Rupee’s fall reason behind inflation: Tarin

Rupee’s fall reason behind inflation: Tarin


Staff Report

ISLAMABAD: Finance Adviser Shaukat Tarin has stressed on the need to stabilise the exchange rate in order to overcome inflation in Pakistan and that the government was trying to give relief to the people.
In an interview to a private news channel, Tarin attributed inflation to the rupee’s depreciation against dollar, saying the government needed to keep the exchange rate near to the “real effective exchange rate” that is Rs 166-167.
Tarin said the rupee was currently undervalued by Rs 9, a main reason he termed behind recent surge in inflation.
He said that the government should have bought the US dollars when it was Rs 152 and sold it at Rs 175. Earlier this month, Tarin had blamed speculators for the rise in the value of the US dollar against the Pakistan rupee.
During the interview, Tarin said the government will table a “mini budget next week” to meet the demands of the International Monetary Fund after both sides reached an agreement last week.
Tarin said as per the IMF demand, the government will impose new taxes to the tune of over Rs 300 billion. He added that the IMF wanted new taxes up to Rs700 billion but he managed to reduce the amount after months-long negotiation.
Tarin said the government also didn’t agree to hike power tariff by more than Rs 4 as demanded by the IMF as it didn’t want to overburden the people.
The government will increase the power tariff less than the demand of the IMF, he added.
According to Tarin, the IMF also wanted 17 per cent sales tax across the board.
Tarin said the State Bank of Pakistan (SBP) chief will be appointed by the federal cabinet, adding that the term of the governor will be five years but it would be renewable.