IMF warns of protests, instability as Pakistan inflation touches 47-year high – Times of India
ISLAMABAD: The IMF has warned that Pakistan’s runaway inflation that shot up to a 47-year high in August could trigger protests and instability in the cash-strapped nation as devastating monsoonal floods have exacerbated its economic crisis.
The country’s inflation measured by the Consumer Price Index (CPI) climbed to 27.3% this August. This level of inflation was last seen in 1975, when the reading was recorded at 27.8%. Observers said the floods and consequent disruption in food supplies could push up the inflation even more in September.
The IMF’s executive board approved earlier this week the seventh and eighth review of the stalled $6 billion loan package to Pakistan. The State Bank of Pakistan (SBP) received the much-needed $1.16 billion deposit last Wednesday.
In its country report released Thursday, IMF said high inflation and tighter global financial conditions because of the war in Ukraine would continue to weigh on Pakistan’s economy, pressuring its exchange rate and external stability.
The report said risks to the outlook and programme implementation remain high and tilted to the downside given the very complex domestic and external environment. “Policy slippages remain a risk, as evident in FY22, amplified by weak capacity and powerful vested interests, with the timing of elections uncertain given the complex political setting,” the global money lender said.
The report said socio-political pressures are expected to remain high and could also affect policy and reform implementation, especially because of the tenuous political coalition in office and its slim majority in parliament.
“All this could affect policy decisions and undermine the programme’s fiscal adjustment strategy, jeopardising macro-financial and external stability and debt sustainability,” it stated.
The lender warned that high food and fuel prices could trigger protests and instability, which could in turn jeopardise macro financial and external stability and debt sustainability.
Moreover, higher interest rates, a larger-than-expected growth slowdown, pressures on the exchange rate, renewed policy reversals, weaker medium-term growth, contingent liabilities related to state-owned enterprises and climate change were described as substantial risks by IMF.
The country’s inflation measured by the Consumer Price Index (CPI) climbed to 27.3% this August. This level of inflation was last seen in 1975, when the reading was recorded at 27.8%. Observers said the floods and consequent disruption in food supplies could push up the inflation even more in September.
The IMF’s executive board approved earlier this week the seventh and eighth review of the stalled $6 billion loan package to Pakistan. The State Bank of Pakistan (SBP) received the much-needed $1.16 billion deposit last Wednesday.
In its country report released Thursday, IMF said high inflation and tighter global financial conditions because of the war in Ukraine would continue to weigh on Pakistan’s economy, pressuring its exchange rate and external stability.
The report said risks to the outlook and programme implementation remain high and tilted to the downside given the very complex domestic and external environment. “Policy slippages remain a risk, as evident in FY22, amplified by weak capacity and powerful vested interests, with the timing of elections uncertain given the complex political setting,” the global money lender said.
The report said socio-political pressures are expected to remain high and could also affect policy and reform implementation, especially because of the tenuous political coalition in office and its slim majority in parliament.
“All this could affect policy decisions and undermine the programme’s fiscal adjustment strategy, jeopardising macro-financial and external stability and debt sustainability,” it stated.
The lender warned that high food and fuel prices could trigger protests and instability, which could in turn jeopardise macro financial and external stability and debt sustainability.
Moreover, higher interest rates, a larger-than-expected growth slowdown, pressures on the exchange rate, renewed policy reversals, weaker medium-term growth, contingent liabilities related to state-owned enterprises and climate change were described as substantial risks by IMF.
For all the latest world News Click Here
Denial of responsibility! TechAI is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.
