Pakistan’s current stock of external loans has escalated by Rs. 3,500billion as the Rupee (PKR) has steeply declined against the US Dollar(USD), as per official estimates.
The rupee depreciated against the dollar by Rs. 35 (17 percent) in July2022, which was the highest decrease in any month in the country’s history,going down from Rs. 204 to Rs. 239 during the period in review.
The declining trend in the value of the local currency is expected toincrease inflation in the coming days. Market sentiments suggest that theprices of imported products, including petroleum, wheat, cotton, and fooditems, will increase at the same rate. Furthermore, inflation is currentlyat the highest level of 37 percent year-on-year (YoY), according to datareleased by the Pakistan Bureau of Statistics (PBS).
According to an initial estimate by the government, July’s rupee downfalladded another Rs. 3,500 billion to the total stock of the government’sexternal loans. The Ministry of Finance revealed that the federalgovernment’s total volume of external loans, excluding liabilities, reached$100 billion by March 2022.
Speaking at a presser on Sunday, the Minister for Finance, Miftah Ismail,said that the PKR is under pressure owing to a variety of factors,including speculations and the high import bill for June 2022. He informedjournalists that the situation would improve in a matter of weeks.
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The drastic decrease in the local unit’s value against the USD has createda negative impact, which is affecting businesses and economic activities inthe South Asian country. Additionally, the present uncertainty in currencytrends is substantially affecting the country’s economy.
An economic expert said that the International Monetary Fund (IMF) programis the only way to exit this crisis. The PKR may strengthen against the USDafter the meeting of the IMF Board, which is expected in the last week ofAugust, Minister Ismail said.
