Can rate cut, IMF program tame Imran Khan’s rising popularity?

Prime Minister Shahbaz Sharif’s government in Pakistan has been facing mounting challenges as the popularity of jailed former Prime Minister Imran Khan continues to rise amid a sluggish economy.

But it may have been one of the better days in office for him in a while, at least on the economic front. The State Bank of Pakistan’s decision to slash its key policy rate by 200 basis points to 17.5% must have given him a glimmer of hope, as the rate cut followed a notable decline in both headline and core inflation in the country, thanks to falling global oil prices and a delay in energy price adjustments.

Another significant announcement during the day, giving Sharif a much-needed boost, came from the International Monetary Fund (IMF). After a long wait, the IMF finally announced that the Fund’s executive board will discuss a crucial $7 billion, three-year program for Pakistan when it meets later this month.

IMF’s Director of Communications, Julia Kozek, told reporters that the meeting will be held on September 25, where the program may be approved. The much-needed IMF program aims to stabilize the economy and support necessary structural economic reforms.

These positive developments on the economic front can provide political mileage to the government too, as they are likely to stimulate business and investment activities, potentially helping alleviate public discontent towards the government.

Improved economic conditions may help mitigate, if not end, the ever-growing anti-government and pro-Imran Khan sentiment across the country.

The writer is Founder and CEO - Nukta