The Pakistani rupee suffered a fresh blow against the US dollar on Thursday amid reports the World Bank has deferred approval of two loans worth $1.1 billion for the country. As the interbank markets opened, the rupee went down – 22nd drop in a row – against the greenback which was now being traded at Rs229. On Wednesday, the local currency depreciated 0.11% in the inter-bank market, declining by 25 paisas to close the day at 228.91. The dull interbank business is lacking direction amid reports the government is considering new tax-raising measures through a Presidential Ordinance that may include an increase in the rates of withholding taxes, more indirect taxation, three percent flood levy on imports, and tax on banks’ foreign exchange income.

The move comes as Pakistan mobilises revenue in an effort to revive the stalled International Monetary Fund (IMF) programme. The World Bank was quick to react, deferring its approval of two loans for Pakistan worth $1.1 billion until the next fiscal year pending some steps on the country’s energy debt and tariffs. The funds were to be provided for two projects including Resilient Institutions for Sustainable Economy (RISE-II) and Program for Affordable and Clean Energy (PACE-II). World Bank was due to give Pakistan $450 million for RISE-II and $600 million for PACE-II. However, it has now deferred the disbursement until the next fiscal year. The bank also opposed the 1%-3% flood levy on imports to fulfill the financing gap of $32 billion.

Credit: Independent News Pakistan-INP