ISLAMABAD: As the third round of talks between the Pakistan government and the IMF came to an end on June 9, it was agreed that the Pakistan government will not borrow from the State Bank of Pakistan (SBP).
According to sources, under the agreement, since the government will not borrow from the SBP, it will have to borrow money from the financial sector. As a result the government will be essentially borrowing at a higher rate from banks and financial institutions.
Moreover, with this agreement the government will be unable to give stimulus in the shape of printing additional money, something that a large number of countries are doing in the wake of COVID-19 pandemic.
“Currently the inflation is low throughout the world and countries are giving stimulus by printing money. This agreement will bar the Pakistani government from doing so,” said a source while talking to Profit.