Finance minister says staff-level agreement with IMF next week n Dollar touches highest ever mark at Rs285.09 in interbank rate
n Amid dollar’s record fligh
ISLAMABAD - Finance Minister Ishaq Dar on Thursday once again ruled out the possibility of default by saying Pakistan and International Monetary Fund (IMF) would reach on staff level agreement next week after dollar value surged to all-time high at Rs285.09.
Pakistani rupee, which was under pressure from last few days, has tumbled down by nearly Rs19 against the US dollar to Rs285.09 in interbank from Rs266.11 closed on Wednesday. In open market, it was above Rs290. Market sources believed that currency is depreciating mainly due to the conditions of the IMF as well as delay in staff level agreement with the Fund. They informed that the IMF had asked Pakistan to trade the dollar at the current Afghan trade rate. In other words, the IMF believed that actual rate should be as in the grey market rate, not the interbank rate or the open market.
Other reasons behind currency depreciation are uncertainty on political front and unstable foreign exchange reserves. A currency exchange dealer informed The Nation that delays in a deal between Pakistan and the IMF is the main reasons, which is taking the country "nearing a default situation". Once the IMF deal is finalised, dollars inflow from other countries would start, which would ease the pressure on the local currency. "Uncertain political situation remained another factor behind the rupee's depreciation," he added.
Meanwhile, finance minister has said that stall level agreement would be finalised by next week. “Our negotiations with IMF are
t, Dar says no chance of default.
about to conclude and we expect to sign staff level agreement with IMF by next week,” said Ishaq Dar on twitter. He has also clarified that country would not default as foreign exchange reserves have started increasing. “Anti-Pakistan elements are spreading malicious rumours that Pakistan may default. This is not only completely false but also belies the facts. SBP forex reserves have been increasing and are almost $ 1 billion higher than four weeks ago despite making all external due payments on time. Foreign commercial banks have started extending facilities to Pakistan”. All economic indicators are slowly moving in the right direction, he added.
Pakistan and IMF have yet to reach on staff level agreement as both sides are continuously negotiating since January 31 this year. The government had met all prior actions of the IMF. The government has taken all tough decisions including increasing power and gas prices massively and imposing new taxation measures worth of Rs170 billion. In last two days, Pakistan has accepted two more conditions. The government on the IMF demand has imposed a surcharge of up to Rs3.23 per unit on electricity consumers across the country from July 1. Meanwhile, the State Bank of Pakistan (SBP) has raised the benchmark interest rate by a significant 300 basis points (bps) to 20 percent.
Meanwhile, the total liquid foreign reserves held by the country stood at $ 9.267 billion as of 24th February, 2023. Foreign reserves held by the State Bank of Pakistan are $ 3.814 billion and foreign reserves held by commercial banks are $ 5.453 billion. “During the week ended on 24th February, 2023, SBP received $ 700 million as GoP commercial loan disbursement from China. After accounting for external debt repayments, SBP reserves increased by $ 556 million to $ 3,814.1 million,” the SBP stated.
