ISLAMABAD: Pakistan is likely to seek a waiver from the International Monetary Fund (IMF) for violating the condition of restricting the difference between inter-bank and open market currency rates as the lender improves its assumption for the average dollar price to Rs300.
Highly placed sources said that compared to July’s underlying assumption of Rs305.2 to a dollar, the IMF “is now assuming the average price of US currency at a little below Rs300 by June next year”.
They said that due to the breach of the condition of keeping the gap between currency rates at banks and foreign exchange companies at 1.25%, Pakistan would have to secure a waiver from the IMF board for qualifying for the next loan tranche. It is expected that Pakistani authorities will win the wavier as the global lender seems positive about gradual improvements in the currency exchange market.
Pakistan and the IMF have already concluded a staff-level agreement that will be followed by the board’s approval next month before the release of a $700 million tranche. Central bank spokesman Noor Ahmed did not reply to a question about the need for IMF waiver.
Under the $3 billion standby arrangement, the IMF had placed a condition to restrict the gap between inter-bank and open market exchange rates to just 1.25% aimed at ending Pakistan’s administrative control over the rupee. However, the gap at one point increased to as high as 8% before returning to the given range on the back of a crackdown by the authorities.
State Bank of Pakistan (SBP) Governor Jameel Ahmad said a few days ago that during the past couple of months, the central bank had cleared most of the backlog related to repatriation of profits and import payments on the back of better inflows and improved foreign exchange reserves.