By Hamza Ameer Islamabad Sep 1, : In the wake of Pakistan celebrated the return of the International Monetary Fund (IMF) bailout programme, the remaining tranche of $1.16 billion was released and was received by the State Bank of Pakistan (SBP) which will bring much-needed peace to the nation’s financial system which was teetering with uncertainty and has left the local currency in an upward trend against the US dollar.
Based on the details of the estimates made by the IMF for Pakistan the country’s “economy will grow by around 3.5 per cent, but the average rate of inflation is estimated to be around 19.9 percent”, in projections that were made prior to the floods which devastated at least one third of the country, and had an impact enormously on the economic stability.
The IMF has also approved an increase of the size of the loan from $6 billion to $6.5 billion, and extended the date of expiration of date until June 2023.
The initial term of the IMF bailout program was set to be over in September 2022.
But, with over half of the money not being distributed mostly due to the inability of the previous administration of Imran Khan in keeping the promises it given in the context of the agreement with the IMF.
The present Shehbaz Sharif administration was forced into taking difficult and unpopular decisions in order to keep the country from sliding into a total economic collapse.This is why the government, at the request of the IMF took the crucial decision of raising electricity, petroleum and gas prices.They also forced major price increases which pushed the country into a serious and extreme inflation.
The decision as per Finance Minister Miftah Ismail took them out of pressure as the non-compliance of the IMF conditions would result in making Pakistan into a second Sri Lanka as the country was rapidly moving towards bankruptcy.
But after the IMF bailout package has been revived and activated with the combined tranche of $1.16 billion of the seventh and eighth examinations in the Extended Fund Facility (EFF) for Pakistan the financial market in Pakistan is reacting positively to the change as Pakistani rupee has begun to increase in appreciation against USD.
“This will aid in improving SBPs reserves of foreign exchange and also aid in the realisation of additional planned inflows coming from bilateral and multilateral sources,” the central bank said.
“Efforts to increase the resilience of the energy industry and to reduce unsustainable losses as well as by adhering to the planned increase in fuel tariffs and energy levies are also crucial,” said IMF Deputy Director Antoinetter Sayeh.
The IMF has also stated that Pakistan must continue to follow the guidelines of higher interest rates as well as a a market-determined exchange rates.
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