Risks in the IMF program could lead to interest rates in Pakistan reaching 3 to 4 percent, economists say, and Pakistan may need a new IMF program after June.
For the agreement between Pakistan and the IMF, the Government of Pakistan will have to make many more difficult decisions. Independence in decisions of State Bank of Pakistan (SBP) is required in Pakistan.
The State Bank has to make autonomous decisions on the exchange rate. The exchange rate has to be fixed according to the market forces.
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The State Bank should also be given autonomy in monetary policy and the monetary policy should be strictly adjusted to inflation.
That is why economists have expressed fear that the policy rate will have to be increased by 200 to 300 or even 400 basis points during the IMF program.
Talking to News360, economists said that Pakistan has to secure foreign exchange reserves for at least two months of imports by the end of the current financial year.
He said that Pakistan has to arrange 3.6 billion dollars under the IMF program by June and also arrange another 10 to 11 billion dollars from friendly countries and development partners and for this the IMF F has to inform friendly countries and institutions about the progress of implementation of Pakistan’s economic and energy reforms.