Finance Minister Ishaq Dar on Tuesday announced that the Asian Infrastructure Investment Bank (AIIB) had transferred $500 million to Pakistan as part of the programme financing.

The welcoming news came as Dar said in a tweet that the State Bank of Pakistan (SBP) received the amount according to the AII Board’s approval.

It is certainly an encouraging developing for Pakistan which facing a serious economic crisis amid a depreciating rupee, falling reserves, hiked interest rate and the resultant chaos at the stock market.

There are reports that the talks between Pakistan and the International Monetary Fund (IMF) are inclusive as both sides unable to reach a broader agreement on a revised macroeconomic framework for the current financial year.

Hence, it is feared that the lingering of the talks may delay the conclusion of the ninth review and release of $1 billion tranche till the next year.

Earlier on Monday, the Pakistan Stock Exchange witnessed a bloodbath as the KSE-100 Index was down by 865 points after the State Bank last week unexpectedly decided to hike policy rate by 1 percent.

However, it is not just the 1 percent (100 basis points) hike in policy rate as political uncertainty caused by PTI Chairman Imran Khan’s announcement on Saturday that they would mull over resigning from or dissolving the Punjab and Khyber Pakhtunkhwa assemblies.

The State Bank on Friday had unexpectedly increased the policy rate by I percent from 15 to 16 percent, as it cited high inflation which is continuous and more than expectations.

It said the decision to hike the policy rate was aimed at ensuring that “elevated inflation does not become entrenched and that risks to financial stability are contained, thus paving the way for higher growth on a more sustainable basis”.

However, the move triggered the stock market’s immediate slump instead of the stated objective of financial stability.


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