The coronavirus has not only shrunk the remittances but also reduced the people’s purchasing power, said the State Bank of Pakistan (SBP) in the latest report on the pandemic’s effects on the economy.

According to 24NewsHD TV channel, it also warned about a dip in foreign exchange reserves and further devaluation of rupee in case the current situation persisted and cited the increase in the country’s debt. 

The State Bank said the reduction in remittances was a result of the crippled world economy, adding that the virus had also adversely affected foreign investment. However, it added, the reduction in oil prices benefited the countries depending on importing petroleum products.

About the effects on the domestic economy, the SBP said the trade activities had been badly disrupted, resulting in reducing the people’s income and purchasing power.

The economic slowdown also meant that a reduction was also witnessed in revenue collection, it noted. The country’s economy was based upon consumption, said the State Bank.

The lockdown negatively affected the cash flow of companies and traders, said the State Bank and warned that several companies could default in the current situation which would reduce the banks’ income and result in joblessness.

According to the report, the pandemic and the resultant state of affairs will adversely affect the growth rate and budget. The reduced income of companies will increase unemployment, while the limited purchasing power too is going to affect the GDP.

It claimed that the economy had started improving before the economy, as the government took various steps in that regard.

There was a decrease in import and increase exports while the rating agencies kept the country’s rating stable, said the State Bank.

There was an increase in revenue collection at the start of 2020, the confidence of the business community and foreign investment, according to the State Bank.

The spending on health is well-blow the comparative figures for the other countries in the region and there is an urgent need to create awareness among the people, stressed the SBP which termed food security and social protection a challenge in the prevailing scenario.

It also mentioned that there was very little information about the important sectors of the country.

The warning about devaluation came as the US dollar continues to grow stronger against the rupee, as it gained 80 paisas against the local currency in inter-bank rate on Monday.

Earlier on Friday [the last working day of the week], the dollar, pound and euro had a field day as they made huge gains against the rupee.

According to the State Bank, the dollar closed at Rs163.10 in inter-bank rate after making a net gain of Rs1.30 during the daily trading.

The day began with a volatile start in the currency market in the morning, as the dollar price at one point soared to Rs163.30.

It meant the dollar had gained Rs1.50 against the rupee during early trading after starting the session from the previous level of Rs161.80.

On the other hand, the pound sterling too grew stronger and ended the day at Rs200.74 after a gain of Rs2.28 in inter-bank rate.

But it was euro which won the race as the currency saw its value going up by Rs2.82 and closed the session at Rs180.97.