IMF asks Pakistan to increase interest rates

ISLAMABAD: The International Monetary Fund (IMF) has asked Pakistan to increase the interest rates to control the rising inflation, ARY News reported on Thursday.

As per details, the International Monetary Fund report for the Middle East and Central Asia on economic outlook stated that Pakistan needs to increase the interest rate to control the rising inflation as the current interest rates are enough to stabilize the inflation.

The World Economic Outlook has projected the average inflation rate as 27.1 percent while the State Bank of Pakistan has fixed the interest rates at a record 21 percent. The report further stated that the inflation rate in April has reached 36.4 percent 

The low-interest rates have resulted in increasing the debt of Pakistan. The IMF report warned that the trade deficit in the current fiscal year can reach 37.4 percent. 

Earlier, the coalition government withdrew a subsidy on gas provided to the export sector, fulfilling another condition of the International Monetary Fund (IMF). 

Read more: IMF CONDITIONS: GOVT ENDS GAS SUBSIDY FOR EXPORTERS

The notification stated that the approved rate of the Oil and Gas Regulatory Authority (OGRA) will be implemented in all export sectors from May 1 after which the export sectors will have to pay $4 extra per MMBTU on Regasified Liquefied Natural Gas (RLNG).

On April 21, it was reported that the International Monetary Fund (IMF) asked Pakistan to ‘do more’ to unlock stalled loan programme despite the assurances from Saudi Arabia and the United Arab Emirates about external funds.

The meeting of Finance Secretary Hamid Yakoob in the US remained ‘unfruitful’ with the International Monetary Fund as the international lender has given the plan to arrange $1 billion from commercial banks to unlock the loan program.

The staff-level agreement was supposed to be signed on February 9 but had been delayed after then over IMF’s demands.