The government’s error of judgment to pay the import bills unnecessarily on the advice of a coalition partner has depleted the foreign currency reserves. The move caused a massive rupee devaluation in September despite approval of the IMF loan, claims a source in the ruling PML-N.
Sources close to Miftah Ismail, however, believe that the import bill payments were not the reasons for rupee devaluation. Credit Default Risk perception, devastating floods and the Afghan factor were the major reasons that contributed to the rupee devaluation, believe the sources.
Sources close to the upcoming finance minister Ishaq Dar claim that he has done his homework to control devaluation. Within the first three months, he will bring the rupee value against the US dollar to Rs200, the sources further claimed.
Dar has chalked out a strategy to bring the power tariff down in order to bring relief to the consumers. The sources further claim that Dar understands the severity of economic challenges, but he has done his homework and people will see the impact soon after he takes charge.
To a question about what different will Ishaq Dar do that his predecessor Miftah Ismail failed to do, the sources claim Dar has plans to reduce the power tariff, reactivate the National Price Committees to bring down inflation and a ensure a strict policy towards the foreign exchange currency market.
According to the sources, Pakistan’s export industry relies on imported goods (65 percent) that contributes to a huge import bill. There is a need to review the export policy. If necessary, Dar will focus on the targeted subsidy to the export sector. In the past, Dar committed the targeted subsidy to the export sector and he fulfilled his commitment in this regard.
Dar will be focused on reducing electricity prices and controlling inflation. To a question about the rupee’s massive devaluation even after loan approval by the IMF, sources close to Ishaq Dar said the error of judgment by the government in import bill payments was the key reason for the dollar’s appreciation against the rupee.