Pakistan strike deal with IMF

[ziaulislam]

PAKISTAN STRIKES DEAL WITH IMF AS $7.5 BN BAILOUT PACKAGE FINALISED

• 10 May 2019
  
• 61 Views

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ISLAMABAD: The Ministry of Finance announced on Friday that the federal government and the International Monetary Fund (IMF) have finalised a staff-level agreement of a $7.5 billion bailout package for a three-year duration.

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The bailout package was finalised with “tough” conditions levied by IMF, according to a ministry of finance notification issued today.

Positive developments occurred between Pakistan and IMF as the consultations between two sides will continue for two days on the manuscript of the agreement, added the notification.

Both sides were expected to hold the last round of talks today in which the proposed bailout package would be finalised. The loan amount was expected to be around $6.4 billion for a three-year duration, the ministry of finance sources further informed.

Pakistan would have no choice but to concede to the IMF’s demands to hike power tariffs and taxes and withdraw tax concessions and exemptions – which are among the conditions that the country has accepted to secure the loan, under the proposed bailed out package

According to the ministry sources, the government would increase the costs of electricity and gas for the consumers in two phases within this year. New taxes amounting to Rs700 billion would be revealed in the budget for the next fiscal year, to be announced on June 11.

The budget deficit would be restricted to 4.5 percent, whereas the revenue target for the Federal Board of Revenue would be set at around Rs5.3 trillion. The interest rate would be brought up to 12 percent.

Under the proposed agreement, the government would not control the rate of the dollar, and subsidies in the energy sector, as well as other sectors, would be withdrawn.

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[zulu]

@Reddington @ps3linux

 

[Jf Thunder]

and now the prices will skyrocket
the poor people should get ready to die
while the middle class should get ready to be classified as poor

 

[ziaulislam]

Comments

1. New loan amount will thus stand at 1.7 b$(previous 5.8b$)
2. Fiscal deficit of 4.5% will be very challenging though possible given further revenue fluctuations wont happen in presence of curtisled CAD
3. Tax collections target of 5.3 t seems to be very difficult to attain without revolutionary changes
4. Interest rate of 12% is resonable seeing its almost same as real effective rate but this also means inflation will hit in double digits next year still less than what we saw when either parties signed IMF in 2008(23%) &2013(13%)
5. What does flexible exchange rate means is beyond me..how flexible? Criteria?

 

[Sharky]

Still flabbergasted on why China doesn't just wave its magic wand and give 50 billion to Pakistan. It will remove all the troubles in paksitan and get it out of IMF trap which undoubtedly has an impact on its flagship cpec project.

 

[wali87]

No shit! We literally handed over our economy to the IMF when pm Khan appointed these new Chiefs of FBR and SBP, is this even news?

 

[Whirling_dervesh]

and now the prices will skyrocket
the poor people should get ready to die
while the middle class should get ready to be classified as poor

All hail nawaz and Zardari....cus surely PTI couldn't have messed stuff this quickly right?? Patwaris where art thou?

 

[ziaulislam]

and now the prices will skyrocket
the poor people should get ready to die
while the middle class should get ready to be classified as poor

This is what happens when you do steriods/drugs

Essence if problem of Pakistan is that they believe they can print dollar/gold which they cant..

Why run fiscal deficit of 8%(meaning taking 3000b loan every year) and who is going to give you that loan? Noone..so now what? Print money.. yeah but now rupee loses value so now you need dollars now what? Arabs give u moeny for year but than what?
People of Pakistan need to be responsible for their actions for choosing corrupt people who went to IMF 10 times..

No shit! We literally handed over our economy to the IMF when pm Khan appointed these new Chiefs of FBR and SBP, is this even news?

Just give me one answer
Who IS GOING TO LOAN THE 8% fiscal deficit(3000b/year) to you WHO?? Surely this isnt a complicated question ?

If you tell me dont run that deficit ? Than da thats whats IMF is doing but askkng you to run half of the deficit ..

