Despite the conclusion of the mission’s physical visit two weeks ago, there is still a stall in the signing of the IMF staff level agreement. The Pakistan government has been in virtual negotiations with the Washington-based fund, ever since.
According to media reports and officials close to the development, the hold in the fund’s disbursement is due to differences in the power sector debts and the current policy rate. The IMF requires an at least 2% increase in the policy rate, which was hinted at in the recent T-bill auction.
Meanwhile, the week on week inflation, on the basis of the Sensitive Price Index (SPI) exceeded the 40% mark this week for the first time in five months. As per official data by the Pakistan Bureau of Statistics, the short-term prices on the week ending in February 2022 was 41.5% lower than the same week in 2023.
The onus of this inflation is mainly on the back of cigarettes, fuel, onions, chicken and eggs. The week preceding this one, saw an Year-on-Year inflation of approximately 38%.
Even on a weekly basis, the previous week-on-week reading of 2.9% was the highest since October 27, when the change in SPI was 4.1 %, as per official data.
The headline inflation calculated through the Consumer Price Index (CPI) was recorded at 27.6% in January and is expected to be significantly higher during the ongoing month.
After the new taxes introduced in the mini budget, inflation figures are expected to go north of 30% in the monthly statistics.
As of now, Pakistan awaits the IMF tranche as funds from the Chinese Development Fund, worth 700 billion were realized on February 25, according to a tweet by Finance Minister Ishaq Dar.