Coronavirus helped reduce current account deficit: Mian Zahid Hussain

Coronavirus helped reduce current account deficit: Mian Zahid Hussain

President Pakistan Businessmen and Intellectuals Forum and All Karachi Industrial Alliance, FPCCI’s Businessmen Panel Sr. Vice Chairman, and former provincial minister Mian Zahid Hussain on Wednesday said collapsing exchange rate should be controlled as it is increasing the cost of imports and hitting the buying power of masses. 

Private power plants are getting paid in dollars due to imported fuel which is also increasing power tariff due to slide in the value of rupee which is impeding local and foreign investment, he said. 

Mian Zahid Hussain said that power tariff be reduced by controlling theft and line losses which are over and above Rs 300 billion.

Talking to the business community, the veteran business leader said that a cut in the interest rates will improve the business environment and trigger investment while improved exports are necessary to support forex reserves. 

He said that exports can be increased by rationalizing the cost of energy and taxes. The current account deficit during 2020 was 2.96 billion which can be attributed to discouraging imports, high interest rates, devaluation of local currency and virus. 

The former minister noted current account deficit could have jumped to three billion dollars if lockdown was not imposed. 

He said that tools like exchange rate manipulation and interest rate can help reduce imports but export growth is linked to enabling environment otherwise the whole nation pays the price. 

He said that the country is swinging back to normal which is increasing imports of petroleum products, food, power generation and other machinery, transport, mobile phones and other services putting pressure on foreign exchange. 

Massive wheat imports will also drain foreign exchange reserves, he said, adding that exports have been reduced by remittances have increased supporting overall situation and this momentum should be ensured. 

He said that shoring up forex reserves with the help of loans is not sustainable which should be considered. 

FBR has waived 60 percent regulatory duty, 11 percent customs duty, 17 percent sales tax and six percent withholding tax on import of wheat which should have been done before to save the masses from the clutches of the mafia, he said.