ICCI expresses concerns over country’s current account deficit
ISLAMABAD – Islamabad Chamber of Commerce and Industry (ICCI) has expressed great concerns over the ballooning current account deficit of the country and called upon the government to take urgent remedial measures to arrest this dangerous trend.
The current account deficit has swelled to around USD 7 billion during the first five months (July-November) of the current fiscal year. The ICCI has noted that surging current account deficit would put more pressure on our exchange rate, cause further depreciation of rupee and give rise to a new wave of high inflation in the country. Muhammad Shakeel Munir, President ICCI, said that the current account deficit of Pakistan had reached record level of USD 20 billion in 2018, which had created multiple problems for the economy and the country had to go to the IMF to overcome its economic problems. However, with great efforts of the current government, this deficit was changed into surplus in September 2020, but it was again on the rise, which was not a good sign for the economy. He said it was unfortunate that being an agricultural country, Pakistan was importing wheat, sugar, pulses and many other food items, which also contributed to the rising current account deficit. He emphasized that the government should extend full support to the private sector in producing imports substitutions in the country in order to reduce dependence on imports and improve exports in order to convert current account deficit into surplus. He stressed that to sustain the strong economic growth, the government should reduce policy interest rate, ensure availability of easy credit and long-term financing to private sector in order to help expand export capacity of firms that would help in promoting exports. Senior Vice President ICCI Jamshaid Akhtar Sheikh said that the value of Pakistani rupee has tumbled to over Rs.178 against a dollar, which showed that our currency was losing its value at an alarming rate. He said that the falling value of the rupee would put more pressure on the country’s forex reserves and increase foreign debt obligations. He said that the eroding value of rupee was also disturbing all future plans of the business community as they needed a stable exchange rate for long-term business and investment planning. He urged that the government should take urgent measures to stabilise the value of the rupee. Muhammad Faheem Khan, Vice President ICCI said that Pakistan’s many industries were importing almost 70 per cent of their raw material for manufacturing activities and decreasing value of rupee would further push up their production cost making our exports more uncompetitive in the international market. He emphasized that the government should support the private sector in setting up raw material producing industries in the country to reduce dependence on their imports that would help in reducing the current account deficit as well.