Tuesday Jan 17, 2023
Former finance minister Hafeez Pasha Tuesday claimed the actual value of the dollar in Pakistan was Rs295 and that the government had placed an artificial cap on the value of the US currency to strengthen the rupee.
“The economic situation is deteriorating, and the system will collapse if the government does not take adequate measures,”, Pasha said addressing an event in Lahore.
He said that the real problem emerged in the last seven or eight years when the volume of loans surpassed $130 billion.
“It is unfortunate that 80,000 landlords pay only Rs3 billion in taxes on an income of Rs900 billion, while the poor people pay Rs120 billion in taxes on food and beverages,” said he.
The former minister further said that Pakistan dangerously reduced the rate of duties/taxes to increase imports.
Moreover, the engineering of the dollar rate was destroying the economy by affecting remittances and exports.
“A society with such injustice and disparity cannot thrive.”
On Friday, the SBP reported that Pakistan's remittances dropped 19% in December to $2 billion from $2.52 billion in the same month of 2021. The drop was attributed to the mushrooming of grey transactions as well as a recession that has dented incomes worldwide.
The remittances received during the July-December period of FY23 fell 11% to $14.052 billion from $15.807 billion in the first half of FY22, the State Bank of Pakistan (SBP) said.
On Monday, The News reported that the Exchange Companies Association of Pakistan (ECAP) has advised the government to "fix" the dollar rate to reduce the volatility in the currency market as the country grapples with a severe economic crisis amid depleting forex reserves.
In a statement, Zafar Paracha, the general secretary of ECAP, advised the government to fix the rupee/dollar exchange rate for export-import bills and remittances.
“These remittance proceeds could be brought in by banks and money changers at a fixed rate of Rs240 per dollar,” Paracha added.
The local currency ended at Rs228.34 per dollar, compared with the previous close of Rs228.15 in the interbank market. In the open market, the rupee was trading at 238.75 against the dollar. It was available at Rs238.50 on Friday.
Paracha suggested the government offer a rate of Rs240 per dollar to overseas Pakistanis and for inward remittance. He believes the move will help increase remittances, reduce Hundi/Hawala, strengthen the official channels, and eventually eliminate the grey market.