KARACHI – Pakistan and the International Monetary Fund (IMF) are constantlyin ‘technical discussions’ to resume a $6 billion loan programme and theFund has supported Pakistan during the COVID-19 pandemic, Dr Reza Baqir,governor State Bank of Pakistan said on Monday as he announced the centralbank’s decision to keep the policy rate unchanged at seven percent.
The central bank in June slashed rates by 100 basis points to seven percentto help counter the fallout of the coronavirus pandemic on economicactivity. “We are constantly engaged with the IMF on technicaldiscussions,” Baqir told media after the announcement of the monetarypolicy, according to Arab News. “We are watching the outlook, apparentlynot all things are agreed on and some things need more discussions … Inthis, the overall point is how quickly the economy recovers.”
Last year, the International Monetary Fund approved a three-year, $6billion loan package for Pakistan to rein in mounting debts and stave off alooming balance of payments crisis, in exchange for tough austeritymeasures. Pakistan has so far secured $1.44 billion under the loan program,which has been put hold.
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Reading out from a statement, the central bank governor said the bank haddecided to keep the policy rate unchanged at seven percent for the next twomonths.
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“The MPC [monetary policy committee] noted that compared to the time of thelast meeting in June 2020, business confidence and the outlook for growthhave improved. This reflects the decline in Covid-19 cases in Pakistan andthe easing of lockdowns, as well as the timely stimulus provided by theGovernment and SBP,” Baqir said.
“At the same time, the forecast for inflation has risen slightly, primarilydue to recent supply side shocks to food prices. Average inflation is nowexpected to fall within the previously announced range of 7– 9 percentduring FY21, rather than marginally below,” he added.
