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  1. #1
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    IMF or China? Who will bailout Pakistanís economy from latest currency crisis?

    The apparent third currency devaluation recently, in nearly seven months, by its central bank shows signs of vulnerability in Pakistanís economy of nearly $300 billion in size. The latest development has once again raised speculations about Pakistan going to the IMF for borrowing loans since 2013. Conversely, what may be different this time is that there is no unanimity among policymakers on seeking loans from the International Monetary Fund (IMF). In fact there are voices asking to find other options including China.

    Can China help?

    Even though China wouldnít want Pakistan to go bust due to its very clear economic interests in the country, it may not independently take on the onus of helping it. In fact, it may supplement the IMFís bail-out programme. ďThe problems of the present originate elsewhere. As well as higher energy costs, they reflect loose fiscal policy and rapidly growing domestic credit. Fixing these will require some combination of lower government spending, higher interest rates and a cheaper currency. Although China will not want to see Pakistan go bust, it will not want to dictate its macroeconomic policies either. That is the IMFís job. China, then, is more likely to supplement an IMF programme than supplant one,Ē The Economist writes.

    The international magazine also writes that the Pakistani politicians may sadden over loss of economic independence of the country but similar objections have not been there in the past. ďBetween 2001 and 2013 Pakistan turned to the IMF three times. In fact, there were as many IMF bailouts of the country over that period as there were World Cups. Apparently, itís time for another one,Ē The Economist says.

    Economic turmoil

    In December and in March, the rupee was devalued, each time by about 5 percent, by the central bank. Pakistanís economy is expected to expand by close to 6 percent this year, the fastest pace in more than a decade, but a widening of the current account deficit has brought new worries. The current account deficit now stands at $14 billion, around 5.3 percent of gross domestic product, an SBP official said. The economic outlook has been hurt by the fast depletion of foreign currency reserves, which now stand at just over $10 billion. Pakistan is currently in discussions with China for loans to ease pressure on its foreign currency reserves.


    https://www.financialexpress.com/eco...risis/1210215/


    TalentSpotterPk: I pray PanamaLeak sink Sharif ship forever we dont want this pseudo democracy

  2. #2
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    Quote Originally Posted by Mian View Post
    The apparent third currency devaluation recently, in nearly seven months, by its central bank shows signs of vulnerability in Pakistan’s economy of nearly $300 billion in size. The latest development has once again raised speculations about Pakistan going to the IMF for borrowing loans since 2013. Conversely, what may be different this time is that there is no unanimity among policymakers on seeking loans from the International Monetary Fund (IMF). In fact there are voices asking to find other options including China.

    Can China help?

    Even though China wouldn’t want Pakistan to go bust due to its very clear economic interests in the country, it may not independently take on the onus of helping it. In fact, it may supplement the IMF’s bail-out programme. “The problems of the present originate elsewhere. As well as higher energy costs, they reflect loose fiscal policy and rapidly growing domestic credit. Fixing these will require some combination of lower government spending, higher interest rates and a cheaper currency. Although China will not want to see Pakistan go bust, it will not want to dictate its macroeconomic policies either. That is the IMF’s job. China, then, is more likely to supplement an IMF programme than supplant one,” The Economist writes.

    The international magazine also writes that the Pakistani politicians may sadden over loss of economic independence of the country but similar objections have not been there in the past. “Between 2001 and 2013 Pakistan turned to the IMF three times. In fact, there were as many IMF bailouts of the country over that period as there were World Cups. Apparently, it’s time for another one,” The Economist says.

    Economic turmoil

    In December and in March, the rupee was devalued, each time by about 5 percent, by the central bank. Pakistan’s economy is expected to expand by close to 6 percent this year, the fastest pace in more than a decade, but a widening of the current account deficit has brought new worries. The current account deficit now stands at $14 billion, around 5.3 percent of gross domestic product, an SBP official said. The economic outlook has been hurt by the fast depletion of foreign currency reserves, which now stand at just over $10 billion. Pakistan is currently in discussions with China for loans to ease pressure on its foreign currency reserves.
    China is going to help Pakistan if it has more to lose than if it doesn't help. China is not a long term solution, it is at best a temporary fix. It may not even be a temporary fix if it thinks that the situation will not change and Pakistan will be back in the future for more help.

    Pakistan's problem at this point is that it is not producing enough stuff that the rest of the world wants to buy. It has the talent and labor to grow modern industries, but unless it gets over its hostility to India and gets its Army out of the economy and gets rid of the Army's asset the jihadis, it will not attract foreign investment necessary to develop modern industries.

