ISLAMABAD  - The Pakistan Economy Watch (PEW) on Wednesday expressed grave concern over depleting foreign exchange reserves asking government to take instant steps to improve the situation.

Foreign exchange reserves held by the State Bank of Pakistan (SBP) have contracted to lowest level since November 2001 which is alarming, it said.

However, any governmental action in this regard will drop the confidence of market to the post-nuclear test level which would result in a disaster for the economy, said Dr. Murtaza Mughal, President PEW.

He said that different officials asking government for action are doing a great disservice to the country as it will do more harm than good which will not be permitted under any circumstances.

Despite record remittances and growth in exports the situation of reserves remained unsatisfactory due to increasing oil imports and repayments to IMF, he added.

Dr Murtaza Mughal noted that free movement of foreign currency was permitted to make country an attractive destination for foreign investors but it proved to be an appealing move for smugglers and hoarders of the currency.

He said that now decision cannot be reversed to arrest the decline and rebuild reserves as it will dent economy beyond repair by accelerating the dollar flight through illegal channels.

He said that astonishing decision by the IMF to disburse meagre payments, a tight monetary policy and a flexible exchange rate policy has not helped avert the crisis but plunged reserves eroding rupee in an unprecedented way. Government can expedite privatization process, sell 3G license without delay, float euro bonds, try to get an oil credit facility, recover outstanding PTCL privatization proceeds and get repayment of Coalition Support Fund to stop the fall. At the same time, authorities should be focusing on economic stability and urgent implementation of policy initiatives, he said. Pakistan can also consider importing oil from Iran which will be available on competitive rates, he demanded. IMF and all other stakeholders should release funds as per their promises before it is too late, said Dr. Mughal.

He lauded the resolve of Finance Minister Ishaq Dar who has said that government will bring back dollar to Rs 98.