IMF bailouts: SL, Pak raise interest rates

COLOMBO/KARACHI: Sri Lanka’s central bank raised interest rates in an unexpected move on Friday in a bid to help the country secure a bailout package from the International Monetary Fund (IMF) to stabilise its crisis-hit economy.

The bank raised its standing deposit facility rate and standing lending facility rate by 100 basis points each to 15.50% and 16.50%, respectively, it said in a statement. The country is awaiting approval of a $2.9 billion

IMF bailout package.

Central bank governor P Nandalal Weerasinghe said with the rate increase all “prior actions” have been fulfilled and he was hopeful of the IMF bailout being approved within this month.

The island nation’s economy has been squeezed by its worst financial crisis since independence from Britain in 1948, with growth contracting by an estimated 9.2% last year amid soaring inflation that hit 50% in February.

Meanwhile, Pakistan’s rupee surged after the nation’s central bank delivered a larger-than-expected rate hike to rein in inflation, as the country sought to secure an IMF bailout to shore up the economy.

The rupee climbed 2.9% to 277 per dollar on Friday, according to the foreign-exchange desks at AKD Securities Ltd and Arif Habib Ltd in Karachi. The central bank increased its key rate by 300 basis points to 20% on Thursday. Most economists expected a 200-basispoint hike.

Pakistan is stepping up efforts to secure a $6.5 billion financing from the IMF to avert a default, as the nation struggles to meet billions of dollars in debt repayments by June.

Pakistan is committed to repay $2.9 billion of foreign debt by June, central bank governor Jameel Ahmad said. Officials are hopeful that another $4.3 billion of loans will be rolled over and refinanced. The nation’s reserves stood at $3.8 billion as of late February.

Also, Pakistan will receive $1.3 billion in financing from the Industrial and Commercial Bank of China in coming days to help shore up its foreign exchange reserves, finance minister Ishaq Dar said on Friday.