VCheng
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The only debate here is how far for the PKR to fall and how fast, and may be later as to why exports still won't rise as declared.
Rupee suffers 4% fall in intra-day movement
- Thread starter SunilM
- Start date
The only debate here is how far for the PKR to fall and how fast, and may be later as to why exports still won't rise as declared.
ziaulislam
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i mean i am getting fed up of this bullshit posts
everyone rupee to go down but it didnt happen went to 110 and than came back to 105
everyone rupee to go down but it didnt happen went to 110 and than came back to 105
undercover JIX
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Nothing to worry about, might be a next step of pressure tactics of IMF / USA. Stay strong and keep working on the development projects fluctuation is part of the game. they are trying Pakistan to give up self reliance and development and again become dependent on USA.
Lets not keep ourselves in the dark. The rupee did not completely recover. It closed at Rs 107. SBP intervened at the Rs 110 level since it developed cold feet. Still the PKR is down 2% which is neither here or there. IMO pakistan has no choice but to devalue its PKR. Its net forex reserves not including the amount it has shown as loan from Private banks is less than 10 Billion dollars ( Dollar 6 billion is loan from pvt banks by way of forward contracts). So the wriggle room in controlling the slide of the rupee is limited. Especially when Current Account Deficit levels are highly elevated. For the First quarter CAD stood at 5.1 % which cant be supported by such meager forex reserves. (The State Bank of Pakistan (SBP) reported on Friday the current account deficit in the first quarter of 2017-18 rose to $3.55 billion compared to $1.63bn a year ago, https://www.dawn.com/news/1365138 )
Apart from the above, the Circular debt is Around 8 Billion dollars now ( https://fp.brecorder.com/2017/11/20171121236754/ ) . And this not include the billion of dollar of awards awarded against the power utility. As set out in another thread just in the next few months the net forex reserves will be down to 4.5 billion dollars. ( https://tribune.com.pk/story/157974...nths-sbps-net-reserves-will-mere-4-5-billion/ )
In this scenario, I dont see how SBP will be able to defend PKR. I mean a max it can intervene for the next few weeks, but thats it. The writing is on the wall. Pakistan will approach the IMF. And for that it is imperative that it devalues its currency.
I see the PKR at the level of Rs 120-125 by March - April 2018. And I would convert my PKR to dollars now to avail the significant benefits.
In the meanwhile here is whats happening everyday due to Balance of Payment crisis. :
Overdue payments of IPPs resurge to Rs205 billion
https://www.thenews.com.pk/print/254174-overdue-payments-of-ipps-resurge-to-rs205-billion
Apart from the above, the Circular debt is Around 8 Billion dollars now ( https://fp.brecorder.com/2017/11/20171121236754/ ) . And this not include the billion of dollar of awards awarded against the power utility. As set out in another thread just in the next few months the net forex reserves will be down to 4.5 billion dollars. ( https://tribune.com.pk/story/157974...nths-sbps-net-reserves-will-mere-4-5-billion/ )
In this scenario, I dont see how SBP will be able to defend PKR. I mean a max it can intervene for the next few weeks, but thats it. The writing is on the wall. Pakistan will approach the IMF. And for that it is imperative that it devalues its currency.
I see the PKR at the level of Rs 120-125 by March - April 2018. And I would convert my PKR to dollars now to avail the significant benefits.
In the meanwhile here is whats happening everyday due to Balance of Payment crisis. :
Overdue payments of IPPs resurge to Rs205 billion
https://www.thenews.com.pk/print/254174-overdue-payments-of-ipps-resurge-to-rs205-billion
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Back in crisis
Pakistan is once again at the crossroads where it will have to stop the foreign currency reserves from eroding by at least around $5 billion over the next seven months (up to June 2018) to fend off another bailout package from International Monetary Fund (IMF).
Country’s dollar reserves fell by around $3.5 billion in the first five months (July-Nov) after current account deficit climbed to a whopping $5 billion. The foreign reserves depleted in the range of $900 million in the previous month’s last week alone.
Pakistan’s economic wizards got a breather after favorable Standard & Poor’s report maintaining the country’s rating and subsequently raising $2.5 billion from international market through Sukuk and Eurobond but it was almost one/third of which the country had already lost this year when the reserves nosedived by $900 million in last week of November.
Currently, the foreign currency reserves held by State Bank of Pakistan (SBP) stand in the range of $15 billion after being jacked up by $2.5 billion received through bonds in the first week of December 2017, even after ignoring forward swaps ( thats the extra 6 billion shown in Forex reserves due to figure fudging by Ishaq Dar) , which could meet the requirement of three months’ imports bill.
