ISLAMABAD: Parliamentary Leader of Pakistan Peoples Party (PPP) in the Senate Sherry Rehman has expressed reservations over the State Bank’s decision to increase the interest rate to 12.25 per cent.

“The interest rates have been increased in accordance with the demands of the International Monetary Fund (IMF). In March, they were increased by 50 basis points and just two months later, they have been spiked by 150 basis points to an eight-year high of 12.25pc,” she said in a statement on Monday.

Ms Rehman said the government was implementing the IMF terms before signing a deal with it. This is also evident in the unabated increase in the dollar rate which has seen the rupee plummet to Rs152 in the open market. “All this devaluation is going to make paying back our debt an onerous task. It appears that the government is nothing more than a silent spectator in front of the IMF. Every step it is taking seems to be an effort to please a few. Its haphazard decisions are wrecking the economy.”

She said given the trends, “we can expect more increase in the interest rate and inflation in the next six months. The increase in interest rate will also drive unemployment further up in the months to come. It seems like the poor people of this country are not the government’s priority at all. Moreover, it is important to note that the IMF programme will continue until the last quarter of 2022, leaving less than three quarters for the government to generate jobs. We hope that the government has not lost track of its promises of providing 10 million jobs to the people, so far the opposite has been the case.”

The Senator said so far all the economic indicators were flashing red.

“The stock exchange index has fallen by 2.5pc today as well after undergoing its worst phase in over a decade, per capita income in the country has dropped by 8pc and revenue targets have been consistently missed. The government is repeatedly floundering in its efforts to reign in the economy.”

Former Senate chairman Raza Rabbani has warned that the country will have to pay huge economic and political price of the agreement being negotiated with the IMF.

The PPP leader said in a statement that the government continued to hide the IMF agreement from the people and parliament.

According to him, in one of the many prior actions to qualify for the IMF loan the Fund has called upon Pakistan to get commitments from China, the UAE and Saudi Arabia that they would roll over their credit lines by extending their loans which are due to be paid in the next financial year.

Mr Rabbani pointed out that the IMF had never asked for such a condition to be implemented by any country. Whereas, the IMF calls upon Pakistan to seek an extension for its loans from China, Saudi Arabia and the UAE it is not willing to roll over its own loan for Pakistan.

He said as preconditions to be met the dollar has been left at the mercy of the open market, while gas, petrol and electricity charges are to be increased.

Published in Dawn, May 21st, 2019