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Pakistan-IMF loan talks: SBP asked to increase interest rate



  • Forex held by SBP stands at $3.1bn after increase of $276m.
  • Pakistani authorities hoping to strike agreement next week.
  • Sources say IMF pressing hard on gross forex target. 

ISLAMABAD: The International Monetary Fund (IMF) and State Bank of Pakistan (SBP) held a round of talks about the possibility of further tightening of monetary policy and building up foreign exchange reserves for the end of June 2023, The News reported Saturday. 

Pakistan’s foreign exchange reserves, held by the SBP, stood at $3.1 billion after it went up by $276 million till February 10, 2023.

This was mainly because of improved liquidity in the market after narrowing down differences between the inter-bank and open markets after allowing adjustments of the exchange rate.

Keeping in view the IMF’s prescriptions to jack up the foreign exchange reserves up to $12 billion till end June 2023, Pakistan will have to secure at least $17-18 billion in four-and-a-half months. It included external debt repayment requirement of $5 billion, financing of current account deficit (CAD) of $3-4 billion and $8-9 billion for building up the foreign exchange reserves till June 30, 2023.

If Pakistan’s wish list is accepted by the IMF, it requires dollar inflows of $11-12 billion for meeting foreign debt servicing, financing of CAD and building up of foreign exchange reserves up to $6-$7 billion by end of June 2023.

The IMF has also asked the SBP for jacking up the policy rate by 300 to 400 basis points in order to move towards the interest rate from a negative to a positive trajectory. 

But the SBP officials made it clear that the independent Monetary Policy Committee (MPC) was established under the SBP’s Amendment Act, and the forum was empowered to take a decision keeping in view the macroeconomic fundamentals.

A senior official of the finance ministry told The News on Friday that the Pakistani side was asking the IMF review mission to strike the staff level agreement (SLA) next week before the IMF’s executive board meeting, expected in four to six weeks.

The Pakistani authorities are still hoping for striking a staff-level agreement next week, but a gap still existed on a projection of the external financing front.

One senior official conceded that Pakistan undertook tough and bold decisions by increasing electricity and gas tariffs and slapping Rs170 billion in taxes through a mini-budget. The exchange rate was brought to market-based and the POL [petrol, oil, lubricants] prices surged.

Taking all these steps was in the hands of Pakistani authorities, but now the most critical steps remained unresolved on account of securing confirmation from all multilateral and bilateral creditors for meeting the yawning external financing requirements during the programme period. The IMF programme of EFF would expire on June 30, 2023, and there is no possibility to grant any further extension in it.

“The IMF is pressing hard on gross foreign exchange reserves target up to $11-$12 billion till the end of June 2023. However, the Pakistani side is asking for fixing gross foreign exchange reserves less than double digit in the range of $6 to $8 billion, keeping in view the possibility of reduced confirmation from bilateral partners,” said official sources, who are privy to the developments on the ongoing virtual parleys with the IMF mission for moving towards the signing of staff level agreement.

Both sides have agreed that there was no possibility to touch gross foreign exchange reserves position up to $16.2 billion till the end of June 2023, as sought on the occasion of finalising the 7th and 8th reviews under the $6.5 billion EFF arrangement. 

Now the Pakistani side wants a 50% reduction in fixing the target for the end of the program period, but the IMF is insisting on seeking confirmation from all possible avenues.

Finance Minister Ishaq Dar, who is currently visiting Dubai, has been running from pillar to post to seeking confirmation from multilateral, bilateral creditors and commercial banks in order to muster up the required dollar inflows support for securing approval from the IMF for the revival of the stalled programme.


Pakistan’s gold price increases by an additional Rs. 800 per tola.




The price of yellow metal in the local market hit Rs247,300 on the first working day of the week, following a rise of Rs800 in a single day.

The cost of ten grams of 24-karat gold increased by Rs686 on Monday, making the current price Rs212,020.

In addition, the cost of 10 grams of 22-karat gold increased significantly, trading at Rs194,351.

These fluctuations are strongly correlated with shifts in the US dollar’s value, demonstrating the tight connection between gold prices and exchange rates. This emphasizes how local gold markets are impacted by variables related to the global economy.

The price of the precious metal dropped $16 on the international market on Monday, hitting $2,348 per ounce.

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A delegation from Pakistan travels to the US to bargain with the IMF for a new loan.




The Pakistani delegation consists of the Governor of the State Bank of Pakistan, the Secretary of Finance, the Additional Secretary, and other individuals.

The Finance Minister was greeted at the airport by Pakistan’s Ambassador to the United States, Masood Khan, and Embassy staff.

The Finance Minister will meet with representatives of the World Bank and IMF while he is in the US.

The IMF and Pakistan are expected to negotiate next week, according to sources.

Sources claim that Islamabad will apply for a new credit package from the IMF.

The Finance Minister’s itinerary also includes meetings with members of think tanks and the world press.

Last month, Pakistan and the IMF came to a staff-level agreement over the third and final review of the $3 billion stand-by arrangement. Should the board of the global lender approve this deal, Pakistan will get approximately $1.1 billion.

Although a specific date has not been determined, the IMF board is anticipated to evaluate the case in late April, according to a spokeswoman.

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Pakistan’s petrol prices are anticipated to rise.




The Oil and Gas Regulatory Authority (OGRA) will not disclose the anticipated increase in fuel prices until its work is finished, according to sources.

Prime Minister Shehbaz Sharif will receive the summary of the petrol price, and sources further stated that the new pricing will be revealed following his approval today.

Noteworthy to highlight is that Pakistan was previously ordered by the International Monetary Fund (IMF) to impose an 18% General Sales Tax (GST) on gasoline.

Details indicate that Pakistan was requested by the Monetary Fund to stop reducing sales tax on all goods, including gasoline.

To boost tax revenue, Pakistan’s recently elected government should impose a sales tax on petroleum items in addition to a Rs 60 charge.

High-speed diesel (HSD) was reduced by Rs3.32 per litre on March 31 but petrol prices increased by Rs9.66 per litre by the government.

In contrast to the reduction in the price of high-speed diesel (HSD) to Rs282.24 from Rs278.92, the price of gasoline jumped to Rs289.41 per litre.

The adjustments were brought about by a commensurate increase in the price of gasoline and a decline in the price of HSD on the global market, according to a statement released by the Finance Ministry.

According to the statement, the adjustment was made in accordance with government policy, which transfers pricing differences from the foreign market to the home market.

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