Now the economic managers will have to put their house in order to protect the foreign reserves because if they further deplete in the range of $5 billion it would fall to $10 billion, which is roughly meet to the requirement of two months’ import bill only, pushing the country into danger zone.
If reserves come down to this level in the next five to seven months period then Pakistan would be left with no other choice than to knock at the IMF door with a begging bowl.
Independent economists believe the country’s total foreign financing requirement would be standing at $26 billion as current account deficit could peak to $17 to $18 billion in the current fiscal year against official projections of $10 billion, while the debt servicing requirement stood at $8 billion for the current fiscal year.
Although, the current account deficit remained at $12.4 billion last fiscal year and it had already crossed $5 billion in the first five months but the economic managers still preferred to stick to the figure of $10 billion for the ongoing fiscal year which seemed unrealistic at this stage.
Now an IMF mission led by Herald Finger is currently in Islamabad for examining Pakistan’s economic health.
At IMF, they don’t know how to portray Pakistan’s economy as a negative report from the staff of the fund will accelerate the depletion of foreign currency reserves, while a positive report will promote ‘inaction’ among policy makers, paving the way for meeting the same fate after a pause of few months.
The IMF is simply in catch-22 situation at the moment and the only way out for them seems mixed signaling by drafting a report in a careful manner where everyone can find meat of its own choice.
There is a general consensus among all economic schools of thought that Pakistan will have to undertake structural reforms to fix internal and external challenges of the economy with or without IMF sponsored programme.
The only constant requirement is the undertaking of painful reform process to fix emerging challenges, which have the potential to blow out in the first half of 2018 when general elections will be around the corner.
All multilateral donors including the World Bank and Asian Development Bank are looking towards the outcome of ongoing IMF talks on the basis of which they will take decisions to continue halting programme loans or resume disbursements of dollar inflows for budgetary support in a major way.
The IMF’s satisfactory report on the stabilisation of economy, the country’s ability to finance its external gap and repayment capacity will be considered as letter of comfort (LoC) which will help Islamabad to get more dollar inflows in order to bridge the gap on external front.
There is a need to highlight another relevant as well as important development that took place last week on the eve of Sustainable Development Policy Institute (SDPI) conference in which mainstream political parties including PML-N, PPP, PTI, and ANP publicly evolved broader consensus for signing Charter of Economy in order to de-link economy from politics. However, devil is in the details as these political parties will have to strike consensus on thorny issues such as privatisation, taxation measures, fiscal coordination among center and provinces.
They will have to rationalize National Finance Commission (NFC) awards, boost manufacturing sector including Large Scale Manufacturing (LSM) and Small and Medium Enterprises (SMEs) for providing right kind of incentives to promote industrialization.
It will help pave the way for increasing exports, placing effective mechanism to discourage imports through administrative and non tariff barriers (NTBs).
For instance on privatization, there is a clear cut division among political parties on the strategy to overcome cash bleedings of public sector enterprises that range between $5 to $7 billion on per annum basis.
In principle, Miftah Ismail, the sitting advisor to PM on economic affairs, and Senator Nauman Wazir of PTI seemed unanimous for undertaking privatisation of Public Sector Enterprises (PSEs) with the sole condition of ensuring transparency in the proceeds.
However, Nafisa Shah, a PPP lawmaker, sternly opposed the privatisation and suggested placing better management to overhaul these state-owned enterprises. These politicians also cited examples of bad privatisation transactions done in the past as an excuse to halt this whole process for indefinite period but Pakistan cannot afford continuous unbearable losses in the years to come.
Syed Naveed Qamar, former federal minister and PPP leader, made an interesting observation that any government coming into power could undertake privatisation in first six months after assuming power so there was no need to waste time for making efforts in remaining four and half year period. Qamar also told the SDPI conference that he had suggested the same thing to the PML-N leaders but they did not listen to him.
At this critical juncture, no simple solutions or quick fixes are available so the country would have to evolve consensus on economic agenda for pursuing it for short to medium and long term periods for reversing the doomsday scenario or be ready for the suffocating demands of the IMF for another three to five years.
And this time, Pakistan will have to pay a higher price for availing a bailout. It is quite likely that Pakistan will be forced to choke its progress on the development of China-Pakistan Economic Corridor (CPEC) by the ‘lender of the last resort’ without naming the project.
https://www.thenews.com.pk/magazine/money-matters/254473-back-in-crisis
A goldmine of figures and why SBP is not in a position to defend the Rupee. As has been said earlier, in the next few months the forex will be depleted to very low levels. 4.5 billion is a figure given in one of the article. With that amount there will a flight of capital as no one would want to keep there savings in the Banking system. And while all this is happening, we have a government which might be overthrown any time now.
