Islamabad: With Pakistan going through a severe economic crisis, the government has move to take several harsh decisions in order to secure the $6.5 billion bailout program from the International Monetary Fund.
Among those moves are several that may increase the burden of the common people including an increase in fuel prices and loosening the government’s grip on the currency leading to more inflation.
Bloomberg quoted the foreign-exchange desk at AKD Securities Ltd as saying that the Pakistani rupee saw a further decline on Monday, falling to as low as 270 per dollar on Monday as the government allowed market forces to decide the currency rates, which is one of the preconditions set by the IMF for a much-needed loan.
The Pakistan government also increased fuel prices, which hit record levels over the weekend.
These harsh measures come ahead of the arrival of an IMF team on Tuesday for a loan review regarding the next loan tranche after months of delay.
As Pakistan spirals deeper into crisis amid a shortage of dollars and fast increasing inflation, the country is in desperate need of a fresh loan from the IMF.
Pakistan’s foreign reserves have dropped to $3.7 billion, which is expected to provide less than one month of import cover. Out of this, around $3 billion has been deposited by Saudi Arabia to shore up Pakistan’s foreign reserves but is not to be used.
“Pakistan has gotten serious about the IMF program by taking these decisions even though we are in an election year,” Suleman Rafiq Maniya, head of advisory at Vector Securities Pvt was quoted as saying by Bloomberg.
“All depends on the IMF team visit and their reaction. These measures are quite painful and have a huge political cost,” he added.
Pakistan PM Shehbaz Sharif has said his coalition government is determined to complete the bailout plan laid down by the IMF after a delay in implementing key decisions. This is despite the fact that the ruling coalition risks paying a political cost just months away from national elections.
More financial woes lie in wait for the people of Pakistan as the government will need to implement even more harsh measures, such as increasing taxes and raising gas prices.
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