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.
Pakistani rupee continues to slide ahead of IMF-Islamabad talks
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Pakistani rupee continues to slide ahead of IMF-Islamabad talks
- Pakistani currency lost its value by 0.50 percent in the interbank market on Friday
- Economists urge government to cut imports of luxury items to save foreign exchange
Pakistan PM speaks to UAE president, calls for enhanced cooperation
- Shehbaz Sharif lauds UAE’s economic support in challenging times
- Both leaders discuss a range of issues, agree to stay in close contact
ISLAMABAD: Prime Minister Shehbaz Sharif on Friday praised the United Arab Emirates for what he described as steadfast financial and political support during Islamabad’s recent economic crisis, as both sides signaled plans to deepen bilateral cooperation.
In a statement issued after Sharif spoke with UAE President Sheikh Mohamed bin Zayed Al Nahyan, the Prime Minister’s Office said the two leaders discussed matters of mutual interest and agreed to stay in close contact.
“The Prime Minister lauded the UAE’s consistent and unwavering support to Pakistan, that had helped the country navigate through difficult challenges,” the statement said, adding the two leaders “reaffirmed their shared desire to further enhance mutually beneficial cooperation between Pakistan and the UAE.”
The UAE, along with other friendly nations in the region, provided critical financial assistance to the South Asian country during a balance-of-payments crisis that strained Pakistan’s foreign exchange reserves and pressured its currency. Islamabad subsequently secured an International Monetary Fund program as part of broader stabilization efforts.
Sharif, in a post on X, described the exchange as positive.
“We fondly recalled our recent meetings and reaffirmed our shared resolve to further strengthen the historic, fraternal ties between Pakistan and the United Arab Emirates, and to expand mutually beneficial cooperation,” he wrote.
Millions of Pakistanis live and work in the UAE, forming one of the largest expatriate communities in the Gulf state.
Remittances from the UAE rank among Pakistan’s top sources of foreign currency inflows and play a significant role in supporting the country’s external accounts.
UAE-based companies are also investing in Pakistan, helping Islamabad develop its seaports to facilitate regional trade.