I again state, by Mar-Apr 2018 PKR will be trading at the level of 120-125. And that is if instability has come to an end. Also Pakistan has no choice but to approach the IMF. Ishaq Dar has single handedly ruined the economy.
Pakistan is once again at the crossroads where it will have to stop the foreign currency reserves from eroding by at least around $5 billion over the next seven months (up to June 2018) to fend off another bailout package from International Monetary Fund (IMF).
Country’s dollar reserves fell by around $3.5 billion in the first five months (July-Nov) after current account deficit climbed to a whopping $5 billion. The foreign reserves depleted in the range of $900 million in the previous month’s last week alone.
Pakistan’s economic wizards got a breather after favorable Standard & Poor’s report maintaining the country’s rating and subsequently raising $2.5 billion from international market through Sukuk and Eurobond but it was almost one/third of which the country had already lost this year when the reserves nosedived by $900 million in last week of November.
Currently, the foreign currency reserves held by State Bank of Pakistan (SBP) stand in the range of $15 billion after being jacked up by $2.5 billion received through bonds in the first week of December 2017, even after ignoring forward swaps ( thats the extra 6 billion shown in Forex reserves due to figure fudging by Ishaq Dar) , which could meet the requirement of three months’ imports bill.
Now the economic managers will have to put their house in order to protect the foreign reserves because if they further deplete in the range of $5 billion it would fall to $10 billion, which is roughly meet to the requirement of two months’ import bill only, pushing the country into danger zone.
If reserves come down to this level in the next five to seven months period then Pakistan would be left with no other choice than to knock at the IMF door with a begging bowl.
Independent economists believe the country’s total foreign financing requirement would be standing at $26 billion as current account deficit could peak to $17 to $18 billion in the current fiscal year against official projections of $10 billion, while the debt servicing requirement stood at $8 billion for the current fiscal year.
Although, the current account deficit remained at $12.4 billion last fiscal year and it had already crossed $5 billion in the first five months but the economic managers still preferred to stick to the figure of $10 billion for the ongoing fiscal year which seemed unrealistic at this stage.
Now an IMF mission led by Herald Finger is currently in Islamabad for examining Pakistan’s economic health.
At IMF, they don’t know how to portray Pakistan’s economy as a negative report from the staff of the fund will accelerate the depletion of foreign currency reserves, while a positive report will promote ‘inaction’ among policy makers, paving the way for meeting the same fate after a pause of few months.
The IMF is simply in catch-22 situation at the moment and the only way out for them seems mixed signaling by drafting a report in a careful manner where everyone can find meat of its own choice.
There is a general consensus among all economic schools of thought that Pakistan will have to undertake structural reforms to fix internal and external challenges of the economy with or without IMF sponsored programme.
The only constant requirement is the undertaking of painful reform process to fix emerging challenges, which have the potential to blow out in the first half of 2018 when general elections will be around the corner.
All multilateral donors including the World Bank and Asian Development Bank are looking towards the outcome of ongoing IMF talks on the basis of which they will take decisions to continue halting programme loans or resume disbursements of dollar inflows for budgetary support in a major way.
The IMF’s satisfactory report on the stabilisation of economy, the country’s ability to finance its external gap and repayment capacity will be considered as letter of comfort (LoC) which will help Islamabad to get more dollar inflows in order to bridge the gap on external front.
There is a need to highlight another relevant as well as important development that took place last week on the eve of Sustainable Development Policy Institute (SDPI) conference in which mainstream political parties including PML-N, PPP, PTI, and ANP publicly evolved broader consensus for signing Charter of Economy in order to de-link economy from politics. However, devil is in the details as these political parties will have to strike consensus on thorny issues such as privatisation, taxation measures, fiscal coordination among center and provinces.
They will have to rationalize National Finance Commission (NFC) awards, boost manufacturing sector including Large Scale Manufacturing (LSM) and Small and Medium Enterprises (SMEs) for providing right kind of incentives to promote industrialization.
It will help pave the way for increasing exports, placing effective mechanism to discourage imports through administrative and non tariff barriers (NTBs).
For instance on privatization, there is a clear cut division among political parties on the strategy to overcome cash bleedings of public sector enterprises that range between $5 to $7 billion on per annum basis.
In principle, Miftah Ismail, the sitting advisor to PM on economic affairs, and Senator Nauman Wazir of PTI seemed unanimous for undertaking privatisation of Public Sector Enterprises (PSEs) with the sole condition of ensuring transparency in the proceeds.
