Pakistan rupee plunges to record low amid talks with IMF — Key developments

The Pakistani rupee (PKR) showed some signs of recovery Friday after two days of steep decline. This offered a ray of hope ahead of the arrival of an International Monetary Fund (IMF) delegation in Islamabad later this month to discuss resuming disbursements from a bail-out package.

Following the removal of an “unofficial price cap on the exchange rate”, Pakistan Thursday recorded its largest single-day drop since 1999, when the new exchange rate system was first introduced.

The cash-strapped country has been seeking a USD 1.1 billion bailout from the IMF, which was originally due to be disbursed in November last year as part of a larger USD 7 billion package secured in 2019. But IMF refused to sanction its next round of funding, till Pakistan follows its terms – increasing energy rates, imposing more taxes, and ending artificial control over the exchange rate – all of which are seen to be politically unpopular.

Here are the top developments unfolding in the cash-strapped Pakistan:

 Pakistani rupee’s fall slows as hopes rise for IMF money

With a team from the IMF set to visit Islamabad to restart discussions on the bailout package over the next few days, the Pakistani rupee showed some signs of steadying on Friday.

The Pakistani rupee recovered from an early drop of 1.8% to stand just 0.2% down trading between 255-259 rupees per dollar, Reuters reported. In the open market, it fell 1.1% to trade between 263-265 per dollar, according to the Exchange Currency Association of Pakistan.

 IMF delegation to visit Islamabad for bailout talks

A delegation of the IMF is set to visit Pakistan between January 31 and February 9 to discuss the ninth review of the USD 7 billion Extended Fund Facility, Dawn reported.

Pakistan entered a USD 6 billion IMF programme during Imran Khan’s government in 2019, which was increased to USD 7 billion last year. The programme’s ninth review is currently pending with talks being held between IMF officials and the government for the release of USD 1.18 billion.

Amid slump, Pakistan government increases development funds for lawmakers by 30%

Despite the ongoing financial crisis, Pakistan has ordered a massive hike of 30 per cent in development funds to PKR 90 billion for Parliamentarians, Dawn reported.

During a meeting of the Economic Coordination Committee (ECC) of the Cabinet on Wednesday, the government also authorised nearly PKR 1 billion in additional funding for the upkeep of the Supreme Court of Pakistan judges’s rest homes and residences in various cities across the nation.

Pakistan’s currency plummets to record low of 255 against US dollar

Pakistan’s currency plummeted to a record low of 255.43 against the dollar in the interbank market on Thursday. This cam after the government reportedly relaxed its grip on the currency to avail much-needed loans from the IMF to rescue the crisis-stricken economy, Bloomberg reported.