Sunday May 28, 2023

Costly delays

March 23, 2023

Pakistan appears to be moving fast towards default, almost as if by design. During the last four decades, we never developed economic planners and thinkers and relied on cronyism instead. Due to this approach, our exports have melted almost as fast as our glaciers over the years. Circular Number 1 on Realization of Export Proceeds, issued by the SBP on February 13, continues the ignominious trend, further damaging the cash flow and liquidity of exporters. According to the circular, in the case of any export proceeds that were due during February but were realized in March, the exporter will be compensated based on the exchange rate that was prevalent when the exports became overdue in February or on March 1, depending on which is lower.

Given the depreciation of the currency over the past few months, exporters who experienced delays due to no fault of their own have been penalized. This about sums up the mediocre level of our economic policymaking, which punishes honest businessmen. Our industry is already on life support and it seems the policymakers want to put the nail in the coffin. The justification for all this is the IMF, which appears to have become a partner to the destruction of our economy.

Ali Ashraf Khan