LAHORE:Deputy chairman of the board of governors of Minhaj University Dr Hussain Mohi-ud-Din Qadri Sunday urged the government to seriously revisit its inflation control policy.
Addressing the 6th World Islamic Economics and Finance Conference at the university, Dr Qadri argued that Pakistan’s financial managers’ perennial approach of increasing exports of the country through devaluing the local currency instead of actually investing in the production of goods was the root cause of the inflation issue.
He said this measure would work only for a short time but would mount foreign debt pressure. To tackle this pressure, the government would resort to tightening the taxation policy, which in return causes inflation, he said, adding that the policy of increasing the interest rate to combat inflation is not effective in Pakistan, which experiences cost-push inflation due to hike in taxes and energy prices.
The interest rate hike policy did not work even in economies with developed inclusion system like USA, Europe and Japan, while in Pakistan only 21 percent people have bank accounts, many of which are also dormant, he said. “Not every economic policy is meant for every country and governments need to amend a policy in accordance with its given environment.”