‘Devaluation to hit poor, boost profit of influential sectors’

F.P. Report

ISLAMABAD: The Pakistan Economy Watch (PEW) on Monday said devaluation will increase the burden on poor, increased foreign debt and liabilities while boosting the profit of some of the influential sectors.

Erosion in the exchange rate to the tune of 9.4 percent in just three months will hit man on the street while and damage education, health, and security environment, it said.

The devalued rupee is to take a toll on the economy while it is to improve the profitability of many influential sectors including textile, oil and gas and IPPs, said Dr. Murtaza Mughal, President of PEW. He said that increased price of locally manufactured and imported goods will trigger smuggling and tax evasion helping the black economy to expand. Repeated devaluation is in conflict with the claims of the government that economy has been revived through tireless efforts, he added. Dr. Murtaza Mughal said that claim that eroded rupee will boost exports needs some verification as imports and more than double of the exports which can nullify the impact of the move. The government should have studied the impact of inflation in advance and tried to contain it, he demanded. He said that if the central bank hiked interest rates to contain inflation it will deal a severe blow to the shattered economy.

Devaluation can provide oxygen to the dying economy but it cannot revive it, he said, adding that key to the economic revival lies in the meaningful reforms which is not on the agenda of authorities.