Jang Economic Session: ‘Rupee devaluation to add to inflation’

LAHORE: Devaluation of rupee against the US dollar on the pressure of IMF is bad for the Pakistan’s economy and it will bring a new wave of inflation, increase the economic woes of commoners, and widen the trade deficit and foreign debt burden, besides pushing the cost of doing business and energy costs upwards.

These views were expressed by the experts in Jang Economic Session on ‘Impact of devaluation of rupee on economy’. The panellists were Irfan Yousaf, Javeed Kiayni, Sarfraz Ahmed Khan, Mian Salman Farooq, Jahanzaib Mirza, and Khalid Piracha while the session was hosted by Sikandar Lodhi.

Irfan Yousaf said that increasing the exports was required to end the dependency on foreign loans as trade deficit reached USD 24 billion. He called for ending luxurious lifestyle while foreign debt burden was increased by 9 billion with rupee devaluation. He said economic situation was again pushing for another bailout package from IMF. He said economic revival was possible with good governance.

Javeed Kiayni said that current devaluation of currency was made to increase the exports but it will not benefit rather negatively affect as the buyer will start asking discount due to devaluation. He called for avoiding such temporary measures to increase exports. He said world was focusing on 20 to 25 percent on counter trade which needs to be focused by Pakistan too while devaluation will continue without expanding manufacturing base. He suggested ending import of luxury vehicles and increase dependency on local vehicles. He said debt servicing amounted at USD 3.62 and to reduce debt burden there is a need to promote ‘Say no to Imports’.

Sarfraz Ahmed Khan said that dependency policy was never successful in successive tenure while money is concentrated in few hands and devaluation is outcome of it. He said exports were declined due to rupee devaluation while dependency on IMF will further weaken the economy. He believed that the artificial measures could not improve economy.

Mian Salman Farooq said that macroeconomic policies were made keeping manufacturing, and services sector productivity. He called for correlating the micro and macro economic policies. He said according to the International Financial Institutions, Pakistan’s currency was over rate. He said devaluation of currency benefits the exports but it was not only factor to increase exports. He called for emergency measures to increase exports.

Jahanzaib Mirza said that currency was devalued many times which immediately affects stock markets. He said first impact of devaluation was positive but foreign portfolio companies secure their interests. He said every sector will benefit from currency devaluation according to its share.

Khalid Piracha said that more than 70 times rupee was devalued since 1950. He said devaluation of rupee on pressure of IMF will affect the electricity, transport and cost of doing business which will increase commoners’ problems. He said loans were never used for the productivity. He said export prices were inelastic which cause decline in exports.