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A Reuters poll of 17 analysts show that 15 are forecasting a rate hike. An easing of import restrictions and the removal of subsidies - both conditions of the bailout - have fueled spikes in energy prices. Although overall inflation fell slightly to 27.4% in August, food inflation remain elevated at 38.5%. Pakistan's central bank said in July that it expects inflation to be on a downward path over the next 12 months. Analysts also noted that rises in cut-off yields in treasury bill auctions - the highest yield at which a bid is accepted - indicate that market participants expect a rate hike.

Persons: Shivaan Tandon, Ariba Shahid, Swati Bhat, Edwina Gibbs Organizations: State Bank of Pakistan, Capital Economics, Thomson Locations: KARACHI, Karachi

☆ Saudi Arabia sends Pakistan $2 bln in financial support
▼ + stars: | 2023-07-11 | by ( ) www.reuters.com time to read: 1 min

ISLAMABAD, July 11 (Reuters) - Saudi Arabia has sent $2 billion to Pakistan's central bank, the South Asian nation's finance minister said on Tuesday, another boost for its ailing economy after an IMF bailout. "I thank Saudi Arabia on behalf of the prime minister and army chief," Finance Minister Ishaq Dar said in a recorded video statement. Saudi Arabia pledged the money and then waited for the aid package from the International Monetary Fund to go ahead before depositing it with the State Bank of Pakistan. The financial support will help to shore up the central bank's depleted foreign exchange reserves, which had dipped to cover barely a month of controlled imports. Islamabad secured a last-gasp $3 billion IMF bailout on the last day of June.

Persons: Ishaq Dar, Asif Shahzad, Sakshi Dayal, Tom Hogue Organizations: International Monetary Fund, State Bank of Pakistan, Thomson Locations: ISLAMABAD, Saudi Arabia, Islamabad

It is not the end of our relationship with the IMF though, as the SBA is a short-term bridging operation. GARETH LEATHER, SENIOR ASIA ECONOMIST AT CAPITAL ECONOMICS, LONDON"The agreement of a loan deal between Pakistan and the IMF should put the economy back on a more secure footing and limit the biggest downside risks. There is a strong risk that Pakistan reneges on the deal once the immediate crisis has passed. Our target shall be that the next IMF programme should be the last one and it would be a great opportunity to correct our fiscal account once and for all." "Things would have been much better if successive governments would have invested in completing the IMF programme.

Persons: MURTAZA SYED, GARETH, Shehbaz Sharif, ABDUL ALEEM, SHERANI, SHAHBAZ ASHRAF, MAHA RAHMAN, ZAFAR MASUD, MUSTAFA PASHA, SHAHID HABIB, ARIF HABIB, ZULQARNAIN, MOHAMMED SOHAIL, AHFAZ MUSTAFA, ISMAIL IQBAL, SAJID AMIN JAVED, Ariba Shahid, Shilpa Jamkhandikar, Raju Gopalakrishnan Organizations: Monetary Fund, South, IMF, BANK OF PAKISTAN, SBA, State Bank, EFF, Capital, UL HAQ, OF PUNJAB, Pakistan, ARIF, Thomson Locations: Pakistan, ASIA, KARACHI, ISLAMABAD, LAHORE, PAKISTAN

☆ Paris summit: More needs to be done for low-income countries, says Pakistan's ex-central bank chief
▼ + stars: | 2023-06-22 | by ( ) www.cnbc.com time to read: 1 min

Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailParis summit: More needs to be done for low-income countries, says Pakistan's ex-central bank chiefReza Baqir, managing director at Alvarez & Marsal and former governor of the State Bank of Pakistan, says "there will be pledges, but if history is any guide … the world will not have an adequate mechanism to monitor how those pledges convert to actual inflows for developing countries."

Persons: Reza Baqir, Alvarez Organizations: Marsal, State Bank of Locations: Paris, State Bank of Pakistan

The external financing is needed to fully fund the balance of payments gap for the fiscal year that ends in June. Last week Saudi Arabia also told the IMF it would provide financing of $2 billion to Pakistan. Dar has said Pakistan has given details of the scheme to the IMF, which has asked how it would it find the resources needed. The IMF program will disburse another tranche of $1.4 billion to Pakistan before it concludes in June. Reporting by Gibran Naiyyar Peshimam, writing by by Shilpa Jamkhandikar; editing by Sudipto GangulyOur Standards: The Thomson Reuters Trust Principles.

