Pakistan economic crisis worsens, currency sees highest 1-day crash in 20 years
1 min read . Updated: 27 Jan 2023, 01:23 PM IST
PremiumThe foreign exchange companies had removed a cap on the Pakistani rupee-dollar exchange rate. This was a key demand of the IMF as part of a programme of economic reforms it has agreed on with the debt-laden South Asian nation.
Economic crisis in Pakistan seems to be worsening by the day. Its currency witnessed its biggest one-day decline in over two decades to 262 against the dollar. After 9.6% fall it recovered a bit to now trade at 242 vs dollars. The slump was so severe that it prompted the International Monetary Fund (IMF) to resume lending to the country.
The country has been relying on IMF funding to save itself from drowning further which has a key demand to remove a cap on the Pakistani rupee-dollar exchange rate. Federal Board of Revenue Chairman Asim Ahmed has termed the current financial situation in the country as 'critical', the Dawn reported.
"Economic situation [in the country] is critical and there is a shortfall in revenue. We will soon overcome the tax gap," Ahmad said during his address at a function held at the Customs House here on Thursday to mark the International Customs Day, according to Dawn.
He added that the ₹7.47 trillion (Pakistani rupee) revenue target would be achieved since those who had not been paying tax would be brought under the tax net, the Dawn reported.
Currency experts claim IMF talks resumption and sharp decline in the foreign exchange reserves has kept the rupee under pressure. According to media reports coming in from Pakistan foreign exchange reserves have plunged to only $3.68 billion by week ended January 20, 2023 and official reserves of the State Bank of Pakistan have plunged by $923 million to $3.678 billion by week ended January 20, 2023 as compared with $4.601 billion a week ago or January 13, 2023.
It can be noted that Pakistan secured a USD 6 billion IMF bailout in 2019. After this, the loan was topped up with another USD 1 billion last year. The country was hit by devastating floods last year.
However, the lender then suspended disbursements in November last year due to the country's failure to make more progress on its way to fiscal consolidation.
The lender announced on Thursday that it was sending a mission to the country at the end of January for discussing on the lines of resuming these disbursements.
(With ANI Inputs)