    The choice is clear, the question is whether Pakistanis have the wisdom to make the right choice.
    Last edited by Napa; 18th June 2018 at 22:58.

  3. #3
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    China lends $1bn to Pakistan to boost plummeting forex reserves

    ISLAMABAD: China has lent Pakistan $1 billion to boost the South Asian countryís plummeting foreign currency reserves, two sources in Pakistanís finance ministry told Reuters, amid growing speculation of another International Monetary Fund bailout.

    https://www.dawn.com/news/1417181/ch...forex-reserves


    TalentSpotterPk: I pray PanamaLeak sink Sharif ship forever we dont want this pseudo democracy

  4. #4
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    ISLAMABAD: The government said on Friday it was ready to take ‘further corrective measures’ proposed by the International Monetary Fund (IMF) to restore economic stability and inclusive growth, apparently setting the pitch for a coming bailout package from the fund.
    https://www.dawn.com/news/1437156

  5. #5
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    Quote Originally Posted by Napa View Post

    gets its Army out of the economy and gets rid of the Army's asset the jihadis, it will not attract foreign investment necessary to develop modern industries.

    The choice is clear, the question is whether Pakistanis have the wisdom to make the right choice.
    Nahhh, Pakistani perspective would be: lets just focus on Kashmir, who cares about the economy or the future of our nation. As long as we gain control of Kashmir everything will be good.... Pakistan is a lost cause, it cannot be revived, it will just go the way it is, with the odd positive tilt but for majority of its existence it will be a non factor country in the world... Its fricken SAD the Pakistani ppl cant see this plain simple fact, hopeless.......


    "Everything else seems so superfluous." ~ Albert Einstein on the Bhagavad-Gita

  6. #6
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    The question should be asked is, how Pakistan fall into this mess?

    Only corruption can not be the answer. It can play part but there must be bigger factor than this.

  7. #7
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    Quote Originally Posted by Itachi View Post
    The question should be asked is, how Pakistan fall into this mess?

    Only corruption can not be the answer. It can play part but there must be bigger factor than this.
    Extremely good question. Corruption is definitely one reason, but there must be several other reasons. Unfortunately, I have very little idea about them.


    If there is a better batsman than Sachin then he hasnít arrived yet: Viv Richards

  8. #8
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    Quote Originally Posted by Romali_rotti View Post
    Nahhh, Pakistani perspective would be: lets just focus on Kashmir, who cares about the economy or the future of our nation. As long as we gain control of Kashmir everything will be good.... Pakistan is a lost cause, it cannot be revived, it will just go the way it is, with the odd positive tilt but for majority of its existence it will be a non factor country in the world... Its fricken SAD the Pakistani ppl cant see this plain simple fact, hopeless.......
    Amazing how Indians would love Pakistan to go away since 1947.

    There's a divine reason why this country is still here and will remain forever, I know it's tough to digest but accept it and move on


    For the latest updates on Cricket, follow @PakPassion on Twitter

  9. #9
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    Quote Originally Posted by MenInG View Post
    Amazing how Indians would love Pakistan to go away since 1947.

    There's a divine reason why this country is still here and will remain forever, I know it's tough to digest but accept it and move on
    Bro,

    I do not care about how RSS or whomever else feel about Pakistan, I am all for Pakistan to be a politically and economically strong independent country. When I look at Pakistan I feel like jumping of a cliff, this country has so much potential but this backward thinking along the religious lines such a divinity reason is the reason why Pakistan is nowhere now and stay that way... Since independence you guys have had no meaningful achievement, when you should be competing with India neck and neck in economy, growth right now but the difference is astronomical. Afterall by DNA you are Ex Indians....Yeah the country will remain forever agreed but as a place the international community will look as a no name and no divine intervention will change this......


    "Everything else seems so superfluous." ~ Albert Einstein on the Bhagavad-Gita

  10. #10
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    From Pakistans perspective it should not go to China for bail out. Already Pakistan has put too many eggs in one basket with China and the more dependent they are on China the more they can dictate us. IMF too will dictate but Pakistan somehow need to try and offset the Chinese influence a bit.


    "Nations are born in the hearts of poets, they prosper and die in the hands of politicians."-Iqbal

  11. #11
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    Imran Khan and his magic money tree he always used to bang on about.

    Imran is more useless then everyone in the past combined.

