Pakistan likely to increase interest rate further

ISLAMABAD: As part of the agreement with the International Monetary Fund (IMF), Pakistan is likely to increase the interest rate further to cope with the skyrocketing inflation.

According to Reuters, the IMF staff-level report has emphasised the need to maintain strict monetary policies.

At least nine of the 16 experts Reuters talked to, predicted a one per cent increase in the interest rate.

The experts believe that the interest rate could be raised to 23 per cent from the current 22 per cent by the Monetary Policy Committee of the State Bank of Pakistan in its upcoming meeting slated for Monday

The State Bank of Pakistan has already raised the interest rate by 12.25 per cent since April 2022.

According to Reuters, the State Bank of Pakistan increased the interest rate by one per cent to to secure the IMF loan.

The government has assured the international lender to take further monetary measures under the “Memorandum of Economic and Financial Policies”.

The SBP will continue to take strict monetary measures until a clear decline in inflation.

Read more: IMF predicts about Pakistani currency’s value against dollar in 2024

In a recent report,  the Asian Development Bank (ADB) said that Pakistan’s growth in the 2022-23 fiscal year “will slow down owing to the monetary policies to safeguard macroeconomic stability, pervasive inflation, and significant damage from flooding.”

Earlier this month, Pakistan secured a badly needed $3 billion stand-by arrangement (SBA) from the IMF , giving the country a much-awaited respite as it teeters on the brink of default.

Of the $3 billion stand-by arrangement, the IMF transferred $1.2 billion to Pakistan.