Pakistan was finally able to agree on a $6 Billion deal with the IMF that would mean that the country would have to tighten its hold on the economic system that would mean increase in taxes and a massive negative effect on the economy. The worse of all is the devaluation of the Pakistani Rupee as it fell to an all time low of Rs146.25 against the US Dollar. The IMF spoke of a “market determined exchange rate” in its statement on the programme, and the financial markets have not taken the words very well. Speculation has broken out in the forex markets, with small and large investors looking towards the greenback.
“The potential for higher rate of dollar is visible in the inter-bank money market,” a banker was recently quoted as saying.
“Fears of further devaluation as a result of the agreement with the IMF have depressed the currency market and the rupee may lose more against the greenback in the coming days,” Secretary General of Exchange Companies Association of Pakistan Zafar Paracha had said on Monday.
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The IMF deal didn’t happen without its fare share of controversy as it led to the dismissal of Finance Minister Asad Umar who was in a deadlock with IMF over the terms of the agreement. Thereafter, as the deal was closed and Asad Umar assigned to a new role in the Government as the chairman of the National Assembly’s Standing Committee on Finance and Economic Affairs. Asad Umar has claimed that he will be comparing the terms of the agreement to the one which he was in a deadlock with.
He said it was the right of the parliamentary committee to be briefed on the IMF programme, adding that as finance minister it was his commitment to placing all details of the Fund programme before the standing committee. He said he had repeatedly stated that he would not comment on the IMF programme during the course of negotiations but make full disclosure once the deal was signed.
He said that once details of the agreement with the IMF were made public, he would also share with the committee what was the difference between the terms and conditions negotiated by him and what were accepted by the new team.