Pak Currency Falls 7% Against USD

ISLAMABAD: Pakistan said on Thursday that it would conclude a personnel agreement (ALS) with the IMF next week as negotiations with the global lender over the release of a $1.2 billion tranche were about to conclude. The statement, issued by Ishaq Dar, Minister of Finance, came after the value of the local currency fell to an all-time low of Rs 285.09 against the US dollar, falling by Rs 19, a drop of around 7%, as of the close of trading on Thursday. Experts blamed the stalled IMF deal for the economy’s decline.
Pakistan has negotiated with the IMF and hopes to sign the SLA, which will pave the way for more inflows from other multilateral lenders and friendly countries.
In a series of tweets, the finance minister denied rumors of Pakistan’s default. “Anti-Pakistani elements are spreading malicious rumors that Pakistan might be defaulting. This is not only completely untrue, but also belies the facts,” he said. Dar said that the foreign exchange reserves of the State Bank of Pakistan (SBP) had increased and stood at nearly $1 billion, “more than four weeks ago despite the fact that all payments external due have been carried out on time”. “Foreign commercial banks have started to extend their facilities in Pakistan. Our negotiations with the IMF are nearing completion and we expect to sign a staff-level agreement with the IMF by next week. All indicators economies are slowly moving in the right direction,” he added.
Pakistan has already taken most of the prior actions demanded by the global lender, including raising fuel and energy tariffs, withdrawing subsidies, generating additional revenue through new taxation in a supplementary budget and l adoption of a market-based exchange rate.
The lender’s preconditions aim to ensure that Pakistan reduces its fiscal deficit ahead of its annual budget around June. The day before, senior officials were reported by local media as saying the government was finding it increasingly difficult to convince the IMF to release a loan tranche.
The four items on the unfinished agenda of the IMF’s lending program included an early rise in the central bank’s interest rate to account for general inflation, a movement in the exchange rate to accommodate outflows war-ravaged and sanctions-hit Afghanistan, written assurances for the shortfall in external financing from friendly nations, and the continuation of the surcharge of Rs 3.39 per unit on electricity consumer financing costs for coming years through the finance bill, rather than for the four months already announced by the government.


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