ISLAMABAD – Pakistan has accepted another demand of the International Monetary Fund (IMF) to increase the policy rate by two percent in an off-cycle review, a move that would further trigger inflation in the country.
The Ministry of Finance officials and the global lender held virtual talks on Friday night when they reached the agreement regarding increase in the interest rate. Currently the policy rate stands at 17pc, the highest level in 25 years.
The IMF has also called for tightening the monetary policy based on inflation in the country.
The cash-strapped country is implementing key measures to meeting the conditions of the IMF to secure much-needed funding. It has recently announced a mini-budget to impose Rs170 billion additional taxes and removing subsidies. Before that, it has allowed the free floating of the rupee value against the dollar.
