Jakarta, CNBC Indonesia – The International Monetary Fund (IMF) sent a team to Pakistan to discuss financial assistance for the country on Tuesday (31/1/2023). This also happened when Pakistan was experiencing critical financial problems.
Head of the IMF Research Department Division Daniel Leigh said Pakistan had actually passed 2022 by recording economic growth at 6%. But the institute has lowered its predictions for 2023.
“In 2023 there will be weakness due to the exhaustion of stimulus and also high inflation, the central bank has raised interest rates by 17% to freeze domestic demand,” Leigh told a press conference. World Economic Outlook Update January 2023 IMF.
Leigh admitted that the IMF had lowered its projection to 1.5% because of the floods which had disrupted supply chain activities and also inflation.
“Inflation is also rising because of this, we see inflation rising by 21% in 2023. This is also due to the weakening of the exchange rate.”
The IMF itself last year disbursed bailout funds of US$ 6 billion (Rp 90 trillion) in 2019, which was added to last year’s US$ 1 billion (Rp 15 trillion). But the lender then halted disbursements in November due to Pakistan’s failure to make more progress on fiscal consolidation and economic reforms.
Meanwhile, as of January 6, it was reported that the State Bank of Pakistan only had foreign exchange of US$ 4.34 billion (Rp 64 trillion). This will only meet import needs for the next three weeks.
“At the request of the authorities, the IMF mission is scheduled to visit Islamabad January 31 – February 9 to continue discussions under review Extended Fund Facility (EFF) ninth,” IMF Representative in Pakistan, Esther Perez Ruiz said in a message, to ReutersMonday (30/1/2023).
Mohammad Sohail, financial analyst and CEO of Topline Securities, said the Pakistani government had overcome a major hurdle in securing the next IMF installment namely the removal of the limit on the value of the Pakistani rupee. Noted, in just two days after the limit was removed, the Pakistani rupee has lost almost 10% of its value.
“Leaving the forex market to market forces is one of the biggest conditions of the IMF, which governments have opposed in the past,” he told AFP.
Meanwhile, Prime Minister Shehbaz Sharif said on Friday that he expected a deal this month. He also said that Islamabad has prepared a priority list of imports that the country urgently needs
“Pakistan today stands at a crossroads where we are trying to save every penny,” he said at an event.
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