KARACHI: Pakistan Business Council (PBC) on Monday expressed satisfaction with the State Bank’s measures to manage an immediate liquidity, proposing the central bank to keep floating markup rates for Naya Pakistan Certificates (NPCs) to maintain their continued attractiveness.
The council also recommended dollar-linked instruments as alternative to hoarding the dollars. A PBC delegation, led by its chairman Muhammad Aurangzeb, met Governor State Bank of Pakistan (SBP) and its senior leadership to discuss the economy and offer suggestions for alleviating some of the challenges businesses facing.
The delegation conveyed its satisfaction with the steps taken by the government and the central bank to revive the International Monetary Fund (IMF) programme. It stressed the importance of continued engagement with IMF, taking measures to limit imports by enhancing reliance on indigenous fuel, and for the government to engage sovereign wealth advisors to help reprofile debt.
PBC suggested floating rates for NPCs to maintain their continued attractiveness in face of global monetary tightening. The government has recently jacked up the markup rate NPCs in, eyeing to lure investments in foreign currencies from abroad. The council welcomed narrowing of exchange rate spreads and recommended dollar-linked instruments as alternative to hoarding dollars. According to PBC, the central bank appreciated both the proposals and agreed to take up the proposals with the government.
PBC further proposed that businesses able to import on 180 days plus deferred payment terms be offered forward cover at a cost. “This will reduce the immediate pressure on foreign exchange reserves and save the government the cost of borrowing as well carrying the exchange rate risk, which it currently does without compensation.” The council said it was informed that the SBP was examining the feasibility of a scheme for providing foreign exchange hedge in consultation with the government. PBC also recommended the SBP to consult business bodies on a second priority list of importable items to provide transparency and enable businesses to plan. “Within this list, groups that generate substantial export earnings be given reasonable priority.”
The meeting concluded with the PBC chairman appreciating the SBP governor and his team’s challenging tasks and assuring him of full cooperation of the council. PBC is a business policy advocacy platform, supported by over 100 private sector companies, local and multinational, that have significant and long-term commitment to sustainable growth of the country. They come from 17 major sectors of the formal economy; contribute to the country’s annual exports and the total tax revenues, employing around three million people.