By the following week, Finmin Ishaq Dar promised to complete a long-stalled deal with the IMF.
The Pakistani financial market is placing its hopes in assurances given by Finance Minister Ishaq Dar that a long-stalled deal with the International Monetary Fund (IMF) will be reached by next week, which led to a sharp decline in the value of the US dollar against the rupee on Friday morning, a day after the local currency fell sharply — by nearly Rs19 — in the interbank market.
According to the Exchange Companies Association of Pakistan (ECAP), the local currency increased by Rs9.91 in intraday trade and was seen trading at Rs275.18 against the dollar as of 11:47am.
Due to the central bank’s review of its monetary policy and worries about a stalled agreement with the International Monetary Fund, the rupee had fallen by nearly Rs19 against the US dollar on Thursday (IMF).
According to the State Bank of Pakistan (SBP), the rupee decreased by 18.98 or 6.66% to close at 285.09 against the dollar on the interbank market, down from Rs266.11 on Wednesday.
In an interview with The News, ECAP General Secretary Zafar Paracha listed several factors that contributed to the dollar’s decline, including the IMF’s advice to Pakistan to trade dollars at the rate they were being sold for close to the Afghan border.
He continued, “In other words, the IMF had stated that our true rate should be the grey market rate and not the interbank rate or the open market.
The negotiations were about to come to an end when Pakistan’s Finance Minister, Ishaq Dar, promised that the country would reach a staff-level agreement with the Washington-based lender next week.
The economy is moving in the right direction, according to the finance minister, who took over in September of last year after Miftah Ismail was fired. He also accused miscreants of spreading false information about Pakistan’s potential default.
“Malicious rumours that Pakistan might declare bankruptcy are being spread by anti-Pakistan forces. […] Despite making all external due payments on time, SBP’s foreign exchange reserves have been growing and are now almost US $1 billion higher than they were four weeks ago “Dar Finmin had stated.
The finance minister had added that the SLA with the Fund should be signed by the end of next week as the negotiations with the IMF are about to come to a close. He had added, “All economic indicators are gradually moving in the right direction.
Since early February, local government officials have been negotiating with the IMF about policy framework issues in an effort to sign the SLA, which will open the door for additional funding from other bilateral and multilateral lenders.
The lender will provide the cash-strapped country with a lifeline once the deal is signed by disbursing a tranche of more than $1 billion from the $6.5 billion bailout deal agreed to in 2019.
In order to close the fiscal deficit, the coalition government has already implemented a number of policies, including a market-based exchange rate, higher fuel and electricity prices, the removal of subsidies, and increased taxation.
