The Pakistani finance ministry has warned that the prevailing political unrest was causing governance problems and intensifying market uncertainties already caused by low forex reserves and external pressures. “Inflationary and external sector risks are building macroeconomic imbalances in the economy. Furthermore, the ongoing political unrest is increasing economic uncertainty, which is causing the rupee to depreciate and has an impact on the cost of production. All these factors are making the economic outlook uncertain”, said the ministry in its monthly economic outlook for July. There is an intense need for the successful completion of the IMF 7th and 8th reviews of Pakistan’s Extended Fund Facility (EFF). A staff level agreement for a $1.17bn IMF loan tranche has been reached, the report said. International commodity prices, especially oil and food prices, and depreciation of the exchange rate has influenced inflation, the ministry said, conceding that inflation mostly in the last two months also came from supply shocks that have overshadowed government efforts in maintaining prices.
