State Bank of Pakistan (SBP) Governor Jameel Ahmad on Wednesday said Pakistan was likely to start receiving dollar inflows from next week – a statement that propelled the Pakistan Stock Exchange’s benchmark KSE-100 Index by 448.88 points.
“We are expecting to witness inflows from next week onwards, which would reduce pressure on our foreign exchange reserves,” Jameel said in his address to the Federation of Pakistan Chambers of Commerce and Industry (FPCCI).
He also shared another good news, saying that the inflows will strengthen the foreign exchange reserves — which now stand at their lowest level since February 2014 — paving the way for the removal of restrictions on imports.
Pakistan banned the import of all non-essential luxury goods in May to avert a balance of payments crisis and stabilise the economy. However, following severe criticism from stakeholders the authorities concerned removed restrictions on the import of some goods to facilitate the industries.
The low level of reserves was the reason behind the SBP placing restrictions earlier last year, much to the dismay of several importers and businesses in Pakistan that cited these curbs behind shutting down or scaling back operations.
Addressing the grievances of the business community regarding difficulties faced in opening Letters of Credit (LCs), the governor said it takes time to verify submissions. “Currently, the central bank cleared around 33,000 LCs (letters of credit) with special consideration for raw material imports used in goods which are exported,” he said.
The commercial banks also requested the regulator to prioritise LCs needed for the import of food items, medicines, and oil, he added.
Punishment for those manipulating exchange rate
Shedding light on the involvement of commercial banks in exchange rate manipulation, Jameel announced that an investigation into the episode had been completed, assuring the industry players that strict action will be taken.
“Rest assured all commercial banks involved in manipulating the exchange rate will be held accountable,” he said, adding that the report would be released on January 23 — the same date when the central bank is expected to announce the monetary policy rate.
In response to a question regarding a possible rate hike, the SBP chief refrained from commenting.
No plan in place
The industrialists highlighted several issues being faced by them due to which their businesses were suffering, as former FPCCI president Mian Nasser Hyatt warned the central bank chief that if supply chain hurdles weren’t removed the country will witness high levels of unemployment and sky-high prices of essential food items.
Lambasting the central bank and finance ministry for not having a proper plan in place, he predicted that if a similar situation persists then the price of pulses will shoot to Rs1,000 per kg.
Saleem Bikiya lamented that out of a total strength of 950 employees, only 350 could be retained while the rest were laid off due to the ongoing financial crunch, as called for taking urgent steps so that businesses could survive.