PM Shehbaz meets Nawaz Sharif in London as economy stutters

Prime Minister Shehbaz Sharif met on Wednesday his brother and Pakistan Muslim League-Nawaz (PML-N) supremo Nawaz Sharif in London, Aaj News reported.

During the meeting, Nawaz congratulated Shehbaz on becoming Pakistan's new prime minister following the ouster of his predecessor in a parliamentary no-confidence vote.

The premier is also expected to meet former finance minister Ishaq Dar.

Accompanied by the senior leadership of the PML-N, the premier arrived in London early on Wednesday.

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The visit comes amid reports that the premier was set to have consultations with his brother and the political party's finance czar on the country's economic situation. Sources suggest some “major” decisions are expected to be taken after the consultations.

Last month, Prime Minister Shehbaz Sharif went on a three-day official visit to Saudi Arabia where he held meetings with relevant officials to discuss ways to enhance economic and trade ties and promote investment.

On his way back from the Kingdom, PM Shehbaz made a day-long stop in the United Arab Emirates where he met Abu Dhabi Crown Prince Mohammed bin Zayed Al Nahyan.

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Pakistan's new government faces the daunting task of managing a stuttering economy with huge deficits.

"Imran Khan has left a critical mess," Miftah Ismail, Sharif's finance minister, told a news conference in Islamabad last month, adding the suspended talks with the International Monetary Fund (IMF) would be resumed as a priority.

"We will restart talks with the IMF," he said.

Ismail had earlier said the government has sought an increase in the size and duration of the IMF's EFF.

“We have requested the IMF to extend the EFF programme by a year from 3 to 4 years,” said Ismail, adding that his team received a positive response in this regard. “We have also requested the fund to enhance the overall loan size by $2 billion,” he said.

Pakistan's current account deficit has widened during the ongoing fiscal year, putting pressure on the rupee which hit a record low against the US dollar on Wednesday as well.

The central bank last month also hiked key interest rates by 250 basis points to 12.25% in an emergency decision, the biggest hike in decades, citing deterioration in the outlook for inflation and an increase in risks to external stability, heightened by the Russia-Ukraine conflict, as well as local political uncertainty.

The bank also revised average inflation forecasts upwards to slightly above 11% in FY22, which ends in June.