The caretaker government’s “do nothing” approach will accelerate “informalization of the economy”, said the Pakistan Business Council (PBC) on Monday.

In a tweet, one of the country’s largest corporate advocacy platforms was of the view that of the long list of fundamental reforms required by Pakistan’s economy, some such as privatization/restructuring of SOEs and DISCOS, may be beyond the Caretaker Government’s remit.

“However, blatant smuggling, under-invoicing, theft of electricity, misuse of the Afghan Transit Treaty, tax evasion by retail, wholesale and the undocumented real estate sectors are all against the law,” the council remarked.

PBC also said, “It is well within the powers of any government (certainly the Caretaker, which has no vote bank to protect) to enforce the writ of the state. A “do nothing” approach does nothing to create a positive sentiment or hope. It only accelerates informalization of the economy. Time to show some teeth!”

This comes just a few days after the Council labeled the current plunge of the Pakistan Rupee “a perfect storm” for the economy.

The PBC questioned the science behind the central bank’s market reviews when it comes to the management of the exchange rate. “What then is the role of our monetary policy premised on high interest rates in managing the value of the Rupee? With over Rs. 9 trn cash in circulation, there is enough available to speculate in currency and gold. This Rs. 9 trn is unbanked money, to its holders, neither bank deposit accounts, nor money market investment, however high the returns may be, are irrelevant whilst the rising value of the $ is an attractive proposition,” it remarked.

The Council explained that overseas Pakistanis sending money through hawala fetches Rs. 15+ more on the dollar versus remitting through banking channels. So long as smuggling is rife and attractive, the differential in interbank and hawala rates will subsist and remittances will divert to the latter.

Source: ProPakistani