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Pakistan's economic growth will contract by 0.3 per cent in the current fiscal year 2023 after the government allowed the local currency to devalue by a net 14.2 per cent against the US dollar in the past four working days, US-based finance and insurance company Fitch Solutions projected.
According to The Express Tribune, the Pakistani rupee closed at Rs 268/83 in the interbank market on Tuesday, in the backdrop of other actions by the government to revive the International Monetary Fund (IMF) loan programme. Fitch Solutions anticipated that the current cycle of rupee devaluation has not yet ended and that the Pakistani rupee will continue to lose its value against the US dollar, considering the high demand for foreign currency to pay for imports and repay colossal foreign debt. Accordingly, the country's economic challenges are going to multiply in the future, the company said. "It (rupee devaluation) could exacerbate imported inflationary pressure and may eventually result in steeper policy rate hikes from the SBP (State Bank of Pakistan)," Fitch Solutions said in a report titled 'Quick View: Pakistan Rupee Could Weaken Further', according to The Express Tribune. "These factors will only exacerbate Pakistan's challenging economic outlook. We currently expect the economy to contract by 0.3 per cent in FY 2022/23," noted the report dated January 30, 2023. Pakistan's central bank had on January 23, 2023, said the report had revised its projection for economic growth to less than 2 per cent for the current fiscal year 2023, as compared to around 2 per cent for the year earlier. This was its second downward revision. Prior to this, the SBP had estimated growth in the range of 3-4 per cent before the widespread devastating floods hit the economy hard in August-September 2022, according to The News International. Islam Khabar recently reported that the new year 2023, has brought more miseries to Pakistan's already dwindling economy. Analysts are now warning that the country may go bankrupt. Amid this Prime Minister Shehbaz Sharif-led Pakistan Democratic Movement (PDM) government has agreed to meet all conditions of the International Monetary Fund (IMF) for the early resumption of the next review. Sharif on January 24 said that Pakistan's ruling PDM alliance is ready to sacrifice its "political career for the sake of the country" by accepting IMF's "stringent" conditions to revive the loan programme. Reports reveal that over 9,000 containers are stuck at different Pakistani seaports, threatening to disrupt the supply chains of essential goods. Inflation in the country has risen to almost 30 per cent. The country's funds are running low and food prices are increasing. According to Islam Khabar, importers are unable to clear containers due to a shortage of dollars, while shipping companies are threatening to suspend Pakistan's operations over the country's failure to make timely payments. This will negatively impact both imports and exports. (ANI)
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