ISLAMABAD; Amid negotiations with the International Monetary Fund (IMF) to restart a $6.7 billion bailout programme, Fitch Ratings said that it is unlikely the cash-strapped nation will devalue its currency again as pressure on the rupee has eased.
Krisjanis Krustins, a Hong Kong-based director at Fitch, said: “We currently do not expect a large further devaluation of the Pakistan rupee.”
“Although the currency has been very stable over the past few months, pressure on the reserves [held by] the State Bank of Pakistan has also been contained, which suggests minimal interventions to support the currency,” Krustins said in an emailed response to questions sent by Bloomberg.
The multilateral lender has said it is working with authorities to fix its currency market and other issues before it resumes the bailout programme, which is set to expire this month.
The rupee has slumped more than 20% this year after officials devalued the currency in January, making it one of the worst performers globally.
The nation’s dollar stockpile has remained stable at about $4 billion since late February, after falling more than 50% in the past 12 months. Funds will be crucial to prop up the economy beset by supply shortages and avert a sovereign default, with billions of dollars of debt payments approaching.
“We continue to assume that the IMF and Pakistan will conclude the ongoing programme review, likely after the IMF has clarity on the budget,” Krustins said. “However, the window for this is rapidly closing, with the programme originally set to expire in June, and substantive progress unlikely in the immediate run-up to elections due by October.”
Prime Minister Shehbaz Sharif on Friday also hoped the IMF would resume the stalled bailout programme as the country has already met all prior conditions set by the global lender despite economic hardships.
“The ninth review will be complete soon,” the prime minister said during his address to the federal cabinet of the coalition government, which presented its second budget.
Washington-based IMF has said it is collaborating with Pakistani authorities to address concerns related to the country’s currency market and other matters before resuming the ongoing bailout programme, which is scheduled to conclude this month.
The government moved to put brakes on the outflow of foreign currency from the country and restricted imports to control the outflow of dollars.
