KARACHI (Reuters) - Pakistan’s monetary policy will aim to balance growth and inflation concerns, the country’s top economic adviser and the central bank governor said in a letter posted on the International Monetary Fund’s website.

The letter of intent, dated March 16 and posted late on Monday, was written before the IMF approved the second tranche of its emergency loan.
“The SBP (State Bank of Pakistan) will calibrate monetary policy to balance concerns about the slowdown in economic activity, subject to the overall objective of lowering inflation,” the letter said.
“Provided that the expected decline in inflation materializes and market confidence remains positive, there could be scope for a more accommodative monetary policy stance.”
Pakistan secured in November an IMF emergency loan package of $7.6 billion to avert a balance of payments crisis.
It got a first tranche of $3.1 billion that month and a second tranche of $848 million last week.
Inflation eased to 21.07 percent in February from a peak of 25.3 percent in August after the central bank hiked its key interest rate by 200 basis points to 15 percent in November.
The central bank kept its rates unchanged in January and is due to review them again this month. Most analysts are expecting an interest rate cut given that inflation data due in the next few days is expected to show a marked fall in March.
The central bank said on Saturday in a report there was a scope for a cut in its key discount rate if there is a fall in inflation and foreign exchange reserves continue to rise.
The IMF said last week Pakistan’s monetary stance was appropriate, but there might be scope for interest rate reductions if inflation declined further.
The letter, signed by Shaukat Tarin, adviser to the prime minister and central bank governor Salim Raza, also said that the disbursement of multilateral programme financing has been slow and projected privatization receipts for the fiscal year 2008/09 budget were unlikely to materialize.
It said the upcoming donor meeting in Tokyo on April 17 was ‘pivotal’ for mobilizing additional financing.
Pakistan will ask its allies to provide up to $30 billion in aid over the next 10 years at a conference in Japan this month, the country’s top economic official said on Friday.