In yet another effort to get a bailout from the International Monetary Fund finalised, Pakistani authorities are preparing to raise the interest rate by a further 2%.

The IMF had asked the government to increase the rate by 4% in its negotiations with the government earlier this year. However, the government chose only to raise the rate by 2%.

Despite negotiations continuing virtually after the Fund’s team left Pakistan, the bailout is yet to be released. The government has now decided that it will go ahead with the remaining 2% as well.

The IMF has reportedly told Pakistani authorities that the current policy rate is less than what is needed to counter the historically high rate of inflation in the country.

Analysts and government alike have repeatedly said that the IMF bailout tranche worth $1.1 billion wil be the first domino to fall that leads to Pakistan’s economic recovery. While the government has repeatedly said that it is confident of receiving help from friendly countries, this aid is also linked to IMF’s bailout appearing first.

Authorities have meanwhile repeatedly said that the IMF deal is ‘close’ and there is no risk of default.