Dollars are likely to arrive in Pakistan from “next week”, State Bank of Pakistan (SBP) Governor Jameel Ahmed announced on Monday, hoping that the country’s foreign exchange reserve position will strengthen in due course.
In his address to the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), the State Bank Governor said, “We are expecting to witness inflows from next week onwards, which will add to our foreign exchange reserves. The pressure will be less.”
Ahmad added that the foreign exchange reserve position after the arrival – now at its lowest level since February 2014 – would improve to pave the way for the lifting of import restrictions.
Pakistan banned the import of all non-essential luxury goods in May to avert a balance of payments crisis and stabilize the economy. However, following strong criticism from stakeholders, the relevant authorities have lifted restrictions on the import of certain goods to facilitate industries.
Due to low reserves, the SBP imposed import restrictions early last year, much to the dismay of many importers and businesses in Pakistan who cited the restrictions as a reason to close or scale back their operations. .
Pakistan’s reserves have dwindled sharply to less than three weeks of import cover of $4.5 billion as of January 6, however, the State Bank chief assured traders that dollar inflows would begin next week. After which decisions regarding import restrictions will be taken.
Addressing complaints from the business community about difficulties in opening letters of credit (LCs), the governor said “verification of applications takes time”.
“Presently, the central bank has cleared about 33,000 LCs with special consideration for import of raw materials used in exported goods,” he said, revealing that commercial banks also requested the regulator. They should give preference to LCs required for food, medicine and imports.
‘Detailed report’ on exchange rate manipulation soonÂ
Highlighting the involvement of commercial banks in exchange rate manipulation, Ahmed said investigations have been completed, industry players have been assured of strict action against the culprits.
“Rest assured that all commercial banks involved in exchange rate manipulation will be held accountable,” he said, adding that a detailed report would be released on January 23 – the same date as the central bank’s monetary policy. The policy rate announcement is expected.
The State Bank chief did not comment on the central bank’s monetary policy stance.
‘No plan in place’
At the beginning of the meeting, the industrialists highlighted several problems due to which their business suffered.
Former FPCCI president Mian Nasir Hayat Mago warned the central bank chief that if supply chain bottlenecks are not addressed, unemployment levels in the country will rise and prices of essential commodities will go through the roof.
Criticizing the central bank and the finance ministry for not planning properly, he predicted that if this situation continues, the price of pulses will touch Rs 1,000 per kg.
Meanwhile, industrialist Salim Bakiya lamented that he had to lay off 600 out of 950 employees due to the ongoing financial crisis.
Bakiya urged the governor to take appropriate measures to ensure the availability of dollars so that companies and industries can survive the ongoing crisis.
