ISLAMABAD: Minister of State for Revenue Hammad Azhar said devaluation of rupee does not have extra burden on foreign debt as the government has to pay external debt in dollar terms.
"Not a single penny is increased in foreign debt when the currency is devalued because we will earn in dollar terms and then will pay back also in dollar terms so no difference will be realized in this regard," he said while briefing the Senate Standing Committee on Finance, Revenue, and Economic Affairs.
Governor State Bank of Pakistan Tariq Bajwa on the occasion said there is no doubt that if the dollar is converted to rupee, the cost will be higher, but with increased value of dollar against rupee, our ability to earn more dollars would also be increased.
However, the committee members were not convinced with the statement of the state minister saying that how it was possible that extra burden will not be observed on external debts when we will get less dollars against a certain amount of rupees.
The meeting was presided over by its chairman Senator Farooq H Naik, and was attended by senators Ayesha Raza Farooq, Dilawar Khan, Muhammad Akram, Muhammad Talha Mehmood, Imam-ud-Din Shouqeen, Mian Muhammad Ateeq Shaikh and Sherry Rehman.
Hammad Azhar told the committee that the recent rupee devaluation occurred due to high pressure on dollar in Pakistan with rapidly decreasing foreign reserves.
He said another reason of devaluation was that rupee became undervalued by 28 percent due to artificially containing the rupee from falling. "This act of previous government negatively affect the country's economy specially exporters suffered huge losses."
He said now all the economic indicators were showing positive signs as exports started increasing and imports which surged by 24 percent during first five months of previous year, had now decreased by 1 percent in same period of current fiscal year.
SBP governor said it is a natural phenomena that when there is huge pressure on a currency it suddenly get volatile and ultimately finds an equilibrium and settles at that point.
Hammad Azhar said by the end of last fiscal year, total current account deficit of the country remained around $19 billion while the current government was planning to set a target of around $12-13 billion of current account deficit by the end of current fiscal year.
He said foreign remittances which stands around $20 billion a year should be around $30 billion because a lot of transactions were being done through Hawala Hundi channels.
He said the government was taking strict actions against those involved in the illegal businesses.
Committee Chairman Farooq Naik, however, showed its concerns over the current status of country's economy saying "Pakistan's economy is under great pressure".
Senator Ateeq Sheikh said the SBP should play role in resisting illegal supply of dollars abroad.
Briefing about hacking of accounts of some local banks from other countries, the SBP governor informed the committee that in October some hackers hacked accounts of Bank Islami and withdrew around $6 million but he said no individual account holder was suffered due to this incident.
He said now the SBP has asked all the banks to revisit their online system and strengthen it.
He said the SBP has also put in place ceiling in order to protect banks and has set a limit for international transactions through Visa cards in a certain period. '