As IMF Measures Take Effect, Inflation In Pakistan Remains High At 27.4%
Citing government data issued on Friday, Pakistan's inflation rate remained above target in August at 27.4 per cent, as policies stated as prerequisites for an IMF loan made it more difficult to contain price pressures, according to ARY News.
Pakistan is on a rocky road to economic recovery under a caretaker administration, despite avoiding a sovereign debt default in July thanks to a USD 3 billion loan program from the International Monetary Fund (IMF).
Reforms related to the bailout, such as relaxing import restrictions and requiring the removal of subsidies, have already contributed to annual inflation reaching a record 38 per cent in May. Furthermore, interest rates were raised, and the rupee fell to historic lows. According to ARY News, the currency fell 6.2 per cent last month.
Food inflation remained high in August, at 38.5 per cent, according to data from Pakistan's statistics department, despite a modest decrease from July's rate of 28.3 per cent.
As political tensions increase ahead of a November national election, the economy deteriorates, sparking occasional protests.
On Saturday, the Jamaat-e-Islami called a statewide strike against rising power prices.
According to ARY News, ordinary Pakistanis are trying to make ends meet.
With sky-high inflation and foreign exchange reserves only enough to cover one month's worth of restricted imports, Pakistan has been experiencing its worst economic crisis in decades, which analysts say may have led to a debt default if the IMF deal had not been reached.
In order to reach an agreement with the IMF, the Pakistani government had to impose higher taxes totalling 215 billion PKR and cut spending by 85 billion PKR.
Under IMF terms, electricity rates in Pakistan have risen, causing social instability in the country. The IMF has requested that Islamabad offer a formal plan after the government chose to seek approval from the Washington-based lender on its proposal to lessen the burden on angry citizens over an increase in electricity rates, according to The News International, citing sources.
