Meeting IMF terms, govt may raise interest rate by 2 percent

The Nation  |  Mar 24, 2023

ISLAMABAD    -    The government might further in­crease the interest rate by two percent to fulfil the conditions of the International Monetary Fund (IMF) to revive the much needed loan programme. 

The State Bank of Pakistan’s Monetary Policy Committee will meet on April 4 to review the inter­est rate on IMF’s demand. Earlier, the IMF had demanded Pakistan to jack up the interest rate by 4 per­cent to control the inflation rate. However, the SBP had raised the interest rate by 2 percent. Inflation has skyrocketed to 31.5 percent in February this year mainly due to the currency depreciation and re­cent rise in energy prices. 

Pakistan and IMF have yet to reach the staff level agreement as both sides are continuously negotiating since January 31 this year. The gov­ernment had met all prior actions of the IMF. The government has tak­en all tough decisions including in­creasing power and gas prices mas­sively and imposing new taxation measures worth of Rs170 billion. In last two days, Pakistan has accept­ed two more conditions. The gov­ernment on the IMF demand has im­posed a surcharge of up to Rs3.23 per unit on electricity consum­ers across the country from July 1. Meanwhile, the State Bank of Paki­stan (SBP) has raised the benchmark interest rate by a significant 300 ba­sis points (bps) to 20 percent.

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