President Pakistan Businessmen and Intellectuals Forum (PBIF), President AKIA, Senior Vice Chairman of the Businessmen Panel of and former provincial of Mian Zahid Hussain on Monday said effective July 16, 2018, the State Bank of Pakistan has interest rate by 1 percent. New policy rate is set to be 7.5 percent which will increase the cost of doing business as well as inflation. Current account deficit has reached USD 16 billion in July to May 2018 which was $ 11.1 billion during the same period of previous year. Estimation for inflation this year was 5.2 percent, which is now revised to 6 percent while the facts and figures indicate that it will hit 7 percent.
The veteran business leader while talking to the business community said State Bank has estimated the growth rate for the current year by 5.5 percent which was targeted to be 6.2 percent. The impact of growing exports has been reduced by the increased imports, specially the strong demand for productive imports like metals; transport, machinery and petroleum to support increased economic activity and rapid increase in international oil prices have pushed the current account deficit to the level which is not sustainable in the short run.
The former minister said that despite various administrative measures and devaluation of PKR by 15 %, Pakistan has reached to the highest trade deficit in the history. During the last fiscal year, import bill has widened by 15.1 percent which the highest ever import bill. During the year, imports have increased by 15.1 percent while exports grew by 13.7 percent. Exports totalled to $ 23.2 billion while imports totalled to $ 60.9 billion resulted in trade deficit of $ 37.7 billion, which is 16 percent higher than that of the year 2016.
Mian Zahid Hussain said that immediate measures are required to be taken to boost exports so that trade deficit can be controlled. Everyday increase in price of US dollar has worsened the trade activities and increased the cost of doing business in the Country. Open market rate of USD has increased by Rs. 5 which has caused reduction of over 600 points in Karachi stock exchange.
He said that constant devaluation of PKR requires immediate attention. If no measures have taken to sustain the PKR value, trade and business in the Country will adversely affected and inflation will raise creating trouble for all sectors including business community. Instead of short term policies, long term and sustainable policies should be implemented to support the declining economy of the Country. Economic decline is due to political instability and restarting of terror activities. Political leaders and policy makers should collective work for political stability and sustainable peace in the Country, in order to attain the economic stability.