- Finance minister says rupee's depreciation will come under control in coming days
Federal Minister for Finance and Revenue Miftah Ismail said that the International Monetary Fund (IMF) has indicated it could ease its programme conditions for Pakistan in the wake of the massive devastation caused by floods with revised estimates putting losses to the tune of $30 billion.
“Prime Minister Shehbaz Sharif met IMF Managing Director Kristalina Georgieva yesterday, where he discussed the current economic situation of the country in the wake of flash floods devastation and called for relaxing conditions,” said Miftah, while talking to the media.
“The IMF understood our predicament and has almost said yes to it, but formal discussions will commence in Washington after two weeks,” said the finance minister, following which conditions will be relaxed and the size of its tranche increased.
On Wednesday, PM Shehbaz met World Bank Group President David Malpass and IMF MD Kristalina Georgieva in separate meetings.
During the meetings, held on the sidelines of the 77th session of the United Nations General Assembly, the parties discussed economic issues faced by Pakistan, with particular reference to the floods.
Record monsoon rains in south and southwest Pakistan and glacial melt in northern areas triggered flooding that has impacted nearly 33 million people in the South Asian nation of 220 million, sweeping away homes, crops, bridges, roads and livestock in damages.
Scientists have said that the torrential monsoon, which submerged huge swathes of Pakistan, was a one-in-a-hundred-year event likely made more intense by climate change.
Meanwhile, talking about the ongoing Pakistan rupee depreciation against the US dollar, Miftah said the government, being currently in an IMF programme, cannot intervene in the market.
“US dollar is strengthening against other currencies, whereas the perception of credit default risk of Pakistan has risen, affecting the dollar value, but it will come under control in coming days,” he said.
Earlier, Miftah had said that Pakistan will “absolutely not” default on debt obligations despite the floods, signalling there will be no major deviation from reforms designed to stabilise a struggling economy.
“The path to stability was narrow, given the challenging environment, and it has become narrower still,” Ismail said.
“But if we continue to take prudent decisions - and we will - then we’re not going to default. Absolutely not.”
Despite the flood disaster, Ismail had said that most stabilisation policies and targets were still on track, including increasing dwindling foreign exchange reserves.