Pakistan got bailout package from IMF, how much benefit is there from Pakistan facing inflation

Pakistan got bailout package from IMF, how much benefit is there from Pakistan facing inflation

Photo:IANS Pakistan gets bailout package from IMF

Pakistan for International Monetary Fund (IMF) The State Bank of Pakistan (SBP) has got a pending installment of $1.16 billion after the resumption of the bailout program of Rs. the country’s Economy stability is expected. The country’s financial market is currently passing through a period of uncertainty and the local currency continues to depreciate against the US dollar.

According to the projections made by the IMF for Pakistan, the country’s economy will grow to around 3.5 per cent, but the average inflation rate is estimated at around 19.9 per cent. Meanwhile, floods have affected a third of the country.

IMF increased loan amount

The IMF has also approved an increase in the loan size from $6 billion to $6.5 billion. The initial term of the IMF bailout package was to end in September 2022. However, more than half of the amount was not disbursed, mainly due to the failure of the former government of Imran Khan to fulfill the commitments of the deal with the IMF.

The current Shahbaz Sharif government was forced to take unpopular and difficult decisions to save the country from sinking into a complete economic downturn. This was the reason that on the demand of the IMF, the government took a big decision to increase the prices of petroleum, electricity and gas and pushed the country into severe inflation.

forced decisions

According to Finance Minister Miftah Ismail, the decisions were taken as a compulsion, as Pakistan’s financial situation would be similar to that of Sri Lanka if the IMF’s pre-conditions were not followed, as the country was headed for bankruptcy.

However, now that the IMF bailout package has been revived and reactivated under the Extended Fund Facility (EFF) for Pakistan with a combined tranche of $1.16 billion from the seventh and eighth review. The financial market in Pakistan is responding positively to the development. The value of Pakistani Rupee has started rising against the US Dollar.

“This will help in improving the foreign exchange reserves of the SBP and will also facilitate the receipt of other planned inflows from multilateral and bilateral sources,” the central bank said. IMF deputy director Antonator Saih said efforts are also needed to strengthen the viability of the energy sector and reduce losses sustained, including adhering to prescribed increases in fuel tariffs and energy tariffs. The IMF has also emphasized that Pakistan needs to continue adhering to the policy of high interest rates and market-determined exchange rates.

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