KARACHI, Pakistan, April 4 (Reuters) - Pakistan's central bank raised its key interest rate by 100 basis points to a record 21% on Tuesday, as the cash-strapped country stepped up its fight against soaring consumer prices. Investors polled by Reuters had expected an even-bigger rate hike of 200 basis point from the State Bank of Pakistan (SBP), which is facing on consumer price inflation that hit a record annual level of just over 35% in March. Worldwide growth in consumer prices has compounded high inflation in Pakistan caused by a weakening currency, energy tariff increases and elevated food prices due to Ramadan. The SBP has hiked the key rate by cumulatively by 1025 bps since January 2022. In early March, the bank raised its key rate by 300 basis points to 20%, exceeding market expectations, likely to meet a key requirement of the IMF for release of bailout funds.

Eighteen out of 20 economists and market watchers surveyed said the central bank would hike rates, with 12 of them predicting a 200 bps increase. Two poll participants saw the benchmark raised by 100 bps, while four forecast a 150 bps hike. Worldwide growth in consumer prices has compounded high inflation in Pakistan caused by a weakening currency, energy tariff increases and elevated food prices due to Ramadan. The latest consumer price-based inflation clocked a 31.5% rise on year in February, the highest in nearly 50 years. The State Bank of Pakistan has raised rates by a total 10.25% since January 2022.

☆ Pakistan central bank may hike rates another 200 bps to unlock IMF funds
▼ + stars: | 2023-02-28 | by ( Ariba Shahid | ) www.reuters.com time to read: +2 min

KARACHI, PAKISTAN, Feb 28 (Reuters) - Pakistan’s central bank is widely expected to raise its key policy rate by 200 basis points in an off-cycle meeting on Thursday as it struggles to unlock critical funding from the IMF, a Reuters poll showed. All sixteen economists and market watchers surveyed said there would be a hike -- 14 of them predicted 200 basis points (bps), while two expected 250 bps. The State Bank of Pakistan (SBP) has raised rates by 725 bps since January 2022. In its last policy meeting in January, the bank raised the key rate by 100 bps to 17%, citing inflationary pressure. He said the market had already incorporated a 200 bps hike in the last treasury bill auction where the government accepted bids with yields more than 200 bps higher than the policy rate.

☆ Pakistan set to increase interest rates in off-cycle review, say investors
▼ + stars: | 2023-02-23 | by ( Ariba Shahid | ) www.reuters.com time to read: +2 min

Market participants in a recent treasury bill auction are expecting at least a 200 basis points increase in the central bank's policy rate, which stands at 17%. The expected increase is based on the rates the Pakistan government set in the auction to raise the funds. The cut off rates for the three-month, six-month, and 12-month tenors jumped 195 bps, 206 bps, and 184 bps higher than the previous auction. While the government expects a deal with IMF soon, media reports say that the agency expects the policy rate to be increased. “Pakistan has two core inflation readings i.e., Urban (15.4% for Jan-23) and Rural (19.4%) and no national core number is released.

☆ China lends Pakistan further $700 mln to shore up FX reserves
▼ + stars: | 2023-02-22 | by ( Asif Shahzad | ) www.reuters.com time to read: +3 min

"This amount is expected to be received this week by State Bank of Pakistan which will shore up its forex reserves," Finance Minister Ishaq Dar said on Twitter. A finance ministry official said the loan was in addition to other facilities that China has already extended to Pakistan. China Development Bank did not respond to a faxed request for comment. Addressing his cabinet, he said the government was focusing on austerity as a top priority. China is already Pakistan's single largest creditor with its commercial banks holding about 30% of its external debt.

