FPCCI: Free-falling rupee threat to national security; Sri Lanka-like scenario emerging

  • Post author:
  • Post category:News Update
  • Reading time:3 mins read

Mr Irfan Iqbal Sheikh, President of FPCCI, has maintained that the free-falling rupee has reached a point where it has become a threat to national security as LCs for petroleum imports are being opened at a much higher rate than that of intra-bank rate; and a grave law & order situation might emerge in case of any fuel shortages for transportation and electricity generation. He added that he is forewarning all the authorities that we are not far from a Sri Lanka-like scenario, and radical decisions are needed to reverse the situation.

Mr Aqeel Karim Dhedhi expressed his shock that even though many numbers are showing improvement over the last few weeks, like international oil prices, declining edible oil prices and better supplies of many other commodities, the government has failed to rein in inflation. He added that imports are expected to be considerably lower this month compared to the last couple of months, but the rupee is still in free fall – which is only adding fuel to the uncertainty.

Mr Irfan Iqbal Sheikh has emphasized that SBP can not continue with the free-floating exchange rate; it has to apply regulatory tools to minimize the speculation, uncertainty, hoarding, malpractices and misinformation. He maintained that we do not even have enough foreign exchange reserves to cover two months of imports.

Mr Irfan Iqbal Sheikh has noted with profound concerns that the trade deficit for the fiscal year 2021 – 22 has clocked at a record $48.66 billion, and that translates into more than $4 billion a month on an average; while it was $30.96 billion in the previous year, i.e. 2020 – 21 and this shows a huge increase of 57 per cent.

FPCCI Chief has proposed that the government should announce the expected dollar inflows through all sources to halt the uncertainty, chaos and rumour-mongering in the market, i.e. IMF, World Bank, ADB, IDB; and other multilateral & bilateral grants, loans and financing facilities.

Mr Irfan Iqbal Sheikh admonished that despite a bloodbath in the foreign exchange, the government has failed to appoint a governor for the SBP, which reflects poorly on the government’s seriousness in addressing the situation.

FPCCI President explained that to keep their economies afloat, U.S., E.U. and India have kept their interest rates negative; On the other hand, Pakistan has raised the interest rate to 15 per cent, and financing is not available to businesses from commercial banks at less than 17 per cent. He added that no business can repay their loans with such high inflationary pressures and high interest rates.

Sharing is caring

Leave a Reply