Despite Revival of IMF Plan, Pakistan Faces Severe Liquidity Crunch
Islamabad: Pakistan is still witnessing a severe dollar liquidity crunch despite the resumption of the last month of the International Monetary Fund (IMF) program, local media reported adding the floods in the country have aggravated the macroeconomic fundamentals.
The IMF programme under USD 6.5 billion was restored in late August.
Geo tv reported that Pakistan's currency has been under pressure since the Imran Khan regime while economists expected the rupee-dollar parity to improve after the revival of the IMF program.
Meanwhile, United Nations Secretary-General Antonio Guterres, who is in Pakistan said on Friday that Pakistan needed "massive" financial support for relief, recovery and rehabilitation in the wake of the catastrophic floods that displaced more than 33 million people and are estimated to have caused USD 30 billion of damage.
The remarks of the UN Secretary-General came after he attended a briefing at the National Flood Response Coordination Centre (NFRCC) alongside Prime Minister Shehbaz Sharif, the Dawn reported.
Official sources as quoted by Geo tv reported that the exchange rate has gone under immense pressure in recent days whereby the rupee nosedived 9 per cent against the US dollar.
"The situation has aggravated as demand for imports has gone up manifold but the country does not have enough dollars. Without improving dollar injections, Pakistan's macroeconomic vulnerabilities are not going anywhere," Geo tv reported citing sources.
According to Geo tv, the initially estimated losses have accumulated in the range of USD 18 billion while Pakistan's agriculture sector faces the worst blow.
The worst performance of the agriculture sector will put pressure on increased demand for commodities imports and if Pakistan fails to generate desired levels of dollar inflows it might create food shortages in the current fiscal year, the media outlet said.
Pakistan is facing the worst calamity in past years, which has pushed most of the country into a crisis.
As heavy floods continue to ravage the region, the water flow of the River Indus in Khyber Pakhtunkhwa's Kohistan District is increasing very fast forcing the police to evacuate people in surrounding areas, Geo News reported.
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