This is part taken from some newspaper and it is not unexpected it was widely discussed in media talk shows for many years that if we go repeatedly to imf and debt increase continuously a time will come when they ask to give up nukes for granting loans or financial help
This is not how the IMF works...if people are saying this in the media (personally this is the first time I am hearing this) then they are wrong and misinforming others as well. Also it would be wise to pursue credible newspapers, magazines and journals.
While that may be true, the issue here is exposure and that is because the PR requires a bank to finance a particular institution upto 20% of the banks equity but has no such requirement for lending to the government. This allowed the banks to pump money into PHPL, PIA and other PSEs, effectively allowing the government to avoid taking corrective measures.
State owned privately owned does it matter? The reason why the banks have been loaning the government is because it comes with a sovereign guarantee and thus counts as 0 risk. Most banks are struggling with the CAR requirements which keep going up as per SBP's drive (which is quiet unnecessary as we don't have high risk products.
You are free and have right to not accept it and have your view but I posted what I see and heard our economy is in disaster and o verge of collapse and time will make things more evident to all of us we should open our eyes and stop living in illusions that our economy is best in the world and recognise the threats we are facing ignoring risk and threats and not recognising and fixing them at time will make us like Syria and other countries which are disentigrated due to ignorance
I think no one disputes that our economy is not doing well. The issue here is the misreporting on the nature of IMF's job. IMF's works like a lender of last resort and is more concerned with policy changes to address economics issues as well as social ones. It does not go around asking countries to give up their nuclear technology or defense spending. It is mostly concerned with improving tax collection, eliminating subsidies, privatisation, devaluing currency to make trading more competitive. It does so on the basis of intellectual capital developed over years since it inception after the WW2. While there are many things that can be said against IMF, your post is not one of them. Here is some research that they were doing in 2001 after the Asian Financial Crisis:
In any loan agreement lenders have power to decide terms of the loan and they can place any condition they want same is the case with imf they are lenders and they can decide the covenant of loans and their is no restriction placed by international law or u.n on imf to not use such conditions for lending
Lender covenants are their for the protection of the lender so that they are able to collect their principle at the end of the tenure. So these covenants are to be in line with that in mind. For the last time, the covenants entail improving tax collection, eliminating subsidies, privatisation, devaluing currency to make trading more competitive. You know that this thread is about the banking sector doling out loans to the government for the PSEs. Imagine what would be in those credit agreements.
