IMF Approves Loan, Thinks PKR should Depreciate by 5 - 20%

[Ifteqar Aisan]

Absolutely....i believe one of the reasons for AIIB....Can someone informed please suggest as to why Pakistan not approaching AIIB?? China has a majority stake there and perhaps can help a bit, no??

I hope AIIB provides a way to swap out loans something like moving from IMF to AIIB....

Swapping arrangement won't be allowed. Firstly, AIIB is a rival to IMF/WB. Secondly, it does not share the same macroeconomic prescriptions as the Bretton Woods institutions. It will have to be a case of either/or.

 

[deckingraj]

Swapping arrangement won't be allowed. Firstly, AIIB is a rival to IMF/WB. Secondly, it does not share the same macroeconomic prescriptions as the Bretton Woods institutions. It will have to be a case of either/or.

Hmmm would you mind sharing a bit more on it...I know its a naive example however there is a market and if am hooked up into a loan with Bank A i am free to go to Bank B and refinance my loan where Bank B will give me the outstanding loan amount which i will use to pay bank Bank A....is it not possible??

 

[Ifteqar Aisan]

Hmmm would you mind sharing a bit more on it...I know its a naive example however there is a market and if am hooked up into a loan with Bank A i am free to go to Bank B and refinance my loan where Bank B will give me the outstanding loan amount which i will use to pay bank Bank A....is it not possible??

Firstly, it is yet unclear as to what parameters will be actually used by AIIB to give loans. Secondly, last I knew, the US, Japan and Canada had not joined. AIIB will be in contest with IMF and World Bank to capture the third world bailout market. Currently Pakistan is an IMF client in this regard. Naturally, the chances of cooperation such as what you are suggesting between AIIB and IMF are nonexistent.

AIIB is meant to provide an alternative to the Washinton consensus, which is the reform package that comes as additional baggage with any bailout program for an economy in crisis. Under this package, governments are told to cut spending (which usually happens in education, government jobs and healthcare), reduce the fiscal deficit, open domestic markets to imports, devalue the currency (usually) to promote exports, and so on. This is called "structural adjustment" in economics. This term has become a deeply hated term in developing countries. There is a near uniform consensus among developing countries that the IMF/World Bank enforced "structural adjustment" severely destabilizes their economies.

AIIB has, currently, a much narrower mandate - to foster long-term economic growth through investment in infrasructure projects. The Chinese government is sure that their "growth through infrastructure investment" model works, and they are now looking for clients. So, really, they are two different routes, and there is little convergence between them. The Asian Development Bank, which was modeled closely on the World Bank, is the immediate rival to AIIB. After it supersedes ADB, the AIIB can look to take on IMF/World Bank.

 

[ziaulislam]

yes, devaluing a rupee is a good way to **ck the poor

question is why are we not competitive when we have more gas, more oil and more cheap labour than india and way cheaper than china..solve that problem rather than making labour even more cheaper

 

[as1mz]

what makes you think that ?

Devaluation of a currency is directly linked with inflation isn't it? Inflation can't be good. Or for that matter, your investments' worth decreases significantly. etc. etc. Not a fan of economics

 

[black-hawk_101]

So that should result in heightened inflation, a PKR USD exchange rate of close to 125 to 1. Can't be good for the economy. But again, Pakistan failed to meet their targets. Possible solutions? Do you think inflation rate will be on a speedy rise in the coming year?

Pakistan Rupee should Decline by 5 – 20% - IMF | Today in Pakistan

Pakistan should go ahead with privatization and fill $billions in economy and return loans.

 

[Faiez]

Devaluation of a currency is directly linked with inflation isn't it? Inflation can't be good. Or for that matter, your investments' worth decreases significantly. etc. etc. Not a fan of economics

devaluation of currency is a good thing........

 

[I S I]

no problem my savings are in $$$$$$$$$$$$$$$$

Zardari?

Or Ayyaan?

 

[liall]

devaluation, depreciation, inflation pretty much go hand in hand..

Explain plz?

 

[as1mz]

In both cases, devaluation and depreciation, a currency loses value. The primary difference is that government is involved directly when it comes to devaluation. Depreciation of a currency may happen for a lot of reasons. The point being, the currency loses values. One of the major consequences of that is that the country's exports become attractive, since they become cheaper. At the same time of course, the imports become more expensive. Thereafter, demand for imported products would reduce, and domestic products would increase. Where it is good for the domestic industry, basic economics commands rise in prices if the demand increases. So eventually, the domestic products become expensive, followed by the domestic products. Hence, inflation happens. Of course it can be controlled, but it happens. Ta-da

 

[tarrar]

Removal of corrupt & incompetent Govt. is the only solution. Failures in any field should not be accepted.

 

[GURU DUTT]

Removal of corrupt & incompetent Govt. is the only solution. Failures in any field should not be accepted.

sir with deu respect just changing the goverment wont help illitrate politicians cant do anything without the help of corrupt beurocracy and judiciarry tell me who will change them till that happens demons of corruption cant be killed or tamed