Raising policy rate was not IMF’s demand, discloses SBP chief

In a surprise, State Bank of Pakistan (SBP) Governor Jameel Ahmad told a parliamentary panel that the recent increase of 300 basis points in its policy rate was a decision of the Monetary Policy Committee (MPC) of the central bank and not done on the demand of the Intern­ational Monetary Fund (IMF). Testifying before the Senate Standing Committee on Finance and Revenue, the SBP governor reported its latest foreign exchange reserves at $4.3 billion, following inflows of about $1.5bn over the past one and a half weeks. He said the remittances from overseas Pakistanis and exports had dropped in recent months and projected the average rate of inflation for the current fiscal year at about 26.5pc. The immediate increase in the central bank’s policy rate in line with the headline inflation was one of the key requirements of the IMF that had been widely reported in the national and foreign media for weeks even though the central bank kept publicly insisting to stick to its pre-set MPC meeting on March 16. It, however, had to suddenly advance the meeting by two weeks to March 2 to raise its policy rate by 300bps to 20pc.