been cleared yet. “Ishaq Dar had also announced clearance of dues in last budget as well,” Bilwani said.
He said it was not an exporter friendly regime, as the largest exporter of the country; textile sector was not benefiting. Textile policy of last year was not implemented, instead a new policy was announced, whereas the previous one should have been extended, he said.
There has been a depreciation of 4 percent to 47 percent in the global currencies and pressure mounted over Pakistan for a decline in the rupee value. Currency of Bangladesh, Sri Lanka, China, Australia, Canada, Russia and other countries was devalued in last couple of months. “In order to race their exports and get more orders these countries were devaluing their currency,” Said Malik Bostan, a leading currency dealer.
Although pressure also mounted on Pakistan after a decline in its exports, government was bound not to devalue it under an agreement with the IMF. “Government cannot devalue the rupee, but it uses some tools to control or unblock the depreciation and appreciation,” Bostan said.
Pakistan government put an unofficial cap on devaluation of its currency in March 2013 when rupee reached at Rs114 per dollar, later it reached to Rs98 per dollar, where cap on appreciation was placed. “Otherwise it would have reached Rs70 per dollar,” he said. “Now, there is no cap and price mechanism is related with open market, still there were some checks that controlled gambling of the banks,” Bostan said.
Pakistani exporters were forcing the government for depreciation of the rupee, as their profit margins would increase while importers were concerned, as their cost would increase after depreciation of the rupee, ultimately, consumers or general public would be affected with such decision. “Common man also wants no depreciation, as it increases inflation,” Bostan said.
With a decline in oil prices in the international market by 50 percent, Pakistan’s oil import bill has been reduced to $7 billion from $15 billion. If oil prices increase again and there is a currency decline in the world over, pressure will further move around Pakistan. It will have to increase exports and cut down imports.
Bostan argued that any depreciation in the rupee would not have any impact on exports, as history shows exports were not increased. It will temporarily increase the margins of the exporters.
He suggested that instead of removing tools to depreciate the rupee, the government should rebate the exporters in utility charges and give them sales tax rebates that would encourage them for more exports. Besides, the government should work out to bring the outgoing foreign investment back in the country. “Utility rates should be brought at the level of our competing countries,” he said.