Islamabad (TIP): The Pakistani rupee on January 27 fell to its lowest-ever level of Rs 262.6 against the US dollar ahead of an International Monetary Fund (IMF) delegation’s visit to Islamabad to discuss resuming disbursements from a bailout package.

On January 26, the Pakistani rupee had suffered the largest single-day depreciation of Rs 24.54 and settled at Rs 255.43, adding to its woes of heightened violence in Khyber Pakhtunkhwa and Balochistan, high prices and even shortage of essentials and electricity blackouts. A devastating flood that affected large parts of the country preceded by the ravages of the Covid pandemic had already put pressure on the Pakistani economy, which was already affected by an unstable polity.

As a result, foreign exchange reserves are at rock bottom with reports of 9,000 containers stuck at the Karachi port for want of payment. Some of the containers reportedly contain essential commodities, petroleum products, LNG and soybean.

The steep devaluation that put pressure on essentials was itself an IMF formula which had asked for the removal of an unofficial cap on the dollar-Pakistani rupee rate to revive its loan programme.

Pakistan is seeking a $1.1 billion IMF bailout after getting off the Financial Action Task Force’s grey list. It had negotiated a $7 billion package secured in 2019, but the IMF now wants Pakistan to take several tough and unpopular measures to get the next round of funding. These include an increase in electricity rates, widening the tax base and ending the artificial control on the exchange rate. The partial implementation of the last step has led to a plunge in the value of the Pakistani rupee.

The IMF delegation is slated to visit Islamabad for 10 days from January 31 to discuss the ninth review of the $7 billion Extended Fund Facility. Then Imran Khan government had negotiated a loan of $6 billion loan in 2019, which was increased to $7 billion last year.

Meanwhile, the foreign exchange reserves of the central bank continued to slide and hit a new nine-year low of USD 3.678 billion during the week ended on January 20. The State Bank of Pakistan on January 26 said that its forex holdings decreased by USD 923 million during the week due to external debt repayments. (TNS)