ISLAMABAD: The record 7.5 percent depreciation of the rupee on Tuesday has contributed to Pakistan’s total debt and liabilities to shoot up solely by around Rs900 billion and Rs1.4 trillion since August.

The central bank on Tuesday allowed the rupee to be devalued by around Rs9.50 against the dollar in line with IMF suggestions signalling the government’s intent to completing prerequisites before it secures another bailout programme, reports Dawn.

According to informed sources, the rupee devaluation on Tuesday was in line with IMF recommendations to allow a full free float exchange rate and raise policy rate and utility tariffs.

The incumbent government has raised gas prices by a record 35 percent in September and is in the final stages of approving a hike in electricity tariff recommended by Nepra by 33 percent or Rs3.90 per unit from the prevailing rate.

And the sources shared the administration had indicated devaluation of the local currency after consecutive meetings with the Prime Minister Imran Khan including the one before the leaving of Finance Minister Asad Umar to Bali, Indonesia to request for an IMF bailout.

Also, an official stated the latest round of devaluation and exchange rate would assist in reducing the import bill which stood at a record $60.9 billion in the preceding FY18 and rein in current account deficit.

Simultaneously, the rising cost of crucial imports like liquefied natural gas and oil would raise transport, industrial and commercial costs significantly.

Alone, the imports of LNG and oil are projected at around $18 billion and the stock market bloodbath that had ensued before the government’s announcement to approach the IMF also had a political dimension to it.

However, that was not the case with currency rate aside the economic uncertainty and indecision of the government to provide a clear economic policy on the IMF programme and the decline of $628 million in forex reserves to $8.4 billion last week set the alarm bells ringing.

As per officials, the initial announcements about foreign inflows expected from China and Saudi Arabia and then its failure to render these proclamations into reality had played a part also.

At end of FY18 on June 30^th, the country’s total external debt and liabilities were recorded at a touch over $95 billion, said an official.

When the new government came into power on August 18^th, this translated into Rs11.685 trillion and rupee to a dollar exchange rate stood at Rs123.

Consequently, the jumping of the exchange rate to around Rs139 per dollar on Tuesday meant the total debt and liabilities went up to Rs13.11 trillion, a rise of Rs1.42 trillion.

The official said the exchange rate on Monday stood at roughly Rs128 to a dollar, which translated to a total burden of external debt and liabilities of around Rs12.2 trillion, which now had soared by Rs902 billion on Tuesday to Rs13.11 trillion.