Pakistan’s central bank will bring forward its interest rate review by two weeks to March 2, according to an official with knowledge of the matter, as the government seeks to meet conditions of a $6.5 billion bailout from the International Monetary Fund.
Previously, State Bank of Pakistan’s monetary policy committee was scheduled to meet March 16, the person said, asking not to be identified ahead of an official announcement. Business Recorder first reported the development. The central bank last month raised its target rate to 17%, the highest in more than 24 years.
Pakistan’s bond auction last week signaled that the central bank is expected to raise its interest rate that is seen as a condition to revive the nation’s loan program with the IMF, according to analysts. It may raise its rate by 150 to 250 basis points, according to estimates by Arif Habib Ltd., Sherman Securities Pvt. and an independent economic advisory Doctored Papers.
The South Asian nation has announced higher taxes and energy prices to meet conditions for the IMF. Higher energy costs risk further feeding into price gains seen to have further accelerated in February, complicating the situation for the monetary authority that’s struggling to contain inflation at a 48-year-high.
Foreign exchange reserves were at $3.26 billion as of Feb. 17, just enough for less than a month of imports. Dollar shortage is restricting the nation’s ability to fund overseas purchases, stranding thousands of containers of supplies at ports, forcing plant shutdowns and putting tens of thousands of jobs at risk.
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