Islamabad, March 08, 2023 (PPI-OT): The Senate Finance and Revenue committee on Wednesday was informed by the Governor State Bank that the current account deficit is at 3.8 million dollars and will continue to reduce. It was informed that although we were targeted for 10 billion dollars but will attain 7 billion dollars overall current account deficit by the end of this year.
It was also informed imports will be also revived with the revival of the IMF program. The Governor State Bank while admitting that the continuous deficit of the economy is due to the policy induced slowdown in response to monetary policy tightening and administration measures to counter inflation and address external challenges.
It was informed that the total FX reserved of the country have declined to 9.3 billion dollars as of 24 February 2023. The Finance and Revenue Committee that met on Wednesday under the Chairmanship of Senator Saleem Mandviwalla here at ye Parliament House lamenting the sudden dollar fluctuation said that state bank is responsible to control and maintain the actual dollar rate and take solid measures to completely curb black marketing and smuggling of dollars.
Senator Mohsin Aziz pointed out that around 4 to 5 million dollars are being smuggled every year. The committee sought details of amount of dollars smuggled to Afghanistan in the recent period.
It was also noted that due to high international inter banking rates, has resulted in Hundi and black money business, “We can see the smuggling of dollar and black money business now being done through infants” remarked Senator Mohsin Aziz.
The committee recommended to seriously address the issue of varying dollar rate of open market inter banking and black market and bring the rate inconformity so that everyone receives a fair price. Saleem Mandviwalla also emphasised that rupee trade with Afghanistan be immediately stopped which is also contributing to external deficit.
He said that the county has reached to 17 billion dollar external deficit which was controlled and monitored better when the CCNL was in exercise and recommended to revive the working of the CCNL.
The committee was also informed by the state bank officials that the remittances have also come down, so far 2 billion remittances took place and also there was a decline in exports from 7.4 pc during July.
It was informed that the major decline in exports came from food especially rice by 12 pc. Vegetables and fruits exports have also been declined by 48 and 37 percentage respectively “The remittances, the FDI and exports have come down the only thing risen are the loans” senator Mohsin Aziz commented.
It was informed that the Government repaid 2.4 billion dollars in principle loans on net basis. It was also apprised that the Monetary Policy Committee (MPC) has further increased the Policy rate by 300 bps to 20 pc in its meeting on March 2nd.
The committee while discussing the matter of refusal of LCs to importers of pharmaceutical ingredients with special issue of packing industry forwarded by Senator Zeeshan Khanzada was informed that most of the LCs are being opened.
SBP is fully supporting import of above articles it was told that if pharma industry faces further issues they can approach the SBP, besides it was also informed that pharma industry can also import necessary raw material for their own consumption and no prior approval from SBP is required for any import including that of packing material.
Similar issued are being faced by Dawlance and Hayat Kimya on which the SBP ensured that as soon as the balance of Payment situation is improves, banks will be in a better position to facilitate full import transactions.
Similarly, the issues of European EV electric car imports was also discussed. The chairman committee supported the import and said that special foreign exchange allocation should be made.
Senator Mohsin Aziz did not support the idea and said that people are dying of essential food items are we are focusing on Electronic cars. The SBP apprised that banks have been advised to remain vigilant and restrict import of luxury items including luxury vehicles in CBU condition to save precious foreign exchange of the country.
The matter was referred to the ministry of Industries and Production for further deliberation the committee was also informed that imports of essential edibles have been made owing to the month of Ramadan including 600 million dollars on oil.
The committee while discussing the financial scam and involving of Bank officials of NBP, HASCOL Petroleum limited and Byco, it was informed that an in-depth inquiry by the FIA is being conducted. Senator Saleem Mandviwalla showed amazement of three ex-presidents on a government bank in jail and an embezzlement of 55 billion rupees goes away without accountability. The committee deferred the matter for further deliberation.
The matter of additional PSDP demand for project of protection and up gradation of Pak China Phase -I OFC project for Establishment of Cross Border Connectivity Project was also discussed. It was informed by the officials that once the already given funds have been utilised the remaining funds will also be released.
The meeting was attended by Senators Mohsin Aziz, Faisal Saleem Rehman, Kamil Ali Agha, and Senator Umer Farooq. Chairman FBR, Governor State Bank and senior officials of attached departments were also in attendance.
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