IMF deal to address Pakistan’s inflation, external debt concerns: governor SBP

The staff-level agreement between the International Monetary Fund (IMF) and Pakistani authorities will address the country’s inflationary and external debt issues, said Governor State Bank of Pakistan (SBP) Jameel Ahmad on Tuesday.

The remarks come after the IMF announced on Friday that its staff and Pakistani authorities have reached an agreement on policies to be supported by a $3-billion, nine-month Stand-By Arrangement (SBA).

The staff-level agreement is subject to approval by the IMF Executive Board, with its consideration expected by mid-July.

“As a result of this programme, we will see stability in the markets and it will have a positive impact on our foreign exchange reserves,” said Ahmad while talking to state-owned broadcaster PTV News.

“The IMF deal would help resolve these two issues.”

Addressing default rumours, the SBP chief maintained the reports were unfortunate.

“We were managing the situation. There were no circumstances under which we would have defaulted.

“Pakistan made timely payments on all its external debt obligations.

“Despite these payments, our foreign exchange reserves stayed at $4 billion.”

On rupee-dollar parity, the official said the SBP has a stated policy on the exchange rate, under which market forces determine the rate of the currency.

“We expect flows to improve, which would have a positive impact. Meanwhile, the SBP would continue to monitor the situation,” he added.

On appreciation of the Pakistani rupee against the US dollar in the inter-bank market, Ahmad said that the sentiment has improved after flows from remittances and export proceeds have risen.

“We are hoping this would continue.”

SBP chief said that the central bank’s held foreign exchange reserves have increased by over $500 million.

“We expect foreign currency inflows would increase in the coming weeks. This would enhance our capacity of debt payment, which would have a positive impact on the market as well.”