Karachi (PR): Mr. Atif Ikram Sheikh, President FPCCI, has maintained that the government should have kept the petroleum prices unchanged – given the slide in international oil prices by $1 per barrel on the back of relative calm in West Asian region after Iran – Israel conflict did not go out of hand as expected; and, the demand destruction due to lowered economic & trade activities.
Mr. Atif Ikram Sheikh maintained that the trend in rupee-dollar parity is visible for all to see that rupee value will remain largely stable in the coming weeks due to the completion of IMF-SBA and a forthcoming, long-term IMF-EFF program. Additionally, Saudi Arabia has also decided to enhance its foreign exchange deposit by $2 billion to take it to $5 billion in the SBP’s foreign exchange reserves (FER) to help Pakistan deal with its economic woes, he added.
It is pertinent to note that petroleum prices have been jacked up unnecessarily with effect from April16th– where petrol went up by PKR. 4.53,taking the rate to PKR. 293.94 per liter and the price of high speed diesel (HSD) has been elevated by PKR. 8.14 per liter to Rs290.38. Furthermore, just a couple of weeks ago, the government had increased the petrol price by PKR. 9.66 per liter with effect from April 1st. Collectively, the government has raised the petrol price by 5 percent in a quick succession of two weeks only, he added.
Mr. Atif Ikram Sheikh stressed that the aforementioned factors must have provided the government with reasonable cushion and a reason to absorb the minor fluctuations in the international oil prices to avoid the domino effect of the hike in petroleum prices in the prices of all essentials and cost-push inflationary pressures in the country.
FPCCI Chief noted that prominent economists agree that the rupee is still undervalued as compared to real effective exchange rate (REER) and will continue to strengthen marginally if the ongoing favorable developments and indicators persist in the external financing of the country.
Mr. Atif Ikram Sheikh, as President of the apex body, has apprised that FPCCI is under tremendous pressure from the entire business, industry and trade community of Pakistan that the government should be made to realize the multiplier effects of increased petroleum prices that they have to bear vis-à-vis cost of doing business.
Mr. Atif Ikram Sheikh explained that the apex body forewarned the government a number of times that they need to address the teething problems in the import of the Russian crude, i.e. handling of oil cargoes; adjustments required vis-à-vis refining processes and commercial transactional procedures to settle oil payments. Nevertheless, the authorities failed to listen to us; else, we would have more Russian crude by now, which is cheaper by a whopping 30 – 35 percent as compared to international markets today, he added.
Mr. Saquib Fayyaz Magoon, SVP FPCCI, reiterated FPCCI’s stance the core inflation has come down to 12.8 percent and headline inflation recorded at 20.7 percent in the month of March 2024; which is the lowest in 22 months; and, the trajectory is categorically showing a downward trend for the months to come.
Therefore, it becomes imperative to reduce the key policy rate at the earliest; and, a regionally-competitive export finance scheme (EFS) and long-term financing facility (LTFF) should be offered to exporters, he added.