Pakistan to approach IMF for a bailout, Asad Umar announces

[Clutch]

Pakistan to approach IMF for a bailout, Asad Umar announces

AFP | Dawn.com | Sanaullah KhanUpdated October 08, 2018
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Finance Minister Asad Umar speaks in a video message. — DawnNewsTV

The government has made the "difficult decision" to approach the International Monetary Fund (IMF) for a bailout to address the mounting balance of payments crisis faced by Pakistan, Finance Minister Asad Umar announced on Monday.

In a video message, the minister revealed that Prime Minister Imran Khan had given the go-ahead to open talks with the Fund for a bailout programme after consulting economic experts and stakeholders.

"The prime minister... after consulting everyone decided today that we should open talks with the IMF," Umar said.

Read: Fresh engagement with IMF is important for Pakistan to attain credibility

The negotiations will be aimed at reaching a "stabilisation recovery programme" which can be used to tackle the economic crisis, the minister said.

hinted at approaching the IMF for “bridging loans” during the critical phase the country is passing through, besides exercising options like seeking help from friendly countries to deposit funds in the State Bank to boost reserves.

The government decision to seek a bailout programme comes at a time when the IMF has concluded that the country faces significant economic challenges, with declining growth, high fiscal and current account deficits, and low levels of international reserves. It has found recent policy measures to be in the right direction, but not yet sufficient. It wants decisive policy action and significant external financing to stabilise the economy.

The IMF also warned the new government that growth would likely slow and inflation rise further if it does not act fast.

According to data released last week, State Bank of Pakistan’s reserves suffered one of their sharpest drops, hitting its lowest level in four years following a decline of $627.7 million to $8.4 billion during the week ending September 28 due to external debt servicing.

The delay by the government in announcing its policy direction to tackle the worsening external crisis has perturbed the financial sector, which has been criticising the government’s inaction to deal with the situation.

The nation was kept busy with visits to governor houses, buffalo auctions, Fawad bablu's speeches etc., and under the table Asad Umar was making deals ( rather selling the nation) with IMF.

Not true... They were pretty transparent... You were just focused of the Benz and Cows.

The Benz and Cows crowd.

 

[RIP Pak LAW]

Pakistan was going IMF and started introducing hard economic policies okay.
Now can any one tell me what is the current PKR to USD price I think it is 122 now so why is rupee up when govt is introducing hard policies.

Stop embarrassing yourself seriously.

@ Topic
The day pti came into charge, Asad Umer hinted about possible IMF package and today he officially announced govt's intent. He is leaving for Bali, Indonesia tomorrow for the negotiations. Increase in gas price was prerequisite requirement which this govt did it and now we will see steep increase in petrol price too and dollar will hit 140 mark in coming days. Having said this, if govt managed this phase well than economy will get a major boost in 2 to 3 years time. It's a tough choice but we have no other option. Even if we manage to get Saudis dollars, say 2-3 billion $$ in State Bank for an year than that option will also be a temporary solution. Sooner or later we had to go to IMF since previous govt has left this Imran Khan party with billions of dollars of circular debt only.

 

[pragmatic_dude]

Cross post from other thread about IMF. Some cold realities :
I see a lot of cheer-leading , a lot of wishful thinking in this thread. Before i put my two cents forward , a little preface :
I have just recently interned with an IIM-B prof helping him with a whitepaper on Indian Fiscal deficit situation, so while not an expert in this field , I have gained a fair idea.( The prof. was congress aligned so the paper was quite adversarial in nature) .
I am also very involved with policy work on other fronts (mostly related to parliamentary reforms , if you think your government is fucked up, you will be surprised to learn how much of that is due to the bad policy infrastructure that is available to MP's)

So, with that being said . let's just jump in .....

On a global level three major things are happening :-

1. Crude prices are going up due to Iran sanctions, OPEC countries reducing Oil production after Shell got successfully killed .This particularly hits hard on oil dependent countries like India , Pakistan
2. US macroeconomic data has been doing well.
   
3. A lot of developing economies are in trouble ( S.A, Brazil, Turkey, Russia).This is resulting in Global Investors pulling out in general from developing countries and reinvesting in U.S .I see @BHarwana posting some odd threads about investors pulling out money from Indian markets, while i suspect his numbers but that phenomena is happening across all developing countries

So, some people here comment about loans from China/Saudi/ . Either they are kids with no knowledge of economics or jingoistic Drum Beaters. It's almost cringey reading their comments.
From DAY - 1 it was clear that Pakistan had no other option other than going to the IMF.Even a second grade economist would have told you that (privately at least).All this bullshit about loans, about getting investment from overseas Pakistani's was just that ...B.S.

