Pakistan government hikes policy interest rate by 200 bps for IMF bailout

decision by Pakistan Officials will raise the interest rate to 19%, well below the previous record of 19.5% set in October 1996. Sources in Pakistan’s finance ministry said a technical-level discussion had taken place between Islamabad and the IMF review mission.

According to reports, discussions on some power sector issues were in the final stages between the officials of the Government of Pakistan and the IMF. The two sides completed the ninth review of the US$6.5 billion bailout package without staff-level agreement.

The Pakistani government hoped that they would be able to persuade Pakistan International Monetary Fund Regarding the implementation of the conditions in a gradual manner. However, Islamabad’s hopes were dashed during the IMF mission’s 10-day visit to Pakistan.

In the midst of an unprecedented economic crisis in the country, Prime Minister of Pakistan Shahbaz Sharif Directed the Ministry of External Affairs to cut down on the number of foreign missions as part of austerity measures. PM Sharif announced the decision on 22 February.

An instruction issued by the PM’s office said, “The Prime Minister is pleased to direct that a well thought out proposal/plan in this regard may be submitted to this office within two weeks in due course.”

He has issued instructions to the Ministry of External Affairs to downsize several foreign missions abroad and downsize their offices, staff and other measures to reduce expenditure by up to 15%.

The official communication titled “Rationalization of Foreign Missions” stated that in view of the ongoing economic constraints and the consequential need for fiscal consolidation and control of external deficit, the Prime Minister constituted a National Austerity Committee (NAC).

(With ANI inputs)