In a significant financial development, Pakistan's central bank has successfully met its target of USD 4.2 billion within the forward book agreement established with the International Monetary Fund (IMF) by the end of September. With this accomplishment, the central bank is now confidently positioned to fulfill other critical objectives, including net international reserves and net domestic assets. This revelation comes directly from the central bank's official statement, as reported by Reuters.
The IMF, a global financial institution headquartered in Washington, D.C., has also indicated its intention to dispatch a delegation to Pakistan, a nation currently grappling with economic challenges, to assess the country's performance during the first quarter of the present fiscal year, as previously disclosed by PTI.
Upon successful completion of the economic evaluation, Pakistan is poised to receive the subsequent installment of USD 700 million from the IMF, subject to approval by the IMF board. This positive development follows an earlier disbursement of USD 1.2 billion from the Washington-based global lender to Pakistan in July. The disbursement was made in alignment with a USD 3 billion bailout program spanning nine months, aimed at supporting the Pakistani government's endeavors to stabilize its struggling economy, as noted by PTI.
Though essentially functioning as a bridge loan, this financial assistance provided a much-needed respite to Pakistan, which had been grappling with a severe balance of payments crisis and diminishing foreign exchange reserves, as detailed in the report.
The economic situation in Pakistan has been a matter of concern for an extended period, with continuous pressure on the vulnerable segments of the population due to surging inflation rates.
Notably, the country's inflation rate experienced an upswing for the first time in four months, following the government's decision to increase fuel prices as part of its commitment to fulfill IMF requirements under the ongoing USD 3 billion bailout program. In September, consumer prices surged by 31.44% compared to the previous year. This figure surpassed the median estimate of a 30.95% rise in a Bloomberg survey and the 27.4% increase recorded in August.
The caretaker government of Pakistan, acting in accordance with IMF conditions to sustain the bailout program initiated in July, has raised fuel prices due to the surge in global prices. Additionally, plans to raise gas prices are in the pipeline, raising concerns about increased living costs and the potential for renewed public protests among Pakistani citizens feeling the economic strain.
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