Loans Crisis And impact of Rupee Devaluation
Loans Crisis And impact of Rupee Devaluation: Haroon Akhtar Khan while addressing a pre-budget seminar stated that four percent depreciation in rupee would help in the “balance of payment” issue (one of the reason of taking loans from IMF).
The event was hosted by Pakistan Businessmen and Intellectual forum.
Impact of rupee Devaluation
Prime Minister special assistant on revenue Haroon Akhtar added that there will be no adverse impact of rupee devaluation. However the official foreign exchange reserves as the State Bank of Pakistan reports is declined to $12 billion from $19 billion due to current account deficit.
- Rise In Imports
The higher imports forced the government to allow devaluation in local currency. The government reduced customs tariff to 4 slabs from 7 slabs. The economy was import based and cheap imported raw material failed to boost the exports.
Free Trade Agreements
Free trade agreements (FTAs) aided the country’s economy but incentives granted under these agreements needs to be revised. In this regard local manufacturers should be protected and incentives under FTAs should be granted to products that are not produced locally.
Amnesty Scheme
He said the prime minister is expected to announce the “amnesty scheme” before the announcement of federal budget on April 27. If the economy receives $6 billion under the amnesty then it would not only support the “balance of payment” but also contribute to the national economy.
Tax Collection
Single digit sales tax is only possible when the sales tax collection is ensured at retail stage. The business community of was given an affirmation that taxes including super tax, tax on bonus shares and tax on dividends will be reviewed.
He further asked the business community to ensure tax compliance and strengthen Pakistan’s economy while the government will make legislation to the remove the existing defects.
However, it has been predicted by the fiscal experts that this 4% of rupee depreciation might goes upto 13% till June 2018.