Dr. Reza Baqir, the Governor of the State Bank of Pakistan (SBP), is optimistic that the next tranche from the International Monetary Fund (IMF) would be completed shortly, according to Bloomberg.
Dr. Baqir stated
“We are quite confident that quite soon we will be able to put the delay behind us and soon announce the good news of completing the next tranche from the IMF. The IMF is important not just for the money, but also for the signal that it sends of good housekeeping on the economic policy front that catalyzes funding from other bilateral creditors as well as private capital markets”
He recognized that the IMF-mandated measures, such as rising energy costs, are tough and unpopular, and that they may stymie cash distribution, but that they are a regular challenge for any country in a political “crisis.”
Furthermore, the governor of the central bank has committed to make policy changes “on a timely basis” to ensure stability in the face of political turmoil and a deteriorating economy. Pakistan’s top central banker made these statements on Monday as MPs prepare to elect a new prime minister after Imran Khan was ousted in a no-confidence vote on Saturday
“A bigger message to the investor community,” Dr. Baqir told Bloomberg Television, “is that such political processes are not uncommon in democracies.” It is critical that economic policy-making institutions move quickly in order to maintain the goal of financial stability.”
He also cited the SBP’s decision during an emergency meeting on Thursday to raise interest rates by 250 basis points, bringing the benchmark rate to 12.25 percent. The real rate (nominal rate adjusted for inflation) returns to positive territory as a result of this.