PTI government forms price control committees, mulls subsidy on petrol
State Bank of Pakistan Governor Reza Baqir has defended the rupee devaluation saying it benefited overseas Pakistanis and claimed that inflation in Pakistan was artificial.
His statement comes as the PTI government forms price control committees and mulls a targeted subsidy on petrol.
Reza Baqir spoke to journalists in Manchester in the UK.
He said inflation in Pakistan is artificial and will be controlled soon.
Baqir said rising exchange rates had pushed up prices in Pakistan.
However, in the same breath, the SBP governor defended the rupee devaluation, saying it benefited overseas Pakistanis.
“How does it benefit them? Because our brothers and sisters from these countries who send their hard-earned money back home their remitances are increasing.”
Baqir said that while a floating exchange rate hurt “some” people, it also resulted in benefits for others.
“If this year our remittances, for examnple, grow to $30 bilion or more, and if [the rupee] depreciated 10% over the last few months, the families of overseas Pakistanis get an additional three billion dollars. This translates into more than Rs500 billion,” he said.
“What I meant to say is that every economic policy benefits some and doesn’t benefit some others. When you speak about people who don’t reap the benefit, you shouldn’t forget those who do.”
Sharing a clip from Baqir’s press talk, a UK-based Pakistani Omer Azhar said that for the first two days of his UK visit, Reza Baqir had refused to comment on rupee depreciation and rising inflation and then he spoke about the “benefits” of the rupee devaluation, but “it is clear that majority suffers from rupee nosedive, effects of which are amplified due to commodities’ supply chain mismanagement by government.”
Azhar claimed that the SBP governor had “appealed to PTI’s overseas voter constituency and tried to sell an inherently unfavourable policy as beneficial.”
1/4 For a good 2 days, Reza Baqir refused to comment on rupee depreciation against the $ & rising inflation. Today, he spoke on the ‘benefits’ of rupee dive.I wish he had’t. He said that overseas Pakistanis benefit from THIS. Consequently, the amount of remittance rises. Insane pic.twitter.com/7rz4u1nrKr— Omer Azhar (@OmerAzhar96) October 20, 2021
The SBP governor also commented on the Pakistan-IMF talks being held in Washington.
He said the discussion with the IMF was moving in the right direction and there will be no deal that hurts the economy.
He said the government would not hide the IMF agreement from people.
Speaking about the FATF meeting, Baqir said Pakistan has almost fulfilled the requirements of the FATF and it would soon be removed from the gray list.
Meanwhile, the federal government is planning to offer a targeted subsidy on petrol after its price rose to over Rs137 last week.
Prime Minister Imran Khan held three meetings with his cabinet members and party leaders on Wednesday to deal with the issue. The meetings pondered how petrol could be provided at cheaper rates to motorcyclists and rickshaw drivers.
It has also been decided that price control committees would be formed at the district level and targeted subsidies would be offered to people through utility stores, SAMAA TV reported.
Sindh Governor Imran Ismail blamed profiteers for the inflation, it said.