  12. #12
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    Quote Originally Posted by CricketDon View Post
    Imran Khan and his magic money tree he always used to bang on about.

    Imran is more useless then everyone in the past combined.
    After Abdul Sattar Edhi, Imran Khan has done more for Pakistan than anyone with his charitable works. So even if he does zero in the next five years he will still be one of the greatest Pakistanis who ever lived. Hardly a useless human being.

  13. #13
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    Imran Khan has no experience in Prime Minister ship. Need to give him time to grow in the position. There is no magic wand to fix Pak's many problems nonetheless I would rather have him then Nawaz or Zardari as PM.


    PP's own self proclaimed sharpshooter and defender of Islam and Pakistan.

  14. #14
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    Ending long drawn-out uncertainty, the government on Monday announced its decision to approach the International Monetary Fund (IMF) for balance-of-payments support and enter into a stabilisation programme.

    Finance Minister Asad Umar left for Indonesia on Monday night to participate in the annual meetings of the IMF and World Bank at Bali, scheduled to run from Oct 9 to 12, and formally request a bailout programme.

    Other members of his team included State Bank of Pakistan Governor Tariq Bajwa, Economic Affairs Secretary Ghazanfar Abbas Jilani and Special Finance Secretary Noor Ahmad.

    “The government has decided to approach the IMF for stabilisation and an economic recovery programme,” said the finance ministry in a statement after the stock market suffered an over 1,300-point plunge, losing almost Rs270 billion of its capitalisation — the highest single-day loss in a decade. The market capitalisation is estimated to have shrunk by almost half a trillion rupees during the current month as the 100-index dropped to a 10-month low.

    Asad Umar leaves for Indonesia to attend annual meetings of Fund, World Bank

    Finance Minister Umar and Noor Ahmad were not available for comment.

    Talking to Dawn on Saturday night, the finance minister had said that the government had not begun work on a letter of intent, or any kind of a strategy document to help guide programme negotiations. When asked whether it would not be better to land in Bali with some sort of a strategy document in hand, he said: “When a decision on whether to go to the IMF has not even been made, how can I start drafting a policy document?”

    During that conversation, he said if any programme discussions were to take place in the Bali meetings, they would only be to convey the in-principle decision of the government to seek the IMF support. “A few weeks later a team from the Fund will come and the real negotiations will begin then,” he said.


    An official requesting anonymity claimed that Monday’s stock market crash had forced Prime Minister Imran Khan to allow the finance minister to seek the IMF support. He said Mr Umar would formally request the IMF management for a bailout programme and the process would take four-five weeks to reach an agreement to work out the exact size, tenure and conditionalities of the programme.

    The official said the finance ministry expected a three-year programme of $7.5bn based on the conclusion of a recent weeklong visit to Pakistan of an IMF staff mission.

    The mission had noted that Pakistan began taking corrective measures in December last year that it described as “a step in the right direction” but insufficient, and hence the country required “decisive policy action and significant external financing” to stabilise its economy, indicating a significant slowdown in economic growth and higher inflation.

    “Additional decisive policy action, anchored in a comprehensive strategy, and significant external financing will be needed in the near term. Policies should include more exchange rate flexibility and monetary policy tightening, further fiscal adjustment anchored in a medium-term consolidation strategy, and strengthening the performance of key public enterprises together with further increases in gas and power tariffs,” the IMF mission had said.

    Sources said members of the federal cabinet having economic background had been insisting for weeks that Pakistan should seek the IMF help immediately because every passing day was adding uncertainty and nervousness to the market because of falling external reserves, declining exchange rate and losing share values and market capitalisation.

    The sources said that Prime Minister Khan wanted to first delay the IMF route until after the first 100 days in office and then after Oct 14 by-elections, but had to change his mind after the falling reserves and capital market.

    The finance ministry said the government had expressed serious concern over the dire economic situation and promised to undertake a quick evaluation of all possible options. It said the decision to approach the IMF had been made after taking into account the current situation and consultations with leading economists, adding the government had engaged with friendly countries in the lead up to this decision and this engagement would continue.

    The finance ministry said that the PTI government had inherited a 6.6pc fiscal deficit, more than a trillion rupees of unaccounted for losses in the energy sector and an unprecedented and debilitating current account deficit running at $2bn a month. “To correct the underlying imbalances, fiscal and monetary actions needed to be undertaken without delay,” it said.

    In this regard, the Finance Supplementary (Amendment) Act, 2018, and an increase in the policy rate are actions taken to stabilise the macroeconomic situation. In addition, regulatory duties on non-essential imports had to be introduced to curb unnecessary growth in imports.

