IMF Predicted Value of Rupee Against Dollar by June 2024.
Pakistan has formally requested a waiver from the International Monetary Fund (IMF) for exceeding the agreed-upon premium between interbank and open market exchange rates. The IMF, however, maintains a positive outlook on Pakistan’s currency market, forecasting a strengthening rupee against the US dollar by June 2024.
Waiver Expected Amidst Improving Currency Conditions
Despite breaching the 1.25 percent premium limit, Pakistan is likely to receive the next tranche of its IMF loan. The IMF’s confidence stems from the encouraging signs of improvement in Pakistan’s currency market conditions. The central bank’s recent interventions and the government’s efforts to stabilize the economy have contributed to a more stable exchange rate environment.
IMF Forecasts Rupee/Dollar Rate Below Rs. 300
The IMF’s revised projections paint a more favorable picture for the Pakistani rupee. The lender now expects an average exchange rate of slightly less than Rs. 300 to the dollar by June 2024. This is a significant improvement from the rate used in the IMF’s July staff-level report, which indicated a potential exchange rate of Rs. 304 to the dollar.
Budgetary Implications of a Stronger Rupee
While a stronger rupee is generally considered beneficial for the economy, it could also pose challenges for the Pakistani government’s budget. The government had budgeted for an exchange rate of Rs. 290 per dollar for the fiscal year 2023-24. A stronger rupee could impact funding for critical sectors such as defense, foreign debt servicing, overseas missions, and the Public Sector Development Program (PSDP).
IMF Revises Economic Projections
The IMF has also revised its economic forecasts for Pakistan, reflecting the revised exchange rate projections. The lender has lowered its growth expectations for the current fiscal year to 2 percent, citing global economic uncertainties and domestic challenges. Consequently, the IMF now projects Pakistan’s GDP to reach Rs. 105.9 trillion by June 2024, which is slightly lower than the July forecast.
IMF’s GDP and Current Account Deficit Forecasts
The IMF has also revised its current account deficit forecast for the current fiscal year to $5.7 billion. This revision is driven by the expected improvement in exports and a moderation in import growth. Additionally, the IMF estimates the size of Pakistan’s economy to be $353 billion in dollar terms.
Looking Ahead: Navigating Economic Challenges
While the IMF’s revised projections offer some optimism, Pakistan faces several economic challenges in the near term. The government must address issues such as high inflation, rising energy costs, and fiscal imbalances to maintain macroeconomic stability and promote sustainable growth.
Read More: PKR Exchange Rates Today
Conclusion: Embracing Economic Reforms
Pakistan’s economic recovery hinges on its ability to implement effective economic reforms and address underlying structural issues. The government’s commitment to fiscal discipline, investment in infrastructure, and promotion of private sector growth will be crucial for achieving sustainable economic progress.
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