Pakistan raises rates by 300bp as default risks rise
Authorities struggle to collect taxes and unlock IMF funds
The State Bank of Pakistan hiked its policy rate by 300 basis points on March 2, to 20%. This was the largest of nine increases since September 2021, totalling 1,300bp.
The SBP’s monetary policy committee moved as the country continues to grapple with spiralling inflation, a wilting currency and a real risk of default. Pakistan has struggled to meet IMF conditions to unlock funding from a 2019 loan package.
Year-on-year headline inflation rose to 31.5% in February, from 27.6% in January. The
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