960416

_______Disequilibrium

in balance of

payments prompts

devaluation,

NA told

RECORDER REPORT

ISLAMABAD: State Finance Minister Shahabuddin, defending the devaluation of the Pak rupee has said that it was a corrective measure to arrest disequilibrium in the balance of payments position. Devaluation is decided when there is disequilibrium in the balance of payments. The main objective of devaluation last October was to make the Pakistan trading competitive with India which had devalued its currency. He said that the devaluation was effected to boost exports and encouraging results have started emerging.

Responding to a call attention notice, he said that after a time lag the exports were increasing. In January, exports increased by 3 percent and in March the increase was about 24 percent. We were expecting these encouraging results and with the Grace of Allah the achievement has been made.

He said the movers were perhaps referring to adjustment which was not devaluation. The State Bank off and on adjust the value of the Pak rupee against different currencies because Pakistan was not following the fixed parity system but managed float system. He said fluctuation in the currency rate was a worldwide phenomenon and Pakistan was no exception. It would be impossible to predict what would be value of the Pak rupee at the end of the current financial year.

Answering a question, he said Pakistan had been facing chronic trade imbalance. He said that Pakistan had repaid $2 billion on account of external debt.

Mian Ejaz Shafi said the Pak rupee had depreciated by about Rs. 10 since 1992-93 against the dollar. The dollar at that time cost 25.95 and now it is 35 rupees_ plus. Ten rupees increase in the value of dollar in two and a half year.

Makhdoom Shahabuddin said that there were three basic reasons for it. India devalued its currency, there was a decline in the Foreign Exchange Reserves because of massive propaganda by the Opposition and substantial depreciation of foreign exchange in the open market. This was again due to the vast propaganda of the Opposition. He said the economy of the country was the national economy and it should not be treated as government or opposition economy.

Responding to anther calling attention notice, the Agriculture Minister, Yusuf Talpur informed the House that a total of 1,22,000 applications had been received for the Awami Tractor Scheme. The government decided to import 20,000 tractors to deliver them to cultivators having deposited advance of Rs. 5000. Of these 3,000 tractors have been disposed of on full cash payment but there is no case of this was done to generate funds for the import of tractors. Next year, he said another 20,000 tractors would be imported. He was confident that there would be not much demand for cash payment tractors and the applicants would be delivered tractors as per their turn.

He said that as a result of the tractors, the cultivation had received a big boost. The wheat production this year was expected to be 1.8 million tons, the cotton production had surpassed 10 million bales, basmati rice export is expected to go up to 2 million tons. The production of oilseeds has made a big boost and as a result the country is making a saving of Rs. 10 billion.