Karachi: Staff-level agreement between International Monetary Fund (IMF) and Pakistani authorities will address country's inflationary and external debt issues, said Governor State Bank of Pakistan (SBP) Jameel Ahmad. Remarks come after IMF announced on Friday that its staff and Pakistani authorities have reached an agreement on policies to be supported by  $ 3-billion, nine-month Stand-By Arrangement (SBA).

Staff-level agreement is subject to approval by IMF Executive Board, with its consideration expected by mid-July. "As result of this programme, we will see stability in markets and it will have positive impact on our foreign exchange reserves," said Ahmad while talking to state-owned broadcaster PTV News.

"IMF deal would help resolve these two issues." Addressing default rumours, SBP chief maintained reports were unfortunate. "We were managing situation. There were no circumstances under which we would default. "Pakistan made timely payments on all its external debt obligations. "Despite these payments, our foreign exchange reserves stayed at $ 4 billion."

On rupee-dollar parity, official said SBP has stated policy on exchange rate under which market forces determine rate of currency. "We expect flows to improve, which would have positive impact. Meanwhile, SBP would continue to monitor situation," he added. SBP Chief said that central bank's held foreign exchange reserves have increased by over $ 500 million.

"We expect foreign currency inflows would increase in coming weeks. This would enhance our capacity of debt payment, which would have positive impact on market as well."