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The delay in the deal with IMF has sent mixed trends to the market as the dollar after losing almost Rs19 in the open market recovered and clawed back. The dollar clawed back on the assurances of the loan revival program with the international lender by Finance Minister Ishaq Dar.
The local currency appreciated by Rs6.63, or 2.38%, in the interbank market and closed at 278.46 against the greenback on the last day of the business week (Friday), as per the State Bank of Pakistan (SBP).
On Thursday, the rupee slumped by nearly Rs19 against the US dollar due to the central bank’s monetary policy review and concerns over a stalled IMF deal. ECAP General Secretary Zafar Paracha cited a few reasons for the dollar depreciation, saying that the IMF urged Pakistan to trade the dollar at the rate it was being sold near the Afghan border.
The time for a debate on whether we need the loan and the mistakes made around it in response is gone now and should be worked on in the future. At this stage, not securing the deal will bring us very close to default.
The reasons behind the delay, although important to correct and think about, can only be addressed long-term. These include Islamabad’s gap in diplomatic efforts and the credibility issue that cannot be remedied at this stage. For now, commit to IMF conditions so that economic stability is achieved.
At this point, things are working in a panic and the longer they remain hidden, the markets will operate in the same manner. It is time that we bring IMF conditions out in the open and commit to them publicly so there is no going back.
It is urgent to unlock this $1.2 bn deal because it governs international credit ratings and funding from friendly countries as well as multilateral deals as well. Not to mention, a sovereign default indicates a future Pakistan cannot cope with. At this stage, lives and livelihoods are already struggling and the cost of living has skyrocketed. Insiders are right in worrying about the situation, but it must be clear: there can be no backtracking now.
