KARACHI: Cash-strapped Pakistan has received pledges of additional $4 billion from international lenders including the Asian Development Bank (ADB), the United Nations (UN) and the World Bank.
Officials of the State Bank of Pakistan (SBP) told analysts during a subsequent meeting of the Monetary Policy Committee that Pakistan has received commitments of additional external flows:
- ADB, valued at $1.5 billion by the end of October
- United Nations, slightly less than $1 billion
- Asian Infrastructure Investment Bank (AIIB), valued at $0.5 billion;
- World Bank, $1 billion between October and December.
However, it was stated that the World Bank’s commitment is subject to the fulfillment of a few conditions.
Regarding the recent rally in the Pakistani rupee, the central bank’s leadership clarified that it was initially due to the market’s emotional reaction to the change of finance minister.
However, analysts noted that several other factors supported the local unit’s strength against the US dollar, including:
- Improvement in inflows in the form of remittances, exports
- Crackdown on speculators
- Narrowing gap between interbank and CURB
It was learned that the State Bank is providing liquidity to the market “which will help banks release payments to clear the import backlog.”
Highlighting plans to buy back Eurobonds maturing in December, officials said no decision has been taken in this regard, adding that any decision in this regard would be in coordination with the government.
State Bank Governor Jameel Ahmed reiterated the government’s stand on external debt restructuring and said that no deferment will be sought from any international creditor in this regard and payment will be made as and when due.
He said that since the beginning of the financial year, 4.6 billion dollars have been returned to external creditors.
Ahmed further assured market participants that the much-discussed program of the International Monetary Fund (IMF) is on track and the central bank has fully complied with the targets set by (end of September) and has positive results. Hope to. A review of post-flood conditions in the next assessment.
Commenting on the potential impact of Fed tightening on Pakistan, the leadership cited three factors:
- A stronger US dollar results in a weaker rupee, adding to inflationary pressures that signal the need for a monetary policy response.
- Raising external debt becomes expensive.
- Global economic slowdown due to global tightening affects domestic exports.
During the MPC meeting earlier today, the central bank decided to keep the policy rate at 15% as the committee felt that keeping the policy rate at the current level (15%) and allowing for various measures that would I was raised. Financial tightening in the last few months, and a strong financial stability plan to work your way through the system.
