ISLAMABAD: Minister of State for Revenue Hammad Azhar said on Thursday that devaluation of rupee has not put an extra burden on foreign debt, as the government has to pay the external debt in dollar terms.
“Not a single penny is increased in foreign debt when the currency is devalued as we will earn in dollar terms and then will payback also in dollar terms. So, no difference will be realized in this regard,” he said while briefing the Senate’s Standing Committee on Finance, Revenue, and Economic Affairs.
State Bank of Pakistan Governor Tariq Bajwa on the occasion said, “There is no doubt that if the dollar is converted to rupee, the cost will be higher, but with an increased value of dollar against rupee, our ability to earn more dollars would also be increased.”
However, the committee members were not convinced with the statement of the state minister, saying how was it possible that extra burden will not be observed on external debts when we will get less dollars against a certain amount of rupees.
The meeting was presided over by its Chairman Senator Farooq H Naik, and was attended by senators Ayesha Raza Farooq, Dilawar Khan, Muhammad Akram, Muhammad Talha Mehmood, Imamud Din Shouqeen, Mian Muhammad Ateeq Shaikh and Sherry Rehman.
Hammad Azhar told the committee that the recent rupee devaluation occurred due to high pressure on dollar in Pakistan with rapidly decreasing foreign reserves.
He said another reason of devaluation was that the rupee became undervalued by 28 per cent due to artificial containment of the rupee from falling. “This act of the previous government negatively affected the country’s economy, especially exports.”
He said now all the economic indicators were showing positive signs as exports started increasing and imports, which surged by 24 per cent during first five months of previous year, had now decreased by 1pc in the same period of the current fiscal year.
Hammad Azhar said by the end of last fiscal year, total current account deficit of the country remained around $19 billion while the incumbent government was planning to set a target of around $12-13 billion by the end of the current fiscal year.
He said foreign remittances which stand around $20 billion a year should be around $30 billion because a lot of transactions were being done through Hawala and Hundi channels.
He said the government was taking strict actions against those involved in the illegal businesses.
Committee Chairman Farooq Naik, however, expressed his concerns over the current status of the country’s economy, saying Pakistan’s economy is under great pressure.
Senator Ateeq Sheikh said the SBP should play role in resisting illegal supply of dollars abroad.
Briefing about the hacking of accounts of some local banks from other countries, the SBP governor informed the committee that in October some hackers hacked the accounts of Bank Islami and withdrew around $6 million but he said no individual account holder was suffered due to the incident.