Home Latest News ‘Major Reason’ for Economic Doldrums is Rupee Devaluation: Dar

‘Major Reason’ for Economic Doldrums is Rupee Devaluation: Dar

PMLN, PTI senators trade blame over reasons for currency devaluation, blaming it for ballooning loans

by Staff Report

File photo of PMLN’s Ishaq Dar

Former finance minister Ishaq Dar on Monday claimed a “major reason” for Pakistan’s prevailing economic concerns is the massive devaluation of the rupee against the U.S. dollar, as senators of rival political parties traded blame over who is responsible for the crisis.

Addressing the Senate as Leader of the House, Dar recalled that during his stint as finance minister from 2013-2017, the rupee had remained largely stable. He said the dollar stood at Rs. 104 when Nawaz Sharif left the government in 2017, adding this had climbed to Rs. 124 when former prime minister Shahid Khaqan Abbasi took office.

“The central bank’s intervention was only to a certain extent,” he claimed, alleging that the State Bank of Pakistan (SBP) had intervened to control the rupee’s value “more often” under the Pakistan Tehreek-e-Insaf (PTI) than the Pakistan Muslim League (Nawaz).

“I am considered an enemy of rupee devaluation by a financial institution,” he said, referring to the International Monetary Fund (IMF), which has repeatedly stressed on a market-determined exchange rate. “However, after giving in to the demand of the same financial institution, the PTI allowed the devaluation of the rupee. See, what happened after that,” he said, claiming this had ballooned Pakistan’s debts and hampered business.

Stressing the need for consensus among all stakeholders to regulate the rupee’s value, he lamented that faulty policies triggered inflation for the general public. “I consider the rupee’s depreciation the mother of economic evils,” he said. “The appreciation of the rupee against the dollar today is due to the Ishaq-Dar policy,” he claimed, taking credit for the interim government’s crackdown on dollar smuggling and speculation. “The real exchange rate today is 244 to the dollar. Some of our institutions have way too much autonomy, but let me tell you, ‘spoiled children deserve the rod’,” he said, in a seeming reference to the SBP, which he maintained had been granted “too much” autonomy by the PTI at the behest of the IMF.

Jamiat Ulema-e-Islam Pakistan Senator Kamran Murtaza said the value of dollar stood at Rs. 3.31 in 1947, which had slowly increased, until soaring to Rs. 335 earlier this year. He maintained controlling the dollar was not achievable in a short meeting or through the use of force and suggested adopting a scientific method to achieve the desired results.

PTI Senator Mohsin Aziz, meanwhile, regretted the dollar fetched Rs. 172 when Imran Khan was ousted as prime minister, with the PDM ruling coalition bringing it to Rs. 335 within a year. He said a serious study was required to identity the factors responsible and fix the problem. He also hit out at the SBP, claiming it had failed to play its role to control the flight of dollars from the country.

Wheat stocks

The Senate also debated the prevailing wheat stocks in the country, with interim Information Minister Murtaza Solangi saying there was no shortage and measures would be adopted to address any flour shortage concerns due to supply chain problems. PTI Senator Sania Nishtar, in a motion, had claimed smuggling might be a major factor behind wheat shortage in addition to hoarding. However, Solangi maintained that public wheat stock included 3,924,367 tons in Punjab; 817,394 tons in Sindh; 215,082 tons in Khyber-Pakhtunkhwa; and 89,354 tons in Balochistan.

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