From Zeeshan Mirza
KARACHI: The State Bank of Pakistan (SBP) on Tuesday “preponed” its Monetary Policy Committee (MPC) meeting on March 2 — which was initially scheduled to meet for March 16 — in another attempt to increase the pace of efforts to secure the much-awaited International Monetary Fund’s (IMF) tranche.
The SBP announced on its official Twitter handle that “the forth-coming meeting of the Monetary Policy Committee has been preponed and now it will be held on Thursday, March 02, 2023,” the central bank announced on its Twitter handle.
The SBP’s chief spokesperson Abid Qamar had said earlier that, following the meeting last month, no MPC meeting had been held to date.
The MPC was established under the SBP’s Amendment Act, which is empowered to take a decision keeping in view the macroeco-nomic fundamentals.
The market expects the SBP to raise benchmark interest rates as the rise in treasury yields in the last auction hinted towards mar-ket weighing-in concerns on the economic front with the investors continuing to take note of rising inflation around the world as well as in Pakistan, Arif Habib Limited stated in a commentary released earlier.
Moreover, the coalition government had agreed to hike the inter-est rate from the existing level of 17% to 19% under one of the major conditions put forth by the Fund to revive the loan pro-gramme.
However, analysts believed that the SBP needed to bring forward the MPC meeting date as the ministry of finance cannot afford failure in the next T-bill auction.
It is to be highlighted that the Fund and the central bank had held a round of discussions about the possibility of further tightening of monetary policy and building up foreign exchange reserves by the end of June 2023.
The IMF had also asked the SBP for hiking the policy rate by 300 to 400 basis points in order to move towards the interest rate from a negative to a positive trajectory.
The cash-strapped country is undertaking key measures to secure IMF funding, including raising taxes, removing blanket subsidies, and artificial curbs on the exchange rate. While the government expects a deal with IMF soon, media reports say that the agency expects the policy rate to be increased.
