PEW says eroded rupee will hurt the entire population
The Pakistan Economy Watch (PEW) on Sunday criticised the textile sector for demanding devaluation of local currency to boost exports.
Eroded rupee to make imports costly which are twice the volume of exports and hurt every person in Pakistan, it said.
The government has accorded zero-rating status to the textile sector in the budget, reduced export refinance rate by 0.5 per cent and promised to pay refunds but the textile mill owners are asking for more which is unjustified, said PEW President Dr Murtaza Mughal.
He said that devaluation of the currency to spur exports is an old-fashioned idea which is contrary to the national interests and therefore the government should refuse the demand for devaluation.
Exchange rate erosion provides little relief to exporters while it increases debt, payable interest and makes imports costly he said, adding that exports should be increased through reforms.
Dr. Murtaza Mughal said that the dollar was worth Rs 60 during Musharraf’s regime that has now depreciated to Rs 104.50 but the exports remain stagnant, and in fact have even dwindled.
Dollar appreciated by Rs 5 recently but exports didn’t improve, rather nosedived which proves that the demand holds no water, he added.
Government should try to tackle weaknesses in manufacturing sector, energy crisis, taxation issues, policy hiccups, supply side constraints, non-existent R & D, value addition, brand development and diversification.
Export sector remained focused on low-value and commodity based products while the officials concerned have always ignored to address the structural flaws.
Interests of the whole population cannot be sacrificed to provide temporary relief to some exporters through exchange rate adjustment as it will increase debt burden by billions of rupees.