The decline of the rupee

It is important that the government realises that the rapid devaluation of the Pakistani rupee is no panacea for economic stability. It is a recipe for disaster, which will push a large number of Pakistanis below the poverty line. There is a misconception that Pakistanis don’t pay taxes. The fact is that all the 220 million Pakistanis pay taxes. The devil lies in the fact that above 80 percent of indirect taxes and less than 20 percent of direct taxes, is the major cause of our backwardness. In addition, 10 percent of the country’s poorest population pays 17 percent of the tax revenue to the government while the richest 10 percent pay only 10 percent. The easiest way to reduce poverty is to ensure direct foreign investment into Pakistan. Our foreign missions must be given specific targets in this regard.

A scheme should be launched to pay three percent PA profit (payable bi-annually) on foreign currency bank deposits in Pakistan (backed by the sovereign guarantee of the GoP), with a suitable, but attractive fixed period. This is a foolproof scheme, which can boost up our foreign reserves over a short time on extremely cheap rates as compared to foreign loans and international bonds, which were sold by the previous government at even 8.25 percent rates.

Syed Nayyar Uddin Ahmad

Sydney, Australia