Islamabad:
The Economic Advisory Council (EAC) raised concerns on the pressure of the pressure on the exchange rate that was also reflected in the data of the Central Bank, which urge Prime Minister Shehbaz Sharif to analyze the matter to maintain competitive exports .
During a meeting, some members of the Nine members indicated the real effective exchange rate (reer), a measure of the value of a currency against the average price of the foreign currencies basket, which increased to 104.05 in January 2025.
According to the officials, this indicated that the rupee was overvalued by 4%, since Reer 100 was considered that the rupe had been negotiating at a fair market value and any movement above or below this threshold meant that the price does not reflected the true economic conditions.
However, the Deputy Prime Minister and Minister of Foreign Affairs, Ishaq Dar, differs with reer and believes that the rupee was underestimated at at least 15%. At present, the rupee is quoted above RS279 to a dollar during the last days and remains stable for a longer period.
The EAC, headed by the Prime Minister, includes Jehangir Khan Tareen, Saqib Shirazi, Shehzad Salem, Musaddiq Zulkarnain, Dr. Ejaz Nabi, Asif Peer, Ziad Bashir and Salman Ahmed as members.
The officials said that the members of the EAC, some of them exporters, had the opinion that, due to the overvaluation of the rupee, their exports were becoming little competitive, and added that the Minister of Finance, Muhammad Aurengzeb, assured the EAC that addressed the matter with the state bank. of Pakistan (SBP): the regime of the exchange rate regime.
Some of the EAC members also seemed to protect their own commercial interests during a meeting, raising certain micro level problems, which should not have been presented for the discussion, observed a participant of the meeting.
The EAC members stressed that currency reserves had also begun to decrease and fell by $ 1 billion to $ 11 billion for the end of last week.
Pakistan’s currency reserves remain low despite the IMF program, since there are no important increases in new foreign entries. The Central Bank has been maintaining reservations by buying dollars from the market. Purchases amounted to $ 9 billion in the last calendar year.
However, there was a limited window available for purchases in January after the country registered the current account deficit of $ 420 million. The SBP is buying dollars retaining a part of export procedures and foreign remittances.
The Central Bank states that import restrictions have been eliminated and allowed the import of tax -free cotton to close the gap between demand and national supply. There is also permission for tax -free importation of textile and spare parts machinery; and raw materials that are not produced locally.
In general, the current account registered a surplus of $ 700 million during the first seven months of this fiscal year at the back of $ 19.2 billion in exports. Some of the EAC members also recommended to import raw sugar in order to re -export it after refine the product.
A member, who has bets in the export business, recommended that the Government impose any sales tax on imported raw materials. Exporters are misunderstanding the installation after the Government imposed the sales tax on the export facilitation scheme.
The prime minister also highlighted efforts to make local industries capable of competing in international markets with their exports, according to a press release. The prime minister said the consultations were ongoing regarding the regulation of digital currencies.
The EAC members also commented that the investment would increase only after the general investment environment and local investors improved also began to invest, according to the participants of the meeting.
An official brochure of the Prime Minister’s office declared that the members of the EAC deposited their full confidence in the government’s economic policies and presented key suggestions aimed at further strengthening the economic growth of Pakistan.
He added that Shehbaz instructed the relevant authorities to collaborate with the members of the Council to form an integral action plan based on these suggestions. He stressed that economic stability was not the result of an individual effort but the collective efforts of the entire team.
The prime minister also emphasized the need to use regional commercial potential. He said that industry, agriculture, the development of information technology, employment creation and increased exports were among the main priorities of the government.
The prime minister said that efforts were underway to improve telecommunications services and provide internet access to remote areas, which would help increase the number of freelancers and information technology exports (IT).
