Staff Report
ISLAMABAD: Pakistan has assured the IMF (International Monetary Fund) to raise its policy rate by 2% in order to fulfill the conditions set by the lender to revive the loan program, according to a report by a local media outlet on Saturday quoting sources.
According to details the virtual negotiations with officials of the monetary body continued till late at night, adding that officials from the IMF were reviewing” every aspect Thoroughly.
Pakistan has agreed to enhance its policy rate up to 2 percent, from7 % to 19%, said by the sources.
It further said that details regarding reforms in the power sector are being finalized and after the settlement, a staff-level agreement will also be signed.
The power sector has remained a major hurdle so far as it has become one of the significant stumbling blocks between the two sides.
Sources added that Pakistan has also briefed the officials in detail on external financing till June, adding the monetary body is also holding talks with other countries for assurance.
Pakistan accepts IMF demand on Policy Rate
Authorities from Pakistan have been negotiating with the IMF since first week of this month over issues of policy framework and are hoping to sign a staff-level agreement (SLA) that will clear the way for more inflows from other bilateral and multilateral partners.
Once the deal is finalized, the lender will release a tranche of more than $1 billion from the $6.5 billion bailout agreed to in 2019.
Pakistan has already taken some strict measures, including adopting a market-based exchange rate, a fuel and power tariffs hike, the withdrawal of subsidies, and further taxation to generate revenue to bridge the fiscal deficit.
These measures are likely to further cool the economy and incite inflation, which stood at 27.50% last month.
Pakistan’s economy has been in turmoil and desperately requires external financing, with its foreign exchange reserves depleting to around $3 billion, barely enough for three weeks’ worth of imports.
