Pakistan Debt

[ejaz007]

Pakistan meets conditions to get next $500 million from IMF

FILE PHOTO: The IMF logo is seen outside the headquarters building in Washington
Asif Shahzad
Tue, February 16, 2021, 9:41 PM


By Asif Shahzad
ISLAMABAD (Reuters) - The International Monetary Fund (IMF) and Pakistan on Tuesday reached a staff-level agreement that Pakistan had completed reforms required for the release of around $500 million in IMF funds that had been suspended for about a year.

"The package strikes an appropriate balance between supporting the economy, ensuring debt sustainability and advancing structural reform," the Fund said in a statement issued by both sides.
"Pending approval of the Executive Board, the reviews' completion would release around US$500 million."

Financial analysts say the hold-up was due to questions around fiscal and revenue reforms.
"This is a good development for Pakistan," Finance Minister Abdul Hafeez Shaikh said in a tweet.
Agreement was also reached on the measures required to complete further reviews of the reform programme, which should eventually bring Pakistan $6 billion from the IMF's Extended Fund Facility (EFF).
Pakistan has also received $1.4 billion from the IMF's Rapid Financing Instrument in separate, emergency funding to help it fill a funding gap stemming from the coronavirus pandemic.

It requested money from the EFF in 2019 after the then newly elected government of Prime Minister Imran Khan refused for months to seek a bailout, and has received the first tranche, worth $450 million..
Khan later acknowledged that it had been a mistake to delay seeking the funds to stabilise an economy under strain from due to a yawning current account deficit and low foreign reserves.

Khan inherited economic growth of 5.8% in the fiscal year July-June 2017/18 (FY2018), but saw it dip to 1.0% in 2018/19 and a contraction of 0.4% in 2019/20. Inflation on his watch peaked at over 14%.
The IMF said economic reforms prior to the COVID-19 shock had started to reduce Pakistan's economic imbalances and created the conditions for better economic performance.

"As result of the authorities’ actions, the COVID-19 first wave started to abate over the 2020 summer and the impact on the economy was significantly reduced. The external current account improved due to stronger-than-expected remittances, import compression, and a mild export recovery," the fund said.
It projected economic growth of 1.5% in fiscal 2020/21.

(Reporting by Asif Shahzad; Additional Reporting by Syed Raza Hasan in Karachi and Charlotte Greenfield in Islamabad ; Editing by Kevin Liffey)

Pakistan meets conditions to get next $500 million from IMF

The International Monetary Fund (IMF) and Pakistan on Tuesday reached a staff-level agreement that Pakistan had completed reforms required for the release of around $500 million in IMF funds that had been suspended for about a year. "This is a good development for Pakistan," Finance Minister...

www.yahoo.com

 

[Hephaestus]

Pakistan meets conditions to get next $500 million from IMF

FILE PHOTO: The IMF logo is seen outside the headquarters building in Washington
Asif Shahzad
Tue, February 16, 2021, 9:41 PM


By Asif Shahzad
ISLAMABAD (Reuters) - The International Monetary Fund (IMF) and Pakistan on Tuesday reached a staff-level agreement that Pakistan had completed reforms required for the release of around $500 million in IMF funds that had been suspended for about a year.

"The package strikes an appropriate balance between supporting the economy, ensuring debt sustainability and advancing structural reform," the Fund said in a statement issued by both sides.
"Pending approval of the Executive Board, the reviews' completion would release around US$500 million."

Financial analysts say the hold-up was due to questions around fiscal and revenue reforms.
"This is a good development for Pakistan," Finance Minister Abdul Hafeez Shaikh said in a tweet.
Agreement was also reached on the measures required to complete further reviews of the reform programme, which should eventually bring Pakistan $6 billion from the IMF's Extended Fund Facility (EFF).
Pakistan has also received $1.4 billion from the IMF's Rapid Financing Instrument in separate, emergency funding to help it fill a funding gap stemming from the coronavirus pandemic.

It requested money from the EFF in 2019 after the then newly elected government of Prime Minister Imran Khan refused for months to seek a bailout, and has received the first tranche, worth $450 million..
Khan later acknowledged that it had been a mistake to delay seeking the funds to stabilise an economy under strain from due to a yawning current account deficit and low foreign reserves.

Khan inherited economic growth of 5.8% in the fiscal year July-June 2017/18 (FY2018), but saw it dip to 1.0% in 2018/19 and a contraction of 0.4% in 2019/20. Inflation on his watch peaked at over 14%.
The IMF said economic reforms prior to the COVID-19 shock had started to reduce Pakistan's economic imbalances and created the conditions for better economic performance.

"As result of the authorities’ actions, the COVID-19 first wave started to abate over the 2020 summer and the impact on the economy was significantly reduced. The external current account improved due to stronger-than-expected remittances, import compression, and a mild export recovery," the fund said.
It projected economic growth of 1.5% in fiscal 2020/21.

(Reporting by Asif Shahzad; Additional Reporting by Syed Raza Hasan in Karachi and Charlotte Greenfield in Islamabad ; Editing by Kevin Liffey)

Pakistan meets conditions to get next $500 million from IMF

The International Monetary Fund (IMF) and Pakistan on Tuesday reached a staff-level agreement that Pakistan had completed reforms required for the release of around $500 million in IMF funds that had been suspended for about a year. "This is a good development for Pakistan," Finance Minister...

www.yahoo.com

Congratulations!

 

[Path-Finder]

It is not government decision. When your current account deficit is 19 billion dollars it means you have to take loan of 19 billion dollars to finance your import. 19 billion means 1900 billion rupees.

So current account deficit went up from 2 billion in 2015 to 19 billion in 2018. After Panama incident, NS and Dar threw Pakistan under the truck to ensure that Pakistan become bankrupt and put all the blame on next government.

Now things are moving in a positive direction and after 4 years October was the first month where we had current account surplus. Current account is difference between your external income and expense.

Rupee depreciated based on demand and supply principle i.e. more dollar were going out and hence value of dollar kept on decreasing. However, to hide the situation, rather than allowed to dollar increase, Dar started issuing dollars from SBP and resultantly our reserves decline from 23 billion dollars to 7 billion. This is similar to the example when you have lower income and expenses than rather to balance that out you start selling your house hold items. However, it was carefully planned to ensure that when PMLN left there are no reserves and only thing next government could do is to either declare Pakistan bankrupt or take more loan but in any of the cases rupee had to be depreciated to get export import balances so that current account deficit could be avoided

Wrong picture by dawn and the graph. The trade gap increased during musharaf rehime was on avcount of world oil crisis. Oil reached as high as 140 dollars. Thise were factors beyond control of Pakistan and eventually resulted in global economic crisis in 2008 ... oil rose again in 2011 but started devlining in 2013 again ... so despite oil prices remain historically low our imports remained historically high due to currency manupulayion of PMLN.


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With 11 billion current account deficit in 2019 this was expected. Given the positive trend in current account deficit i expect that to start going down in next 1 or 2 years as by then we would have suffecient reserves to start reducing the loan.

For me the bigger problem is budget deficit which is still very high and due to corona and reduced world wide trading activities is not expected to going down anytime soon.

bro can you post this in the pinned economy thread. thanks