So , We got that clear, let me tell you why IMF is good, a hard sell I know but hear me out :

1. IMF provides the loans at the cheapest rates ( STFU, i already knew that , you shout at me, bear with me till the second point please....)
2. Government Economic bodies secretly love IMF World Over. IMF suggest or rather forces reforms most which the economic council of Pakistan would have already suggested/pleaded/begged the GOP to implement.Now they have no choice to but implement these policies.
3. These policies can be labelled in two buckets :
   1. Short Term : Slashing developmental budgets, raising taxes, increasing interest rates ( All of these very unpopular with the populace)
   2. Long Term and Frankly the most important : Introducing frameworks like Congressional Budget Office in USA, setting up fiscal policy institutes ( via legislature) which sets binding fiscal targets/Debt ceiling for government at both state and federal level (All of these are very unpopular with ruling govt. and bureaucracy)

If you want to know why Pakistan in this mess , its because of point number 2.IMF is an enabler for these polity changes in loads of developing countries, which otherwise the rulers will never implement.

So there my two cents, oh...wait, coming from an Indian that would be my (2/million) cents....coincidentally this also happens to be the probability that Pakistani won't go to IMF to solve it BOP crisis

 

[BHarwana]

can you tell me the name of exchange company from where i can have dollar at this rate ?

It is the current Google rate and western union website is showing it $120 I just checked it before making the post you can do it as well. I was a bit shocked at this my self but that is what they are saying. Check it bro.

 

[AZADPAKISTAN2009]

The Ultimate fix is our Tax Collection, IMF is a temporary medicine to cure you for small time

If people really cared about Pakistan they would be 100% on board with these measures in order for Pakistan to be free of this Loan taking habit

Pakistan's real battle is with our own spending habits and Tax giving Habits

These measures raise 7 Billion dollars in 1 year from inside Pakistan

Our issue is our Tax collection and Over Spending on imports

 

[shah_123]

This one is classic:

https://twitter.com/x/status/662635716036440064

https://twitter.com/x/status/662633948665745408

 

[pragmatic_dude]

The Ultimate fix is our Tax Collection

If people really cared about Pakistan they would be 100% on board with these measures in order for Pakistan to be free of this Loan taking habit

View attachment 503954

You are really like a one trick pony..... However much people tell you...that your posts make 0 sense, you refuse to update them.
My salutes.

 

[CHACHA"G"]

This one is classic:

https://twitter.com/x/status/662635716036440064

https://twitter.com/x/status/662633948665745408

N wallo ko copy past he kerna hai bus ,,,,,,,,,,,, that will do the job...…..

 

[shah_123]

https://twitter.com/x/status/651658232981798913

 

[El Sidd]

https://twitter.com/x/status/651658232981798913

He is right.

I should vote for him.

 

[RIP Pak LAW]

Good thing about IMF package is, you are required to pay their money soon. They keep a strong follow up on it that is why we see tougher economic policies during their time. There is lesser corruption on their money as compared to taking loan from a friendly nation where you have a blanket freedom to use the money which often results in unwanted expensive projects, wastage of money and corruption. IMF check and balance will help the govt to use the money efficiently and also this current govt is many foldes lesser corrupt than their preceders. It's not a bad option if implemented in its true spirit.

 

[shah_123]

N wallo ko copy past he kerna hai bus ,,,,,,,,,,,, that will do the job...…..

Criticizing PTi's stupidity doesn't make one N wala --- even if I am born 100 times, I will never ever support N walas.

 

[AZADPAKISTAN2009]

IMF money will come and it will certainly help Pakistan in short term
however as a Pakistani I would like to know how will Government start generating cash from
Tax collection Or various permit sales like it is done in rest of world

• I am 100% ok with Asian Development Bank's 7 Billion Dollar Announcement
• I can also digest the IMF , Loan program (3-5 Billion Dollar) Announcement

I am just interested in the Policy for Aggressive Tax Collection

Either collect Income Tax 80% population pays this tax

or

• 15% Sales Tax ?
• Road Toll Charges across 15 cities
• Permit for Small Shops
• Cell Phone recharge Government tax
• Control Water distribution (Tanker Mafia)
• Property Tax
• Agricultural Land Tax or Policy

 

[shah_123]

How much you have promised?

https://twitter.com/x/status/662889021249581056

 

[El Sidd]

How much you have promised?

https://twitter.com/x/status/662889021249581056

He is brave just like his name Assad. The lion.