The Commerce Minister Humayun Akhtar Khan floated the proposal in the recently held NSC meeting. He was of the view that devaluation can help exporters, get more share in the global market to take exports close to targeted mark of $18.6 billion.
Sources said NSC's reaction to the Commerce minister's plan to enhance exports through devaluation, an artificial mean, was spontaneous and extremely harsh.
NSC members raised a number of questions on the proposed devaluation of the currency. They enquired the minister how his idea could grantee the desired result to benefit the economic growth in the given regional scenario when India, China and other countries were appreciating their currencies. They also asked about proposed devaluation's net impact on foreign debt, its cost of financing and open market currency rates.
NSC members opposed the proposal outrightly and asked the commerce minister to go for other options to increase exports and secure maximum share in the international market. They also asked how devaluation would affect the imports and, in particular, industrial activity since in majority of cases, industry was dependent on imported raw material for value addition and other industrial inputs.
Sources said before taking the proposal to NSC, the minister had presented it at other important meetings, including one chaired by Prime Minister Shaukat Aziz, but every time its response was in negative. Finally, he took the idea to NSC.
The government is facing huge trade deficit due to sluggish trend in exports during the current fiscal year. Imports have shrunk vis-à-vis last fiscal year, but this trend is not helping the government to plug rising trade deficit.