bank should come out and lead from the front, tackling the difficult situation, by taking firm and prudent actions and by issuing clear-cut instructions to the authorized dealers for provision of the much needed forex.”

In an emergent meeting, SITE Association enumerated the firm actions to be taken that allowing the rupee fetch its real value on the basis of free float, as agreed by the Govt in its Sep-2022 Article-IV consultation agreement with IMF. Quantitative restrictions on imports _ if and where needed _ must be clearly specified and an HS code wise list of ‘essential imports’ should be categorically notified, without leaving ambiguity in the phraseology of SBP circulars, by using words like “such as”, “related to”, “preferably” or “etc.”

READ MORE: FBR issues SRO to impose 5pc regulatory duty on yarn amid protest

“Under a force majeure, the SBP should allow local industries a moratorium on repayment of their debt, including interest payments and principal, until such time the import restrictions on non-essential industries are lifted by SBP/Govt,” Riaz said.

READ MORE: KATI urges removal of regulatory duty on yarn

He further added that to prevent industries from falling sick and becoming a subject of distress-sale, on the pattern of COVID disaster the SBP should now extend special loans to industries for meeting exigencies at zero per cent interest rate, with a payback period of 5 years after lifting of forex restrictions.