Pakistan Saved Eleventh-Hour Rescue
Significant funding of USD 4 billion has been successfully secured, raising foreign reserves to approximately USD 9.5 billion.
For now, the focus of the IMF is to ensure that Pakistan follows its FY 24 budget and ensures a tight monetary policy to curb inflation.
Pakistan has finally secured a Stand-by Arrangement for an amount of USD 3 billion. The arrangement also entails the immediate release of USD 1.2 billion for the cash-strapped government. The agreement's nature spares future governments from renegotiating with the IMF on this matter. For now, the focus of the IMF is to ensure that Pakistan follows its FY24 budget and ensures a tight monetary policy to curb inflation. But can we expect different outcomes with the same old policies this time around?
In the past, Pakistan has sought assistance from the IMF on 23 separate occasions. A few common characteristics among all these arrangements include a tight monetary policy, a market-based exchange rate, and high utility prices to name a few. ‘An appropriately tight monetary policy aimed at disinflation’ is also being put in place this time, however, the historical trend shows a correlation between high policy rates and inflation.
Pakistan's foreign reserves have received a significant boost after receiving around USD 3 billion in loans from the Middle East. The IMF lending definitely green-signalled this move, in addition to releasing USD 1.2 billion for Pakistan’s urgent external problems. Regardless, this is just a temporary solution to our current problem although the relief is much appreciated.
But when will Pakistan stop running in circles and focus on devising concrete solutions?
The World Bank assessed the impact of Floods 2022 🌊 in Pakistan 🇵🇰 on the increase in Poverty Rate (%) by overlaying satellite data with household survey data for rapid estimates of the extent and severity of the flooding.
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