Pakistan Economy_Is it the last of the hikes,(AKD Daily, Apr 05, 2023)
AKD Daily
Pakistan Economy: Is it the last of the hikes,
- The SBP’s Monetary Policy Committee met yesterday, where the policy rate in the country was increased by 100bps to 21%, in a bid to control the rampant inflation in the country.
- SBP has attributed the recent heightened inflation readings to adjustments introduced in the mini-budget, along with undoing of energy subsidies. However, the inflation readings are expected to have plateaued near the prevalent levels.
- Pakistan’s external financing needs stand at ~US$4.5bn in 4QFY23, with a rollover of US$2.2bn expected, leaving behind a net liability of US$2.3bn for the quarter.
- Not only does the IMF’s nod for the 9th review bring with it ~US$1bn, it would also be the stamp of approval required by multi-lateral and bilateral sources to rescue Pakistan’s dwindling foreign reserve position.
- Going forward, inflation readings are expected to remain heightened, with further weakness in the local currency a possibility. Furthermore, with interest rates at 21%, market participation is expected to remain lackluster.
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