Rupee depreciation opening floodgates of inflation

On Saturday, former Vice President of FPCCI Atif Ikram Sheikh said exchange rate erosion would open floodgates for unprecedented inflation and add to the country’s debt. The rupee depreciated by Rs34 against the dollar, which shattered the tall claims of some officials, while the depreciation can increase the country’s debt by six trillion rupees in a few days, he said.

Atif Ikram Sheikh, who has also served as Chairman PVMA, said that the dollar was trading at Rs264 in the last session while it may depreciate further, bringing more inflation in the country.

In just two days, Pakistan’s loans have inflated by Rs4.5 trillion while the incumbent government has increased the loans by over Rs11 trillion. The foreign exchange reserves have fallen below $4 billion, including the dollars given by Saudi Arabia, UAE and China.

The business leader said that the reluctance of the IMF at this critical juncture is due to a host of issues, including a reduction in the fiscal deficit.

Our fiscal deficit is at Rs3.2 trillion while the government has to levy more taxes on petrol, diesel, and other items, to raise two to three hundred billion rupees which will put more financial burden on the people,” he added.

The circular debt was increasing by Rs123 billion per month and touching Rs 3.2 trillion, and Pakistan needed to meet the target relating to circular debt.

Government has to enhance the prices of electricity and gas to fill the shortfall, which can push up the electricity tariff to Rs50 per unit.

All these steps will pressure the masses and increase the cost of doing business; many businesses will be closed, resulting in massive unemployment.

He said that the economic meltdown was caused by political turmoil, and Pakistan was facing a critical situation calling for urgent steps.

 
 

Sharing is caring

Leave a Reply