    The finance ministry said there had been 10 IMF programmes since 1990s in one shape or the other, and Pakistan had a history of repeatedly going to the IMF, with every new government forced to go for an IMF programme due to legacy of those who held power in the previous government. “The challenge for the current government is to ensure that fundamental economic structural reforms are carried out to ensure that this spiral of being in an IMF programme every few years is broken once and for all,” it added.

    Published in Dawn, October 9th, 2018
    IMF it is... Naya Pakistan ... same old stories!!

  15. #15
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    Quote Originally Posted by Wonderwoman View Post
    IMF it is... Naya Pakistan ... same old stories!!
    You should bail out Pakistan! The mess created by PMLN and PPP is atrocious.

  16. #16
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    IMF should always be the first option, going to china will mean you will have to serve there interests aswell.


    If you want to destroy a country, just create enmity between its people and their army - Salahuddin

  17. #17
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    Quote Originally Posted by Wonderwoman View Post
    IMF it is... Naya Pakistan ... same old stories!!
    we need a tajarbakaar team like the PMLN who can increase loans to such an extent that the country will collapse..

  18. #18
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    I feel sorry for Imran , hes inherited such a mess and unfortunately these are extremely difficult times for emerging/developing economies . Currency crisis , Crude , lack of Jobs are pretty much every countries problem , but he will probably get blamed for it ....!!


    " you don't play for the crowd, you play for your country " - MSD

  19. #19
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    Quote Originally Posted by jusarrived View Post
    I feel sorry for Imran , hes inherited such a mess and unfortunately these are extremely difficult times for emerging/developing economies . Currency crisis , Crude , lack of Jobs are pretty much every countries problem , but he will probably get blamed for it ....!!
    His liberal policies do not help either tbh. Taxing the hell out of those who do things by the book will give them no option but to leave Pakistan, already there is a big brain drain problem.

  20. #20
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    There was no other option but to go to imf and you can blame previous governments for making that a certainty.

    However PTI does deserve some of the bad rap theyíre getting since they gave unrealistic scenarios where Pakistan wonít have to go to imf

  21. #21
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    Now that Pakistan has invariably decided to go to the IMF, 3 questions remain-

    1. IMF will demand to see or even audit all Pakistan investments & loans including CPEC before disbursing any loan amount. Will China be okay with this level of transparency considering the shroud of secrecy on CPEC details?

    2. What if IMF deems CPEC projects as unviable & asks them not to be financed from IMF funds (all pointers indicate that). Assuming the worst case, they can even ask CPEC projects to be shut down/postponed to improve the future debt ratios. What is the future of CPEC?

    3. Austerity measures on govt spending - Invariable outcome of going to the IMF. How this impacts defence purchases (like proposed sale of Chinese Drones to Pakistan) & welfare projects envisioned by the new go ernment?

  22. #22
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    Quote Originally Posted by Slog View Post
    There was no other option but to go to imf and you can blame previous governments for making that a certainty.

    However PTI does deserve some of the bad rap theyíre getting since they gave unrealistic scenarios where Pakistan wonít have to go to imf
    Asad Umar always said that IMF is an option. Our friendly dosts were not so friendly #UaE #Saudis. Not suprised tbh.

  23. #23
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    Quote Originally Posted by dildilpak View Post
    Now that Pakistan has invariably decided to go to the IMF, 3 questions remain-

    1. IMF will demand to see or even audit all Pakistan investments & loans including CPEC before disbursing any loan amount. Will China be okay with this level of transparency considering the shroud of secrecy on CPEC details?

    2. What if IMF deems CPEC projects as unviable & asks them not to be financed from IMF funds (all pointers indicate that). Assuming the worst case, they can even ask CPEC projects to be shut down/postponed to improve the future debt ratios. What is the future of CPEC?

    3. Austerity measures on govt spending - Invariable outcome of going to the IMF. How this impacts defence purchases (like proposed sale of Chinese Drones to Pakistan) & welfare projects envisioned by the new go ernment?
    It will have a severe effect on the welfare projects but I highly doubt that it would have much effect on CPEC. The ideology of IMF is to lend money to other countries so that they can invest in their economy. CPEC, in the long run, is going to help IMF to recover its loans from Pakistan. So right now, it’s the common man that will be shafted by the IMF.

  24. #24
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    How times change.....

