In fresh talks with IMF, Pakistan hopes to avoid rupee devaluation

Finance Minister Aurangzeb eyes crucial new IMF deal in June

WASHINGTON/ ISLAMABAD  -   Finance Minister Muhammad Aurangzeb has ruled out any further significant rupee devaluation ahead of talks with International Monetary Fund.

Speaking at roundtable meeting with Bloomberg team in Washington, he said there is no reason for rupee devaluation as Pakistan has solid foreign- exchange reserves, stable currency, rising remittances and steady exports. The minister said the government is focusing on bolstering industries, agriculture and information technology sector to push the national growth above four percent in the coming years.

 While massive devaluations have accompanied some of Pakistan’s previous IMF loans and are often a condition of the crisis lender’s programs around the world, nothing comparable should be necessary this time around, he added in an interview on the sidelines of the IMF and World Bank spring meetings in Washington. “I don’t see the need for any step change,” Aurangzeb said Wednesday, citing solid foreign-exchange reserves, a stable currency, rising remittances and steady exports. “The only thing which can be a wild card, although in our projections we should be OK, is the oil price.” Pakistan expects an IMF mission to visit in May and would like to reach a staff-level agreement on its next loan by the end of June or early July, Aurangzeb said, without specifying how much the nation was seeking. Bloomberg News earlier reported that the nation plans to ask for at least $6 billion. Securing a new deal would help boost Pakistan’s dollar bonds and stock market, which provided investors one of the best gains globally since the nation began the current IMF loan last July. The IMF executive board is likely to approve the final disbursement of $1.1 billion later this month under the existing $3 billion SBA loan facility. Pakistan recently repaid a $1 billion overseas bond after it closely averted a default on its debt last year and does not anticipate any significant currency devaluation as part of its negotiations with the IMF to unlock billions of dollars in lending and bolster its economic reform agenda. “There will be no reason for the rupee to depreciate more than the range of about 6% to 8% seen in a typical year,” the finance minister said. While massive devaluations had accompanied some of Pakistan’s previous IMF loans and are often a condition of the crisis lender’s programs globally, nothing comparable should be necessary this time around, he said. The finance minister said Pakistan’s newly elected government was looking to bolster industries including agriculture and information technology with support that it hoped would help push the economy’s growth above 4 percent in the coming years. The nascent government is making strides to steer the country out of a high-inflation and low-growth pattern, broadening the tax base, improving debt sustainability, and restoring viability to the energy sector. Also, in a high-profile meeting held at the sidelines of the IMF/World Bank 2024 Spring Meetings in Washington DC, Federal Minister for Finance and Revenue, Muhammad Aurangzeb emphasized the need for a robust financial safety net and capacity building to address geo-economic impacts and climate vulnerabilities. Speaking at the Middle East, North Africa, Afghanistan and Pakistan (MENAP) Ministers and Governors meeting with the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, the minister called for a more proactive and responsive Global Financial Safety Net to tackle elevated risks, according to a press statement issued by Finance Ministry here Thursday.

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