(Bloomberg) -- Pakistan's loan talks with the International Monetary Fund are progressing, according to the acting central bank chief, adding that such discussions can “take a bit of time.”
“We are confident we'll get to the finish line,” Murtaza Syed, acting governor at State Bank of Pakistan, said in an interview with Bloomberg TV's Rishaad Salamat on Tuesday.
The talks have been focused on issues including closing the country's fiscal gap due to subsidies on fuel and electricity, and the formation of next year's budget, Syed said.
“I would not want to put a date on it. I know that the budget negotiations can take a bit of time,” Syed said when asked when a deal could be done. “But the good news is that the gaps are being closed.”
Read more: Pakistan Dollar Bonds Halt 12-Day Slide as IMF Deal Seen in Days
The central bank raised its target interest rate to 13.75% on Monday, taking total increases from its pandemic-era lows to 675 basis points, as it struggles to tame Asia's second fastest inflation.
Syed said in the interview that the hikes are aimed at cooling economic growth, keeping inflation expectations anchored and to moderate the current account deficit.
Read more: Another Steep Hike in Pakistan, But Peak Rates Still to Come
Consumer prices rose more than 13% in April, while Pakistan's foreign exchange reserves of $10.2 billion cover less than two months of imports. The rupee gained 0.6% to 199.70 per dollar in intra day trading on Tuesday, its first gain in 14 sessions, according to Arif Habib FX data in Karachi.
Talks are underway in Doha with the IMF for accessing the remaining $3 billion from an existing loan program. Finance Minister Miftah Ismail on Monday pledged he'd come back from the meetings with a deal.
Read more: Pakistan Finance Minister Says Interest Rates Might Rise
Syed also said structural reforms should be undertaken to put the economy on a sustainable course, including reigning in the fiscal deficit, increasing exports and boosting productivity.
(Updates with rupee movement in seventh paragraph and additonal comments in the last paragraph)
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