    "I take them to mean anything that comes with strings attached damages your self-esteem and self-respect Ė you'd better die than take it," says Khan. "A country that relies on aid? Death is better than that. It stops you from achieving your potential, just as colonialism did. Aid is humiliating. Every country I know that has had IMF or World Bank programmes has only impoverished the poor and enriched the rich."
    https://amp.theguardian.com/global/2...mpression=true


    On a more serious note the Khan government didnít really have much of a choice here - they are cleaning up a mess left by the previous administrations.

  25. #25
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    Quote Originally Posted by Gabbar Singh View Post
    How times change.....



    https://amp.theguardian.com/global/2...mpression=true


    On a more serious note the Khan government didn’t really have much of a choice here - they are cleaning up a mess left by the previous administrations.
    That’s why I believe that every party should at least consult some expert researchers on the subject before delivering public speeches.

  26. #26
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    I'd rather hop back to India.

  27. #27
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    The IMF want details.

    NUSA DUA, Indonesia (Reuters) - The International Monetary Fund launched formal bailout talks with Pakistan on Thursday, and IMF managing director Christine Lagarde said she would require ďabsolute transparencyĒ of Pakistanís debts, including those owed to China.

    She said such disclosures were necessary to determine the debt sustainability of countries seeking IMF loans.

    The requirements are likely to shine a spotlight on the extent, composition and terms of Pakistanís debts to China for infrastructure projects as part of Beijingís massive Belt and Road building program.

    China has pledged some $60 billion in financing to Pakistan for ports, railways and roads, but rising debt levels have caused Islamabad to cut the size of the biggest Belt and Road project by some $2 billion.

    ďIn whatever work we do, we need to have a complete understanding and absolute transparency about the nature, size, and terms of the debt that is bearing on a particular country,Ē Lagarde told a news conference when asked about Pakistanís debts to China.

    The United States has criticized Chinaís infrastructure lending, warning that it has saddled some developing countries with debts that they cannot afford to repay. U.S. Secretary of State Mike Pompeo has said there would be ďno rationaleĒ for an IMF bailout of Pakistan that pays off Chinese loans.

    The United States has become increasingly impatient with what it sees as a lack of support from nuclear-armed Pakistan in quelling a Taliban insurgency that U.S.-led forces are fighting in neighboring Afghanistan.

    Lagarde said that the IMF would need to know the extent and composition of the a countryís debt, including sovereign debt and state-owned enterprise debt, ďso that we can actually really appreciate and determine the debt sustainability of that country, if and when we consider a program,Ē she added.

    Lagarde said in a statement that Pakistan requested IMF assistance during a meeting with Pakistani Finance Minister Asad Umar and central bank governor Tarik Bajwa on the sidelines of the IMF and World Bank annual meetings in Bali.

    ďAn IMF team will visit Islamabad in the coming weeks to initiate discussions for a possible IMF-supported economic program,Ē Lagarde said. ďWe look forward to our continuing partnership.Ē

    The formal request follows an apparent 7 percent devaluation of the Pakistani rupee by the central bank on Tuesday, after Pakistani President Imran Khan announced it would seek financial assistance to ease a mounting balance of payments crisis.

    If a package is agreed, it would be Pakistanís 13th IMF bailout since 1988. The Fund lent Islamabad $6.7 billion in 2013.

    DEBT RESTRUCTURING

    A Pakistani minister told Reuters in Islamabad on Wednesday that the government was considering options, including the possible restructuring of some foreign loans.

    ďItís in very initial stages, the negotiations havenít started or matured yet, but this is something that we may look towards,Ē Muhammad Hammad Azhar, State Minister for Revenue, said.

    Donors have warned Pakistan that its budget deficit, which hit 6.6 percent of the GDP in the year to end of June, was unsustainable.

    ďWe do have extremely high deficits,Ē Azhar said.

    ďUnless we restructure the debt the burden will mount.Ē

    In the past year, Pakistan has borrowed billions of dollars from China to boost its foreign currency reserves, with the money spent defending an overvalued local currency. This is on top of money pledged for Belt and Road projects.

    Azhar said Chinese projects should proceed as planned as the government views the infrastructure was vital to stimulating growth.

    Most of the Chinese money loaned so far has been through private power projects and not to the government, but Islamabad has given sovereign guarantees for the projectsí annual profits.

    Critics have raised concern about opaque nature of some of the deals, saying they have left Pakistan with liabilities that could saddle it with de facto off-books debt.
    https://www.reuters.com/article/us-i...KCN1ML0W1?il=0


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