Rupee devaluation benefits overseas Pakistanis: Governor SBP

SBP governor says discussion with the IMF is moving in the right direction and there will be no deal that hurts Pakistan’s economy.

MANCHESTER: 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, 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 remittances 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 example, grow to $30 billion or more, and if [the rupee] depreciated 10 percent 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.”

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. 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 grey 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.