Pakistan’s central bank to hold monetary policy meeting today amid spiraling inflation

An undated file photo shows a general view of the State Bank of Pakistan's building in Karachi. (Photo courtesy: social media)
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Updated 12 December 2023
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Pakistan’s central bank to hold monetary policy meeting today amid spiraling inflation

  • The market anticipates a rise in the policy rate to curb increasing inflationary pressure in the economy
  • Government announced additional power surcharge on Wednesday as CPI hit 50-year high in February

ISLAMABAD: The State Bank of Pakistan (SBP) will hold its monetary policy committee meeting today, Thursday, after the country'sstatistics bureau proclaimed a day before the consumer price index (CPI) had increased 31.5 percent in February on a year-on-year basis which is the highest level in about 50 years.

Pakistan has taken stringent economic measures in recent months by raising fuel and power tariffs to unlock a $7 billion loan facility provided by the International Monetary Fund (IMF). The country is facing a tough financial situation amid dwindling forex reserves and a rapidly depreciating national currency.

However, the government’s decision to meet the IMF conditions to secure the release a $1 billion tranche, which has remained stalled since last September, has led to increased inflationary pressure in the economy, making financial experts believe the central bank may further raise the policy rate.

“The forthcoming meeting of the Monetary Policy Committee has been preponed and now it will be held on Thursday, March 02, 2023,” the SBP announced in a Twitter post on Tuesday.

The meeting was originally scheduled to take place on March 16.

Meanwhile, the recent CPI increase of 31.5 percent in February turned out to be the highest since 1974. Statistics indicate that food, beverage and transportation prices have also surged more than 45 percent in the country.

Financial analysts have already warned that inflation is likely to increase further in the coming months as the government raised tax rates in February to generate Rs170 billion to manage revenue shortfall.

The government's Economic Coordination Committee also approved a power surcharge of up to 3.28 per unit during its recent meeting on Wednesday to finance the energy sector's growing liabilities.


Imran Khan’s party seeks ‘confidence-building measures’ after government’s talks offer

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Imran Khan’s party seeks ‘confidence-building measures’ after government’s talks offer

  • PTI says access to jailed founding leader essential for talks to be considered credible
  • Government says it’s ready for dialogue but nothing will happen until Khan favors the idea

ISLAMABAD: Pakistan’s jailed former prime minister Imran Khan’s party said on Saturday it would only consider the government’s offer for talks credible if it is accompanied by “concrete confidence-building measures,” such as unhindered access to its founding leader in a high-security prison in Rawalpindi.

Last month, Prime Minister Shehbaz Sharif said the government was fully prepared to hold a dialogue with Khan’s Pakistan Tehreek-e-Insaf (PTI) party to address political polarization that has deepened since the downfall of the PTI administration in a parliamentary no-confidence vote in 2022.

PTI has frequently complained about a state crackdown against its top leadership, including Khan and his wife, who are serving prison sentences in multiple cases ranging from corruption charges to inciting violence against state institutions and attacks on government properties.

Sharif’s offer for talks came amid media reports that PTI wanted a dialogue with the government, though he noted that negotiations would not be allowed to proceed on the basis of “blackmailing” or unlawful demands and would only cater to legitimate issues.

“Announcements of talks, without concrete confidence-building measures, cannot be treated as credible progress,” Azhar Leghari, PTI’s central deputy information secretary, told Arab News.

He recalled that Khan had authorized Mahmood Khan Achakzai and Allama Raja Nasir Abbas to carry forward with the dialogue process, adding that talks “require trust, and trust cannot be built at the cost of constitutional rights or democratic legitimacy.”

“For dialogue to be meaningful, it is essential that these authorized representatives are allowed regular and unhindered access to Imran Khan so that any engagement accurately reflects his views and PTI’s collective position,” he added.

Khan’s family, party and legal team have complained in the past they are stopped by the authorities from meeting the ex-PM in prison. Last month, they also raised concerns about his health, prompting the officials to allow one of his sisters to meet him, who said he was fine.

Shortly thereafter, a scathing message was posted on his social media account, criticizing the army chief. Khan’s post elicited a bitter response from the government and the military amid accusations of inciting people against state institutions.

Leghari’s comments came only a day after Rana Sanaullah, adviser to Prime Minister Sharif on political affairs, said PTI’s “second- or third-tier leadership” wanted dialogue, but nothing was going to happen until Khan favored these negotiations.

He also maintained that while the government was ready for talks, “uncertainty and delays from PTI are preventing progress.”

Meanwhile, a newly formed National Dialogue Committee of former PTI leaders told Arab News it had organized a session on Wednesday, January 7, in the federal capital that will bring together all major political parties, journalists, lawyers and representatives of civil society.

“Our goal is to bring political leaders together so that, while discussing their own issues, they can collectively seek solutions to the nation’s challenges,” Mahmood Baqi Moulvi, a Pakistani politician and member of the committee, said.

“The initiative also builds on previous efforts, including a letter to the prime minister requesting confidence-building measures to enable talks with PTI,” he added.

The National Dialogue Committee had urged the government in the letter to grant parole to jailed party figures in Lahore, including former foreign minister Shah Mahmood Qureshi and Dr. Yasmin Rashid, describing the move as vital for building trust ahead of negotiations.

It had also maintained such a step “would not only create an extremely positive, conducive, and trust-filled environment for the negotiations but would also lay a strong foundation for restoring mutual confidence among all stakeholders.”

While the government has also offered dialogue in the past, PTI leaders have conditioned participation on substantive measures, including what they describe as an end to politically motivated prosecutions and arrests, restoration of fundamental rights, respect for judicial independence and a credible roadmap toward free and fair elections.

“Reconciliation is possible, but it must be based on correcting injustices rather than managing optics,” Leghari said. “A genuine reset requires restoring respect for the Constitution, ending political victimization and allowing democratic processes to function without interference.”

Rana Sanaullah and Deputy Law Minister Barrister Aqeel Malik did not respond to requests for comment.