Pakistan takes hard steps in efforts to secure IMF bailout plan

PakistanThe moves to loosen monetary controls and raise fuel prices suggest that the beleaguered nation has finally made unpopular decisions to secure a $6.5 billion bailout from the Money Fund. International currency.
The rupee fell to as low as 270 to a dollar on Monday, according to the foreign exchange desk at AKD Securities Ltd., as authorities allowed the currency to be more determined by the market, one of the preconditions of monetary policy. IMF for loan. The government also raised gasoline prices to record levels over the weekend before the IMF team arrived on Tuesday to review the loan after months of delaying the next loan tranche.
Pakistan is sinking deeper into crisis amid dollar shortage and rising inflation, increasing urgency for Prime Minister Shehbaz Sharif to secure money from the IMF. The country really needed the money as its reserves fell to $3.7 billion, less than a month to import.
“Pakistan has taken the IMF program seriously by making these decisions even though we are in an election year,” said Suleman Rafiq Maniya, head of consulting at Vector Securities Pvt. “It all depends on the visit of the IMF team and their response. These measures are quite painful and have huge political costs.”
Sharif said his coalition government was determined to complete the bailout plan after delaying key decisions, even though it meant a heavy political cost with only a few months left. national elections take place. A difficult task lies ahead for the nation’s economic managers headed by Finance Minister Ishaq Dar, who will need to convince the IMF that the country is ready to take other tough measures, including tax increases and gas prices.
Marginal markets seeking IMF funding are facing greater pressure to loosen their grip on the currency, which should help improve their current account balances. Egypt this month suffered its third devaluation in less than a year. Bloomberg Economics calculations suggest the rupee will stabilize at 266 to the dollar, according to a Monday note by Ankur Shukla, an analyst in Mumbai.
In Pakistan, the slippage of the rupee this month was triggered by the decision of currency exchange companies to abolish the exchange rate limit between the dollar and the rupee on the open market. The supply of dollars among domestic money changers has dried up as locals turn to the black market, as the greenback is selling for about 10% more than the advertised rate.


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