☆ Pakistan current account deficit falls to $0.2 billion in Jan - cenbank
▼ + stars: | 2023-02-20 | by ( Ariba Shahid | ) www.reuters.com time to read: +1 min

KARACHI, Pakistan, Feb 20 (Reuters) - Pakistan’s current account deficit (CAD) dropped to $0.2 billion in January 2023, down 90% from last year as the rupee's depreciation slowed down imports, the central bank said on Monday. During the first seven months of the current fiscal year, the country’s current account deficit decreased by 67% to $3.8 billion, compared with a deficit of $11.6 billion during the same period last year. “This monthly deficit is lowest after 25 months, and lower than expectations,” said Mohammad Sohail, CEO of Topline Securities. The weaker currency has made imports more expensive, effectively slashing them. Reporting by Ariba Shahid in Karachi, Editing by Louise HeavensOur Standards: The Thomson Reuters Trust Principles.

☆ Pakistan's forex reserves with central bank drop to $3.09 bln
▼ + stars: | 2023-02-02 | by ( ) www.reuters.com time to read: +2 min

ISLAMABAD, Feb 2 (Reuters) - Pakistan's foreign exchange reserves held by the central bank decreased by 16.1% to $3.09 billion in the week ending Jan. 27, the State Bank of Pakistan (SBP) said on Thursday, which analysts said covers less than three weeks of imports. The country is locked in negotiations with the International Monetary Fund (IMF) to release much-needed money under a stalled bailout programme. The central bank said in a statement that the drop in reserves was due to external debt repayments. Reserves held by commercial banks stood at $5.65 billion, taking total liquid reserves in the country to $8.74 billion, SBP added. The central bank recently removed a cap on exchange rates and the government raised fuel prices by 16%.

[1/2] People wait for their turn to get fuel at a petrol station in Peshawar, Pakistan January 30, 2023. If we don't have LCs (letters of credit) open right now, we might see shortages in the next fortnight," a senior official at one of the oil companies told Reuters. Oil traders, however, are shunning countries such as Pakistan and Sri Lanka due to an acute shortfall of foreign exchange. State-owned refiner Pakistan State Oil (PSO) and Pakistan LNG Ltd have left a flurry of fuel tenders unawarded in the last couple of months. Pakistan bought only 223,000 tonnes of gasoline in December versus 608,000 tonnes in the same period a year earlier, data from Kpler showed.

☆ Debt restructuring framework must improve to help distressed countries, Pakistan's ex-central banker says
▼ + stars: | 2023-01-30 | by ( Sumathi Bala | ) www.cnbc.com time to read: 1 min

Global bodies like the IMF need to step up and improve the framework for sovereign debt financing so that emerging market economies, like Sri Lanka, can get out of their debt distress problems faster. That's according to the former governor of the State Bank of Pakistan, the country's central bank. Reza Baqir, currently the global head of sovereign advisory services at Alvarez and Marsal, pointed out that Sri Lanka is still waiting for the International Monetary Fund debt relief to help restore stability as the country grapples with dire economic conditions. Sri Lanka "stopped paying its creditors in spring of last year and it's been close to nine months, and we are still waiting for a meeting of the IMF board," noted Baqir. "We need a more proactive response from the international financial community."

The currency's official value closed at 255.4 rupees against the dollar versus 230.9 on Wednesday, the central bank said. Facing an increasingly acute balance of payments crisis, Pakistan is desperate to secure external financing, with less than three weeks worth of import cover in its foreign exchange reserves. Aside from wanting the government to reduce its budget deficit, the IMF is pushing for it to move to a market-determined exchange rate regime. The foreign exchange companies said on Wednesday that they had removed the cap for the sake of the country, because it was causing "artificial" distortions for the economy. Aside from moving towards a market-determined exchange rate, Islamabad has also announced it will take fiscal measures recommended by the IMF.

In November, the State Bank of Pakistan's Monetary Policy Committee unexpectedly pushed up its key rate by 100 bps, meaning it has now raised it by a total of 725 bps since January 2022. The country - struggling after last year's devastating nationwide floods - posted a 24.5% annual inflation rate in January. Although some moderation was seen in inflation in November and December, it remains high and core inflation has been on a rising trend for the last 10 months, the central bank added. The lack of fresh financial inflows and ongoing debt repayments have led to a steady drawdown in official reserves, the central bank said. "The current account deficit narrowed by around 60 percent to $3.7 billion in H1-FY23," the central bank said.

