Pakistan finally reaches staff-level agreement with IMF

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PKR closes at 2 10.1 against dollar

Pakistan and the executive board of the International Monetary Fund on Wednesday reached a staff-level agreement that revived the $6 billion Extended Fund Facility programme for the country, Bloomberg reported.

The move comes after the coalition government adhered to all “tough” conditions set by the global lender, including an increase in the price of petroleum products and energy tariffs, among others.

The official announcement in this regard is expected soon. The staff-level agreement will pave way for a $1.2 billion disbursement, which is expected in August.

Bloomberg reported that the disbursal would offer relief to Islamabad as the country’s foreign-exchange reserves are depleting so much so that they can only cover less than two months of imports.

In June, Pakistan and the Fund staff achieved substantial progress to strike a consensus on budget 2022-23 after which the IMF shared a draft Memorandum of Economic and Financial Policies.

Meanwhile, the rupee lost over Rs2 against the dollar during interbank trade on Wednesday with analysts and currency dealers attributing it to fears over the delay in the finalisation of an agreement with the International Monetary Fund.

According to the State Bank of Pakistan, the local currency depreciated by Rs2.19, or 1.04 per cent, against the greenback and closed at Rs210.1.

It had closed at Rs207.91 on Thursday, according to the central bank.

The dollar has consistently risen in the currency market, but the inflow of $2.3 billion from China on June 23 changed the scenario as the rupee recovered Rs4.70 in a single session to Rs207.23 from Rs211.93.

However, the US dollar snapped the rupee’s rising streak and gained Rs2.38 in the interbank market on July 5, the first appreciation in the new fiscal year. Since then, the greenback has continued to rise. The director of Mettis Global, a web-based financial data and analytics portal, Saad Bin Naseer, noted that the market had reopened after five days.

“The inflow of remittances was not as high as expected because of which the rupee is under pressure right now. This pressure will remain until the agreement with the IMF is finalised,” he said.

 

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