State Bank prepones Monetary Policy Committee meeting to March 2
Pakistan, IMF reportedly agreed to raise interest rate by two percent
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The State Bank of Pakistan (SBP) has preponed the meeting of its Monetary Policy Committee to consider raising policy rate apparently aimed at clinching the crucial IMF needed urgently to avert the looming default, reported 24NewsHD TV channel.
The next meeting of the State Bank’s Monetary Policy Committee which was scheduled to be held on March 16 was preponed and will now be held on March 02 (Thursday) for an off-cycle review of the interest rate.
Off-cycle rate reviews are not uncommon in Pakistan, though.
The central bank made the announcement in a tweet uploaded on Tuesday.
The forthcoming meeting of the Monetary Policy Committee has been preponed and now it will be held on Thursday, March 02, 2023. pic.twitter.com/555JOhCFoe
— SBP (@StateBank_Pak) February 28, 2023
According to officials in the finance ministry, the talks between the International Monetary Fund and Pakistan are continuing and the global lender is thoroughly looking into every point.
The officials confirmed that Pakistan has agreed to increase its interest rate by 2%. The current policy rate is 17%.
“We support the use of monetary policy to rein in inflation, anchor inflation expectations, and support the exchange rate,” said Esther Perez Ruiz, the IMF’s resident representative in Pakistan, in an email to Reuters a few days back.
The IMF official further said "As such, monetary policy has an important role to play in taming inflation and preserving the purchasing power of Pakistanis, first and foremost the poor and most vulnerable."
The finance ministry officials further said that issues related to (circular debt in) power sector have also been sorted. “After resolving power sector issues, the staff-level agreement (SLA) with the IMF will be signed,” they added.
The officials said that the finance ministry has briefed the IMF about the sources of foreign reserves the country is going to receive till June.
The cash-strapped country is undertaking key measures to secure the IMF funding, including raising taxes, removing blanket subsidies, and artificial curbs on the exchange rate.