rupee increases as IMF rescues Pakistan from default risk
The much-anticipated bailout programme for Islamabad was resurrected by the executive board of the International Monetary Fund (IMF), giving the Pakistani rupee a small boost versus the US dollar on Tuesday.
In the interbank market, the rupee strengthened by 1.8 percent to 220.12 US cents from Monday’s close of 221.92, according to data from the State Bank of Pakistan (SBP).
Officials from the government said Monday night that the international lender has authorised the seventh and eighth evaluations of the $6 billion Pakistan initiative after months of frantic work.
Zafar Paracha, general secretary of the Exchange Companies Association of Pakistan (ECAP), stated that he anticipates the local unit to continue appreciating and drop to 200 in the upcoming days.
Paracha emphasised that the government’s efforts to tighten its belt after the contract finally materialised after much delay resulted in an upsurge in smuggling.
The substantial regulatory taxes placed on imports, according to Paracha, led to an increase in the smuggling of commodities, which caused a shortage of dollars in addition to the smuggling of dollars to Afghanistan.
Although the loan from the international lender was $1.1 billion, he pointed out that it would open the door for Pakistan to get more funding from other multilateral and bilateral organisations.
According to Paracha, foreign direct investment will rise as well, and she anticipates that the general economy will improve over the next few days.
The Extended Fund Facility (EFF) for Pakistan’s “extended arrangement” has now through its combined seventh and eighth reviews, according to a statement from the Fund.
According to the announcement, “The Board’s resolution permits an immediate disbursement of SDR 894 million (about $1.1 billion), bringing the total purchases for budget support under the arrangement to approximately US$3.9 billion.”The loan was extended until June 2023 with approval from the international lender to raise its size.
