While the Pakistani Rupee (PKR) is now among the worst performing currencies globally, Pakistan is making progress on the IMF loan package to assist the country weather the storm.
Thanks to progress on a delayed IMF loan and stringent expenditure cutbacks, the government has reportedly discovered a path out of the present economic crisis without going into default, according to Finance Minister Miftah Ismail.
The Finance Minister stated, in reference to Pakistan’s staff level agreement with the lender for its $6 billion bailout, that “Pakistan and other emerging countries have been facing the worst crisis with the commodity supercycle and Russia-Ukraine war, oil prices skyrocketing, and gas going as high as ever before.” However, Pakistan has survived the storm thanks to an IMF program, a severely constrained budget, and low import demand.
He said, “Everything is resolved today, and Pakistan will unquestionably pay every single payment and honor every single bond.”
The State Bank of Pakistan estimates that the country would need $33.5 billion in total between now and June 2023, with $35.9 billion in available capital. Cutting imports by 35% in July to $5 billion, which also reduced the nation’s current-account deficit, was one of the earliest contributing reasons.
In order to reduce imports and energy usage, which were putting pressure on the rupee’s depreciation, the nation also raised the price of domestic energy by 50%.
The currency saw its greatest monthly decline since 1998 in July, when it lost more than 14% of its value versus the dollar, finishing last week at 239.4 per dollar. The currency remained steady today (Monday), and it ended the day up versus the top foreign currency.
The PKR has temporarily overshot to the negative, however, according to a joint statement recently released by the SBP and Ministry of Finance, it would most likely rebound in line with fundamentals over the coming months.