{"id":14303,"date":"2023-02-25T11:38:57","date_gmt":"2023-02-25T11:38:57","guid":{"rendered":"https:\/\/dailyausaf.com\/en\/?p=14303"},"modified":"2023-02-25T11:38:57","modified_gmt":"2023-02-25T11:38:57","slug":"policy-rate-hike-pakistan-accepts-one-more-imf-demand","status":"publish","type":"post","link":"https:\/\/dailyausaf.com\/en\/business\/policy-rate-hike-pakistan-accepts-one-more-imf-demand\/","title":{"rendered":"Policy rate hike: Pakistan accepts one more IMF demand"},"content":{"rendered":"

Policy rate hike: Pakistan accepts one more IMF demand. Pakistan has assured the International Monetary Fund<\/a> (IMF) to raise its policy rate by 2% in order to flfill the conditions set by the lender to revive the loan programme.<\/p>\n

The sources aware of the development told a private news channel that virtual negotiations with the IMF continued till late at night, adding that officials from the international lender were “painstakingly reviewing” every aspect.<\/p>\n

“Pakistan has agreed to raise its policy rate by 2%,” the sources said, which is currently at 17%.<\/p>\n

The sources also added that details regarding reforms in the power sector are being finalised and after the settlement, a staff-level agreement will be signed.<\/p>\n

The power sector has remained a hurdle so far as it has become one of the major stumbling blocs between Pakistan and the IMF.<\/p>\n

Read more:\u00a0Govt presents \u2018mini-budget\u2019 to unlock $1.1bn IMF loan<\/a><\/em><\/strong><\/p>\n

Pakistan has also briefed the lender in detail on external financing till June, the sources said, adding the IMF is also holding talks with those countries for assurance.<\/p>\n

There’s no discussion being held regarding the political situation of Pakistan, the sources further added.<\/p>\n

Pakistan-IMF talks<\/strong><\/p>\n

Pakistani authorities have been negotiating with the IMF since early February over policy framework issues and are hoping to sign a staff-level agreement (SLA) that will pave the way for more inflows from other bilateral and multilateral lenders.<\/p>\n

Once the deal is signed, the lender will disburse a tranche of more than $1 billion from the $6.5 billion bailout agreed to in 2019.<\/p>\n

Pakistan has already taken a string of measures, including adopting a market-based exchange rate; a hike in fuel and power tariffs; the withdrawal of subsidies, and more taxation to generate revenue to bridge the fiscal deficit.<\/p>\n

The strict measures are likely to further cool the economy and stoke inflation, which stood at 27.50% in January.<\/p>\n

The South Asian country’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.<\/p>\n

Tough conditions<\/strong><\/p>\n

Prime Minister Shehbaz Sharif said a day earlier that Pakistan has to unwillingly accept the strict conditions to provide a lifeline for an economy in turmoil.<\/p>\n

He was speaking to top security officials at his office in Islamabad in a meeting that was telecast live.<\/p>\n

“We have to accept unwillingly the strict conditions for the IMF deal,” he said, adding that an accord was still a “week, 10 days” away.<\/p>\n

Longtime ally China this week announced refinancing of $700 million, according to Pakistan\u2019s finance ministry.<\/p>\n

Finance Minister Ishaq Dar on Friday said Pakistan\u2019s central bank has received the money.<\/p>\n

“Thank God,” he said in a tweet.<\/p>\n

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AlhamdoLilah!<\/p>\n

Funds $ 700 million received today by State Bank of Pakistan from China Development Bank. https:\/\/t.co\/7eLwWkSFgO<\/a><\/p>\n

— Ishaq Dar (@MIshaqDar50) February 24, 2023<\/a><\/p><\/blockquote>\n