Pakistan

Pakistan’s rupee, bonds and stocks are rallying as investors bet the nation will win a bailout from the International Monetary Fund this month and avoid a default, Bloomberg News reported. Dollar bonds due in December were indicated at about 95 cents on the dollar on Tuesday from a low of 85 cents in July, as investors turn more confident the debt will be repaid. The rupee surged 11% this month to 213.87 per dollar as of Monday, the biggest gainer in the world. The benchmark stock index climbed 9%, the top performer in Asia after Sri Lanka.

Pakistan sees a way out of its current economic crisis without descending into default, thanks to progress on a stalled International Monetary Fund loan as well as spending cuts, Finance Minister Miftah Ismail said, Bloomberg News reported. “With the commodity super cycle and Russia-Ukraine war, oil prices skyrocketing and gas going as high as ever been in history, Pakistan and other emerging countries have been facing the worst crisis,” he said in a phone interview.

The International Monetary Fund agreed to a bailout of Pakistan, providing a financial lifeline as emerging markets strain under pressure from a global price shock rippling out from the war in Ukraine, the Wall Street Journal reported. The IMF said in a statement late Wednesday it would provide Pakistan with $4 billion over the next year, starting with an initial $1.2 billion, once its board formally approves the agreement worked out with Pakistani officials over weeks of negotiations.

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.