ISLAMABAD (Eshfak Mughal) :- The Finance Ministry has shared compliance report of agreed prior actions with the International Monetary Fund (IMF) to make progress to reach at Staff Level Agreement (SLA), it is learned.
Sources told Voice of Public on Thursday, the officials of the Finance Ministry held virtual meeting with the officials of the IMF and shares progress on implementation on agreed prior actions.
They informed the the Washington based International lender they country has increased Policy rate by 3 basis points to 20 percent to fulfill the prior condition of the IMF to revive the stalled loan program, sources further told. The authorities has also assured the international lender they will further tightening of monetary policy during next meeting of the Monetary Policy Committee which will be held on second week of next month.
Once the Staff Level Agreement is signed, the IMF will disburse a tranche of more than $1 billion from the $6.5 billion bailout agreed to in 2019.
On the exchange rate, the authorities also given assurance to the Fund that they will maintain policy of market-based exchange rate and government will not intervene to control the currency rate.
The PKR plunged by nearly Rs.19 against the USD on Thursday ahead of the State Bank’s Monetary Policy review and amid concerns over a stalled IMF deal.
The PKR slumped by Rs.18.98 or 6.66% to close at 285.09 against the dollar in the inter-bank market as per the State Bank of Pakistan (SBP), down from yesterday’s close of Rs.266.11.
Sources also told the international lender that the country has increased the rate of surcharge on consumers of electricity for next fiscal year. This decision will generate Rs.335 billion from the electricity sector during the next fiscal year through the surcharge.
The authorities have also assured to the Fund that the FBR will achieve tax collection target of 7.640 trillion during the current fiscal year, sources told the scribe. The govt has approved new tax measures worth Rs.170 billion last month in compliance of the IMF.
The authorities has also informed the lender that the government has discontinued subsidy on electricity bills for farmers package and export sector, sources further told.
The government’s measures will increase its income and decrease expenditures to bridge the fiscal deficit.
The strict measures are likely to further cool the economy and stoke inflation, which stood at 31.5 percent in February 23 as compared to the same month of the last fiscal year.
Pakistan’s economy has been in turmoil, and desperately needs external financing, with its foreign exchange reserves dipping to around $3 billion, barely enough for three weeks’ worth of imports.
Pakistan Tehreek-e-Insaf (PTI) Chairman Imran Khan slammed the government for slaughtering the rupee.
“Rupee slaughtered — lost over 62% or 110/$ in 11 months of PDM. This has increased public debt alone Rs 14.3 trillion and historic 75-year high inflation 31.5%,” noted the former prime minister.
The PTI chief alleged that the country was “paying heavy price of regime change conspiracy where a bunch of criminals” were “foisted upon nation” by former army chief.
The foreign exchange reserves held by the central bank registered their third consecutive weekly increase, according to data released by the State Bank of Pakistan (SBP) on Thursday.
On February 24, the foreign currency reserves held by the SBP were recorded at $3.814 billion, up $556 million (or 17 percent) compared to 3.258 billion on February 17. Last week, the central bank reserves went up by $66 million or almost 2 percent compared to 3.193 billion on February 10.
Overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $9.267 billion, up $541.4 million over the previous week. The net reserves held by banks stood at $5.453 billion, registering a drop of $14.2 million during the week.
The reserves increased on the back of a commercial loan from the China Development Bank.
The central bank reserves, which were nearly $18 billion at the start of 2022 but have been significantly depleted in recent months, highlight Pakistan’s urgent need to complete the next review of the International Monetary Fund program.