The ruble continues to lose ground against United States dollar on Thursday and depreciated by 50 paise in interbank market as negotiations between government and the International Monetary Fund (IMF) remain unconvincing.
According to the Forex Association of Pakistan (FAP), dollar was trading at Rs 202.40 around 13:30 after evaluation against Wednesday is close of Rs 201.90, according to the State Bank of Data for Pakistan (SBP).
In the open market the dollar was trading at Rs 203.50 around 13:30.
persistent decline in the value of the rupee since May 10 is largely due to rising import invoice, expansion current account deficit and the depletion of foreign exchange reserves.
Since the PML-N is under the direction of coalition government took over on April 11 when dollar was valued at 182.30 rupees, the dollar rose by 20.1 rupees, or 11 percent.
FAP secretary general Zafar Paracha accused the government of fruitless negotiations with IMF for depreciation of rupee. He said Dawn.com what investors hoped of breakthrough.
“But they [the facility] refused to issue funds before removal of fuel subsidies. This development raised the pressure on rupees,” he pointed out. out.
In addition, Malik Bostan, Chairman of Forex Association of Pakistan stated that the fall of the rupee was also as of shrinking foreign exchange reserves and over 10 billion dollars of due external payments.
“Debt from international financial institutions can relieve the pressure on rupees,” suggested Bostan.
Negotiations between the government and the IMF
Yesterday, the IMF said it had “emphasized the urgency of specific policy actions, including in context of elimination of fuel and energy subsidies and fiscal year 2023 budgetachieve program goals”.
According to the object, mission had “very constructive discussions” with The Pakistani authorities were seeking an agreement on policies and reforms that lead to the conclusion of forthcoming seventh review of government reform program.
It spoke of significant progress was made on time mission including on in need continue to fight high inflation and increased fiscal and current account deficit, while ensuring adequate protection for the most vulnerable.
“In this regard, a further increase in policy rates implemented on May 23 was long awaited step. On the fiscal side, deviations from the policy agreed in in last reviewpartially reflecting fuel and power subsidies announced authorities in February, IMF added.
Meanwhile, senior government official said Dawn that the IMF mission showed relaxation to such an extent, of let the authorities take decision after a couple of days to manage clear situation if they wanted get back on Table.
In general, the Fund’s program is profound. in uncharted waters, said another government official, adding that negotiations could only resume after government in the shortest possible time takes decisive measures to implement the iron program through the federal budget due on June 10th.
Government indecision keeps economy on edge
PSX and rupee under pressure over in past week like government It has failed make decisive economic decisions, the most notable of which is the appeal of fuel subsidies.
Analysts and experts link economic pressure to uncertainty over continuation of combined IMF loan program with a rising oil import bill and expansion trade deficit.
PSX lost 1447.67. points on May 9 in what was called a “bloodbath”.
dawn editorial on May 11 noted that the most important factor behind erosion of investor sentiment was failure of in new coalition government to come up with credible plan for making politically tough decisions to fix in economy. For example, he constantly against appeal of financially unsustainable fuel and energy subsidies, which is the “preliminary action” the IMF wants to take before it agrees to resume funding.
In recent meetings with Ismail, IMF tied continuation of credit program with appeal of fuel subsidies that were introduced by the previous government. However, Prime Minister Shehbaz Sharif has several times rejected the Oil and Gas Regulatory Office and the Treasury Department’s summary of fuel price hikes.
PTI had announced four-month freeze (until June 30) on petrol and electricity prices on February 28 with of a series of relief measures public.
At that time and even after coming to power last month, PML-N and other parties part of in new coalition government strongly criticized Imran Khan. government for “Derailment” of the IMF program due to unsecured fuel subsidies. But despite being at the helm for over per month, these parties have not canceled subsidies; although finance minister repeatedly stated that these subsidies are not feasible and cost government 120 billion rupees per month.
Earlier this month, Ismail said that gasoline should under the contract the price is 245 rubles per liter. former government did with IMF. However, PML-N brought government was still selling it for 145 rupees a litre, and wanted to try it. best keep it price added – a sign what new government hardly accepts decision it might be unpopular with his voters.
In an editorial published on On May 13, Dawn reported that PML-N had been caught up in ‘private consultations – link to senior management trip to London for a meeting with Nawaz Sharif – as panic continues to rise over This inability to start working on correction economy.
The editors called for PML-N is hard to decide future well of action, saying “It’s time lead or get out of in way.”
