Pakistan

Pakistan’s central bank raised borrowing costs more than expected to quell Asia’s second-fastest inflation and meet conditions for a loan from the International Monetary Fund, Bloomberg News reported. State Bank of Pakistan lifted the target rate by 125 basis points to 15% on Thursday. The hike aims “to moderate domestic demand, prevent a compounding of inflationary pressures and reduce risks to external stability,” the central bank said in a statement. Inflation, due in part to pent-up demand, high global commodity prices and rising imports, surged to a 13-year high of 21.32% in June.

Pakistan's Prime Minister Shehbaz Sharif said on Tuesday that the annual budget this week will levy more taxes on real estate, which he termed as a non-productive sector, Reuters reported. The South Asian nation of 220 million people is facing a balance of payment crisis with foreign reserves falling below $10 billion, hardly enough for 45 days of imports, a widening current account and historical fiscal deficit. A fiscal consolidated budget to meet targets given by International Monetary Fund (IMF) will be presented on Friday.

Pakistan GDP growth will slow to 5% for the upcoming fiscal year beginning on July 1, from 5.9% in the outgoing year, following budgetary tightening aimed at winning International Monetary Fund (IMF) support, the government said on Saturday, Reuters reported. The planning ministry made the estimates ahead of the annual budget to be presented on June 10.

Pakistan faces $6.4 billion in dollar debt due over the next three years as Prime Minister Shehbaz Sharif’s new government is trying to meet bailout terms set by the International Monetary Fund, Bloomberg News reported. The country, under pressure to keep its economy afloat and avert a sovereign default, needs about $3.16 billion to pay dollar bonds and loans this year, $1.52 billion next year and $1.71 billion in 2024, according to data compiled by Bloomberg.

Pakistan's central bank raised its benchmark interest rate on Monday by 150 basis points to 13.75%, the second hike in less than two months, as the South Asian nation grapples with a sinking economy, Reuters reported. The key interest rates have been hiked by 400 bps in less than two months, according to the central bank. "This action, together with much needed fiscal consolidation, should help moderate demand to a more sustainable pace while keeping inflation expectations anchored and containing risks to external stability," the State Bank of Pakistan (SBP) said in a statement.

Pakistan’s trade deficit is at a record, inflation is the fastest in Asia, and its stock market is among the worst in the world, adding pressure on authorities to take steps beyond the recent revival of a $6 billion loan from the International Monetary Fund, Bloomberg News reported. The first signs of concern emerged when the central bank advanced its review meeting last month and raised the key interest rate by a whopping 1.5 percentage points. The decision is pushing traders to pencil in another 1 percentage point jump for when the State Bank of Pakistan next meets Dec.

Pakistan will cut taxes on imports of raw materials to spur manufacturing and overall economic growth, according to Prime Minister Imran Khan’s trade adviser, Bloomberg News reported. Customs duties on input items needed by pharmaceutical, chemical, engineering and food processing industries will be reduced by 3% to 10%, Abdul Razzak Dawood, Khan’s adviser on commerce, said in an interview by telephone. That will help lower the import of finished goods, encourage local production and put the nation in a position to boost exports, he said. “Pakistan had ridiculously high duties,” Dawood said.

Pakistan is closing in on a deal with bilateral creditors that would tie debt relief to the achievement of biodiversity goals, government officials said, Bloomberg News reported. The South Asian nation is working with lender countries on a debt-for-nature swap program, which would see debt relief in return for binding commitments to achieve conservation targets. An official letter of intent could be announced as soon as World Environment Day on June 5, which Pakistan is hosting this year.

Pakistan is selling a $2.5 billion dollar bond that will be a key test of investor sentiment after the resumption of a $6 billion bailout program with the International Monetary Fund, Bloomberg News reported. The South Asian nation is offering the notes in three parts, people familiar with the matter said, asking not to be identified because they’re not authorized to speak about it. The debt deal comes amid a flurry of developments in recent days, as Pakistan’s economy grapples with continued fallout from the pandemic.