Pakistan currency drops 7% against USD – Times of India

ISLAMABAD: Pakistan said on Thursday it would reach a staff-level agreement (SALAD) with the IMF next week as negotiations with the global lender over the release of a $1.2 billion tranche were about to wrap up. The statement, issued by Finance Minister Ishaq Dar, 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, down about 7%, as it closed trading on Thursday. Experts blamed the stalled IMF deal for the downturn in the economy.
Pakistan is negotiating 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 debunked rumors of Pakistan defaulting. “Anti-Pakistani elements are spreading malicious rumors that Pakistan may default. This is not only completely false, but also contradicts the facts,” he said. Dar said that State Bank of Pakistan (SBP) forex reserves had increased to almost $1 billion, “higher than four weeks ago despite all external payments due having been made on time”. “Foreign commercial banks have started extending facilities to Pakistan. Our negotiations with the IMF are nearing completion and we expect to sign a staff-level agreement with the IMF next week. All economic indicators are slowly moving in the right direction,” he added please.
Pakistan has already taken most of the previous measures demanded by the global lender, including raising fuel and energy tariffs, withdrawing subsidies, generating more revenue through new taxes in a supplementary budget and adopting a market-based exchange rate.
The lender’s terms aim to ensure that Pakistan cuts its budget deficit ahead of its annual budget around June. According to local media, senior officials said a day earlier that the government was finding it increasingly difficult to convince the IMF to pay off a loan.
The four items on the agenda of the unfinished IMF lending program include an early rise in central bank interest rates to reflect headline inflation, exchange rate movements to accommodate outflows to war-torn and sanctions-ridden Afghanistan, written external financing gap guarantees from friendly countries, and the continuation of the Rs 3.39 per unit financing cost surcharge for electricity consumers for the coming years through the financial account, instead of for the four months already announced by the government.

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