- Government missed its revenue, budget deficit targets
- Pakistan due for $502 million IMF loan tranche in December
Pakistan’s rupee, Asia’s best performing currency over the past two years, is overvalued between 5 percent to 20 percent, the International Monetary Fund estimated on Friday.
"If the exchange rate is going to depreciate by that amount then that would be in line with fundamentals," Harald Finger, the IMF’s Pakistan mission chief, told reporters in Islamabad. The rupee has been relatively stable against the U.S. dollar over the past two or three years despite the greenback’s appreciation against other currencies, he said.
The rupee erased earlier losses after Prime Minister Nawaz Sharif in 2013 won a $6.4 billion loan from the IMF to prop up foreign reserves and stave off a balance-of-payments crisis. However, he’s been unable to attract more stable flows and critics say the dollar stockpile masks risks that could push Pakistan toward more external funding.
Over the past 24 months, the rupee has gained 1.7 percent to 105.5 a dollar, the only one to strengthen among 12 Asian currencies tracked by Bloomberg. The Bloomberg Dollar Spot Index, which measures the greenback’s performance among 10 peers, has risen 20.5 percent over that period.
The government missed its budget deficit and revenue collection targets under the IMF loan program, and inflation will rise to 4.5 percent by the end of June from 1.6 percent now, Finger said after review talks with Finance Minister Ishaq Dar.
Sharif’s administration will take steps to cover the revenue shortfall, he added. Finger also said Pakistan has made progress on economic stability.
Pakistan is due to receive an installment of $502 million under the loan after approval from the IMF’s executive board, which meets in December, Finger said.