Pakistani rupee continues to slide ahead of IMF-Islamabad talks

ISLAMABAD: Pakistan’s national currency on Friday continued its losing streak, with the US dollar closing at Rs186 ahead of Pakistan’s talks with the International Monetary Fund (IMF) for the revival of a $6 billion loan program. 
The rupee lost its value by 0.50 percent and the greenback closed at Rs186.63 in the interbank market. The development comes as the country faces a soaring current account and trade deficits, and dwindling foreign exchange reserves. 
Pakistan’s economy is facing inflationary pressures from imported commodities, while inflation in the South Asian nation rose to 13.4 percent in April, the highest since January 2021, after staying under 13 percent during the previous two months. 
“The government must impose a complete ban on the import of all things except food items, at least for a year, to save foreign exchange,” Malik Bostan, chairman of the Exchange Companies Association of Pakistan (ECAP), told Arab News. 
He said the government must withdraw subsidies to oil and electricity sectors, adding Pakistan was spending around $2.5 billion a month on energy imports. These, he said, included petroleum products and liquefied natural gas (LNG). 
Bostan said Pakistan was bearing a heavy import bill of $5 billion per month from Kabul since the Taliban took over in August 2021. He urged the government to review its trade policy regarding Afghanistan. 
“We are paying in dollars for Afghanistan’s imports while they reimburse us in rupees,” he explained. “This model isn’t sustainable.” 
Pakistan was set to give more than $2 billion in subsidies to oil and power sectors from April till June, which was announced by former prime minister Imran Khan during his last days in power. 
Prime Minister Shehbaz Sharif’s government is retaining the subsidies against the IMF’s recommendations to maintain fuel and power prices for consumers. 
An IMF mission is due to arrive in Pakistan this month to resume discussions over policies to complete the seventh review of the country’s $6 billion Extended Fund Facility secured in 2019. Islamabad has requested the global lender to boost the loan size to $8 billion to meet its balance-of-payment requirements. 
If Islamabad clears the review, Pakistan will get an estimated $1 billion, which would in turn unlock additional external funding. 
Haroon Sharif, a former economic adviser, suggested the government look toward foreign investment rather than loans to stabilize the volatile economy. 
“We should offer shares of our profit-making enterprises to friendly countries to boost our foreign exchange reserves,” he told Arab News. 
Sharif suggested the government should try to boost value-added exports through “massive incentives” and cut down imports of all luxury items. 
“The next financial year is going to be very tough for Pakistan if we fail to manage our ballooning import bill,” he added.