The rupee remains on the ropes, falling to an all-time low of Rs 271.35

A currency dealer counts $100 bills in this undated photo. – AFP/File
  • The rupee touched 272.17 rupees against the dollar in intraday trade.
  • The local unit closed at Rs 268.83 on Wednesday.
  • The rejection of the periodic debt plan by the International Monetary Fund is likely to have dampened sentiment

Karachi: Rs On Thursday after two moderate meetings due to “optimism around the government and International Monetary Fund (IMF) negotiations are lost.

The rupee fell by Rs 2.52 to end the day at Rs 271.35. However, the local currency hit 272.17 against the dollar in intraday trade.

The rupee closed at Rs 268.83 on Wednesday.

Since the beginning of this year, the value of the rupee has decreased by 44.92.

Capital market expert Saad Ali said Reports of the rejection of the Circular Debt Management Plan (CDMP) submitted by the government to the International Monetary Fund (IMF) have dampened market confidence.

Ali said that these reports have raised doubts about the possibility of creating a bottleneck in the ongoing negotiations between the government and the International Monetary Fund.

An IMF delegation is currently in Pakistan conducting negotiations on the ninth review, which will last until February 9, after which a staff-level agreement is expected to be signed between the two sides.

The fund rejected the circular debt management plan

earlier today News It had reported that the IMF rejected the CDMP presented by the government and asked the authorities to increase the electricity tariff by Rs 12.50 per unit to limit the additional subsidy to Rs 335 billion in the current fiscal year.

During the second day of technical-level talks, the Washington-based lender called the revised CDMP “unrealistic” based on certain incorrect assumptions. Therefore, the government should make further changes in its policy prescription to limit the losses in the power sector.

The IMF and the Ministry of Finance will create a gap on the fiscal front after which various additional tax measures will be finalized through the upcoming mini-budget.

The revised CDMP envisages a monster increase in circular debt of Rs 952 billion for the current financial year against the earlier projection of Rs 1,526 billion.

The government shared its revised plan with the International Monetary Fund on Wednesday, which shows that despite raising electricity tariffs to the tune of Rs 7 per unit through quarterly tariff adjustments in the first two quarters of 2023, the government needs to It has an additional subsidy of 675 billion rupees. 1.64 for the third quarter from June to August.

The IMF has opposed the specific basis of the revised CDMP and wants the government to increase the tariff in the range of Rs 11 to Rs 12.50 per unit, so that the need for additional subsidy will be halved from the current level of Rs 675. billion for the current fiscal year,” sources told the confidential publication.

The IMF also raised questions about how the government calculated the additional subsidy for the current fiscal year, which is 675 billion rupees. The government has announced a lower exchange rate for calculating the revised CDMP, so it changes with the existing rate of the scheme.

According to this report, the new debt management plan formulated seeks to limit the average losses of DISCO companies to 16.27% during the current financial year.

The government is aiming to pocket Rs 20 billion in fuel price adjustment (FPA) costs that were delayed last summer, against estimates of Rs 65 billion in the run-up to last summer.

Savings from IPPs’ equity payments will bring in Rs 11 billion while GST and other taxes on a collection basis will help recover Rs 18 billion in the current financial year.

Recurrent debt is estimated to be around Rs 2,113 billion by the end of FY2023, including the amount parked in Power Holding Limited (PHL), Rs 765 billion and Rs 1,248 billion payable to power producers and Rs 100 billion to supply. fuelers

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