Tax advisory firm Tola Associates has claimed that the International Monetary Fund’s (IMF) market-based exchange rate policy has significantly overvalued the US Dollar by Rs. 67 against the Pakistani Rupee. According to the firm, without IMF-imposed restrictions, the rupee-dollar exchange rate could have been at Rs. 211.5 by October 2024, instead of the current higher levels.

In a recent market review, Tola Associates argued that a lower exchange rate of Rs. 211.5/$ would have had far-reaching positive effects on Pakistan’s economy. The firm estimated that such a valuation could have reversed inflation for the July-October period into a 4.67 percent deflation, reduced interest rates to below 2 percent, and saved the government Rs. 6.4 trillion for economic development initiatives.

The firm’s analysis is based on average rupee-dollar exchange rates from fiscal years 2022 to 2024. It contends that without IMF conditions, the rupee would not have depreciated to Rs. 278/$ during the 2023-24 fiscal year.

Tola Associates further highlighted that a stronger rupee at Rs. 211.5/$ could have saved Pakistan Rs. 475 billion in debt repayments by lowering interest rates. The firm’s findings suggest that the IMF’s market-based exchange rate policy has placed a significant financial burden on the country.

This analysis comes amid ongoing debates about the impact of IMF policies on Pakistan’s economy, with critics arguing that the conditions attached to IMF loans have exacerbated economic challenges.