LAHORE: Pakistan Federation of Chambers of Commerce businessmen panel warned government against relentless increase in trade deficit, widened 106.4% in first half of current fiscal year 2021 -2022, keeping the local currency under pressure, which is back to its depreciating trend against the US dollar, after remaining stable for a few days.

BMP chairman Mian Anjum Nisar urged the government to control the volatility of the rupee against the US dollar, which is not possible without controlling the increase in the trade deficit, endangering the industrial recovery and the economic growth.

The trade deficit in the first six months of July-December reached $ 25.478 billion from $ 12.34 billion recorded in the same period of 2020-21, he said and added that the week Last, the rupee closed at its all-time low of 178.24 against the US dollar before appreciating over the next two days to end the year at 176.51.

He believed that the State Bank of Pakistan should remain vigilant in this regard. In addition to this, the SBP and the government must also step in and propose policy reforms to control the depreciation of the rupee with a view to solving the problem of the trade deficit.

The Chairman of the FPCCI Businessmen’s Panel said that in addition to increasing exports and controlling imports, the government will need to take administrative measures, as there is a high demand for cash dollars in the market. .

He said that it is appreciable that the country’s exports increased by 24.7% and remained at $ 15.102 billion in the first half of the current fiscal year but it is also the fact that imports are also rising in alarming 65.94% boom to $ 40.58 billion.

If the increase in imports continues, the depreciation of the rupee cannot be avoided, he warned and suggested providing incentives for the industry to keep increasing its exports. If the situation persists, the interest rate could rise further as the import bill rises, he added. He argued that the depreciation of the rupee comes despite the SBP’s latest move in which it changed foreign exchange regulations for exporters. During the week, SBP announced to reduce the realization period of export products to 60 days and now exporters will be required to report export products within a maximum period of 120 days from the date of filing. shipment, but the new measure has not had a positive impact so far, “he said.

The SBP believes that a flexible exchange rate has appropriately played its role as a shock absorber and it is important that its role is complemented by strong realization of exports, he added.

This indicates that the pressure on the rupee is steadily increasing, he said, stressing the need to design a warlike strategy to increase foreign investment in Pakistan in order to stop the bullish trajectory of the dollar.

He said the continued increase in imports is fueling demand for the dollar in the market. Besides increasing exports and controlling imports, the government will need to take administrative measures as there is a high demand for cash dollars in the market, he suggested.

He observed that the flexible market-based exchange rate system, resilience of remittances and other factors can help contain the current account deficit within a sustainable range of 2-3% of GDP over the course of fiscal year 22. He declared that the rise of the dollar is not logical despite the fact that the State Bank claims that Pakistan’s external position was at its strongest with a current account deficit of 0.6 pc .

He stressed the need to continue to encourage export-oriented sectors in order to take exports to the next level. He said that it is undeniable that the government has faced many economic challenges in addition to other internal and external issues and problems over the past three years.

He said the textile industry maintained the top spot in exports and was the lifeline of Pakistani exports, which would be further increased after the government’s decision to cut down on this sector. ° With the resolution of the hampering issues, it hoped that the export share could go higher in FY2021-22.

Commercial copyright recorder, 2022