Govt to set budget at Rs295/$ amid fears of currency devaluation

Govt to set budget at Rs295/$ amid fears of currency devaluation


Decision sparks concerns regarding budget's viability

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ISLAMABAD (Dunya News) – The federal government has opted to set the budget with an exchange rate of Rs295 per US dollar, in anticipation of significant currency devaluation in the financial year 2024-25.

Sources in the Ministry of Finance say that the budget for the next fiscal year will be formulated at an exchange rate of Rs295 per US dollar.

Nevertheless, this decision has sparked concerns regarding the budget's viability, given the prevailing highly uncertain economic conditions.

Sources indicate an anticipated increase of Rs10 in the dollar rate compared to the current financial year.

An upward fluctuation in dollar rate is feared to potentially trigger inflation in the next financial year, albeit it may boost demand for Pakistani products in the global market, leading to increased foreign exchange earnings.

Sources suggest that the rupee depreciation will impact foreign currency reserves, petroleum product pricing, and development expenditure, potentially reducing the trade deficit by curbing demand for imports.

Experts foresee the adoption of a market-based exchange rate as per the IMF agreement, predicting that the increased dollar rate will elevate external debt, import bills and prices of imported food items.