☆ Pakistan repays $1 bln international bond -central bank spokesman
▼ + stars: | 2022-12-03 | by ( Gibran Naiyyar Peshimam | Fergal Smith | ) www.reuters.com time to read: +1 min

ISLAMABAD, Dec 2 (Reuters) - Pakistan repaid a $1 billion international bond, the central bank spokesman said on Friday, amidst growing uncertainty about the country's ability to meet external financing obligations. "The payment (was) made to Citibank New York," State Bank of Pakistan (SBP) spokesman Abid Qamar told Reuters in a message. The bond repayment, which matures on Dec. 5, totals $1.08 billion, the central bank chief said last week. During the week ended Nov. 25, SBP reserves stood at $7,498.7 million. Saudi Arabia on Friday also extended the term of a $3 billion deposit it has in Pakistan's foreign reserves.

☆ Saudi Arabia extends $3 bln deposit term to cash-strapped Pakistan
▼ + stars: | 2022-12-02 | by ( ) www.reuters.com time to read: +1 min

CAIRO, Dec 2 (Reuters) - Saudi Arabia on Friday extended the term of a $3 billion deposit it made to Pakistan's foreign reserves, state news agency SPA and Pakistan's central bank said. Saudi Arabia deposited the money in Pakistan's central bank late last year as a loan to shore up the cash-strapped country's reserves. The central bank reserves stood at $7.5 billion as of Nov 25 this year. "Saudi Fund for Development (SFD) extended the term for the deposit provided by the Kingdom of Saudi Arabia in the amount of 3 billion dollars to the State Bank of Pakistan," the bank said in a statement. Reporting by Alaa Swilam in Cairo and Asif Shahzad in Islamabad; Editing by Alex Richardson, William MacleanOur Standards: The Thomson Reuters Trust Principles.

☆ China will support Pakistan in stabilising its financial situation - Xi
▼ + stars: | 2022-11-02 | by ( ) www.reuters.com time to read: +2 min

BEIJING, Nov 2 (Reuters) - China will continue to support Pakistan as it tries to stabilise its financial situation, state media quoted President Xi Jinping as saying on Wednesday, during a visit by Pakistan's prime minister to Beijing. Pakistan was expected to seek debt relief from China, particularly the rolling over of bilateral debt of around $23 billion. China has been involved in major mining and infrastructure projects in Pakistan, including the deep-water Gwadar port, all part of the $65 billion China-Pakistan Economic Corridor (CPEC). China will also export technology for a 160 km/h high-speed railway train to Pakistan, state broadcaster CCTV said on Wednesday. China welcomes Pakistan to expand high-quality agricultural exports to the country, and is willing to deepen cooperation in areas including the digital economy, e-commerce, photovoltaic and other new energy sources, Xi said.

ISLAMABAD, Oct 20 (Reuters) - The Financial Action Task Force (FATF), a global money laundering and terrorism financing watchdog, starts a two-day meeting in Paris on Thursday and is expected to take up removal of Pakistan from a list of countries under "increased monitoring". In a meeting in June, the FATF said it was keeping Pakistan on the list - also known as the "grey list" - but said it might be removed after an on-site visit to verify progress. Register now for FREE unlimited access to Reuters.com RegisterHere are some key points:WHAT WOULD IT MEAN FOR PAKISTAN? If removed from the list, Pakistan would essentially receive a reputational boost and get a clean bill of health from the international community on terrorist financing. Removal from the FATF list would provide Pakistan a boost after the country's sovereign credit rating was downgraded by Moody's.

☆ Pakistan keeps policy rate at 15%, projects high inflation, weak growth
▼ + stars: | 2022-10-10 | by ( Syed Raza Hassan | ) www.reuters.com time to read: +4 min

GDP growth could fall to around 2% in the 2023 financial year compared to previous forecast of 3%-4% before the floods, the central bank statement said. However, the central bank later said the economy faces significant imbalances including a large current account deficit and persistently high inflation. INFLATION VS POLICY RATEThe central bank projected inflation after the floods to be on higher side compared to the last estimate of between 18%-20% in FY2022-23. Higher food prices could raise average headline inflation, the bank said, adding that the impact on the current account deficit was likely to be muted. It said it will leave the current account deficit in the vicinity of the previously forecast 3% of GDP.

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