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Pakistan Raises Rates More Than Expected to Win IMF Bailout

  • Inflation rises to more than 13%, second-fastest in Asia
  • Nation’s forex reserves cover less than two months of imports
A commercial area in downtown in Karachi. 

A commercial area in downtown in Karachi. 

Photographer: Betsy Joles/Bloomberg
Updated on

Pakistan raised borrowing costs more than estimated to damp demand, as policy makers try to win a bailout from the International Monetary Fund without meeting the politically tough condition of increasing fuel prices.

State Bank of Pakistan lifted the target rate by 150 basis points to 13.75% on Monday, steeper than the 100 basis point median estimate in a Bloomberg survey. The monetary policy committee’s outlook assumes engagement with the IMF, as well as reversal of fuel and electricity subsidies in the year starting July 1, the central bank said in a statement.