The harsh reality is that IMF is like village head which comes and gives you loan but ask you not to eat one time and he will give you the other time meal..

Pakistani need to grow up and hold their leaders responsible for what happened also learn basics of economy and that no magic wand can fix things in 1 2 3 years but its easy to figure out the direction of things

Still flabbergasted on why China doesn't just wave its magic wand and give 50 billion to Pakistan. It will remove all the troubles in paksitan and get it out of IMF trap which undoubtedly has an impact on its flagship cpec project.

China helped Pakistan alot the reason why such lax IMF deal was acheieved which is not much different than what we have now..this will end all the woes..basically its simply an extension of current loan of 5.8b$..most of time i dont reply because you like guys take out of your behind...IMF SAID TO MAINTAIN SAME DEVELOPMENT PROJECTS basically IMF endrosed the CPEC lol even though govt wanted to cut development fund IMF asked to increase revenues instead

_-----
So basically the whole issue is that the rich and middle class are spending more than they have running on loans and now we were at a stage when noone wants to lend us..when IMF comes forward to ask you to decrease your spending and that he would lend you start blaming IMF?

 

[Michael Corleone]

so IMF literally want to peg pakistan with such high interest. why not get help from china?

 

[Kompromat]

So half of the projected bailout.

 

[pkuser2k12]

 

[Sugarcane]

It's called 100 ganday te 100 danday khana. Should have done when PTI took charge of the government.

 

[Sharky]

This is what happens when you do steriods/drugs

Essence if problem of Pakistan is that they believe they can print dollar/gold which they cant..

Why run fiscal deficit of 8%(meaning taking 3000b loan every year) and who is going to give you that loan? Noone..so now what? Print money.. yeah but now rupee loses value so now you need dollars now what? Arabs give u moeny for year but than what?
People of Pakistan need to be responsible for their actions for choosing corrupt people who went to IMF 10 times..


Just give me one answer
Who IS GOING TO LOAN THE 8% fiscal deficit(3000b/year) to you WHO?? Surely this isnt a complicated question ?

If you tell me dont run that deficit ? Than da thats whats IMF is doing but askkng you to run half of the deficit ..

The harsh reality is that IMF is like village head which comes and gives you loan but ask you not to eat one time and he will give you the other time meal..

Pakistani need to grow up and hold their leaders responsible for what happened also learn basics of economy and that no magic wand can fix things in 1 2 3 years but its easy to figure out the direction of things


China helped Pakistan alot the reason why such lax IMF deal was acheieved which is not much different than what we have now..this will end all the woes..basically its simply an extension of current loan of 5.8b$..most of time i dont reply because you like guys take out of your behind...IMF SAID TO MAINTAIN SAME DEVELOPMENT PROJECTS basically IMF endrosed the CPEC lol even though govt wanted to cut development fund IMF asked to increase revenues instead

_-----
So basically the whole issue is that the rich and middle class are spending more than they have running on loans and now we were at a stage when noone wants to lend us..when IMF comes forward to ask you to decrease your spending and that he would lend you start blaming IMF?

Sorry for going off topic. But it's not that simple. China has more to lose with the IMF deal than Pakistan. CPEC is the vanilla project in and road initiative which is the brain child of ping xi. If this fails he has everything to lose as it can mean as much as being ousted from the top position of communist party. This is really something that really doesn't make sense. 50 billion is nothing to China compared to what is at stake. Things don't add up.

 

[ziaulislam]

so IMF literally want to peg pakistan with such high interest. why not get help from china?

??
You know anything about real effective rate sir?
If inflation is 10% the interest rate of 12% is merely 2% which is surprisingly low

This is state bank interests by the way not IMF laon rate

Pakistan needs to role over 40b$ of paris club laons on favourable terms which will not happen unless they know we can pay

 

[FOOLS_NIGHTMARE]

I doubt the deal is finalised yet. I have heard IK is pleading IMF to lower the conditions. Mis timings and wrong priorities have led to this fiasco. They say "jis ka kaam ussi ko saajay".

https://twitter.com/x/status/1126907302823518209