However, Nafisa Shah, a PPP lawmaker, sternly opposed the privatisation and suggested placing better management to overhaul these state-owned enterprises. These politicians also cited examples of bad privatisation transactions done in the past as an excuse to halt this whole process for indefinite period but Pakistan cannot afford continuous unbearable losses in the years to come.
Syed Naveed Qamar, former federal minister and PPP leader, made an interesting observation that any government coming into power could undertake privatisation in first six months after assuming power so there was no need to waste time for making efforts in remaining four and half year period. Qamar also told the SDPI conference that he had suggested the same thing to the PML-N leaders but they did not listen to him.
At this critical juncture, no simple solutions or quick fixes are available so the country would have to evolve consensus on economic agenda for pursuing it for short to medium and long term periods for reversing the doomsday scenario or be ready for the suffocating demands of the IMF for another three to five years.
And this time, Pakistan will have to pay a higher price for availing a bailout. It is quite likely that Pakistan will be forced to choke its progress on the development of China-Pakistan Economic Corridor (CPEC) by the ‘lender of the last resort’ without naming the project.
https://www.thenews.com.pk/magazine/money-matters/254473-back-in-crisis
A goldmine of figures and why SBP is not in a position to defend the Rupee. As has been said earlier, in the next few months the forex will be depleted to very low levels. 4.5 billion is a figure given in one of the article. With that amount there will a flight of capital as no one would want to keep there savings in the Banking system. And while all this is happening, we have a government which might be overthrown any time now.
I again state, by Mar-Apr 2018 PKR will be trading at the level of 120-125. And that is if instability has come to an end. Also Pakistan has no choice but to approach the IMF. Ishaq Dar has single handedly ruined the economy.
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The economy is stabilizing but still long way to go which requires patience and persistence is what Pakistan can afford.
But India cannot afford to keep being fixated at Pakistan at its own expense; lack of washroom, Delhi smug, and anti-women [abortion/rape]. I didn't even add genocide given the massive intolerance against minority which all those factors translate as bad receipt for the economy in the foreseeable future.
But India cannot afford to keep being fixated at Pakistan at its own expense; lack of washroom, Delhi smug, and anti-women [abortion/rape]. I didn't even add genocide given the massive intolerance against minority which all those factors translate as bad receipt for the economy in the foreseeable future.
Trade deficit jumps 29pc to $15bn
Mubarak Zeb Khan
December 12, 2017
ISLAMABAD: The merchandise trade deficit swelled nearly 29 per cent to $15.03 billion in the first five months of this fiscal year, the Pakistan Bureau of Statistics said on Monday.
It rose 19.5pc year-on-year in November to $2.92bn.The year 2016-17 saw the trade deficit rise to an all-time high of $32.58bn, representing year-on-year growth of 37pc. The country’s annual trade deficit was $20.44bn in 2013. It has been continuously on the rise since then.
Analysts believe rising trade deficit is a serious challenge for the government. A commerce ministry official says the impact of government measures including increasing regulatory duties and introducing several non-tariff measures will apply to imports from December onwards.
The imports recorded a growth of 21.12pc to $24.06bn during the July-November period from $19.95bn a year ago. On a monthly basis, they grew 16.48pc year-on-year to $4.9bn in November.
It is claimed that the surge in import bill is driven by increase in imports of petroleum, food and capital products. The imports of mobile phones and apparatuses also witnessed tremendous growth during the period under review.
The import bill of LNG and other petroleum products will rise further following the depreciation of the rupee.
The export proceeds grew 12.35pc in November reaching $1.97bn from $1.75bn last year.
In the first five months of this fiscal year, the export proceeds recorded a growth of 10.49pc to $9.03bn as against $8.17bn in the corresponding period last year.
An official in the commerce ministry told Dawn that the impact of cash support under the prime minister package has revived exports. He said export proceeds entered double-digit growth owing to the cash support. Prime Minister Khaqan Abbasi has recently directed departments concerned to expedite process of clearing refund claims and jointly work to resolve all pending issues for facilitating exporters.
https://www.dawn.com/news/1375992/trade-deficit-jumps-29pc-to-15bn
The target was 8.9 Billion dollars for the fiscal year. It is already 15 billion in the first 5 months. One really wonders the worth of the figures Presented by Ishaq Dar in his budget. The Rupee closed as 108.40 yesterday. It should settle at 110 by the months end. And gradually Rs 115 till Mar 2018 i.e if the Govt survives till then. In case of any political instability, it should reach Rs 120.
Mubarak Zeb Khan
December 12, 2017
ISLAMABAD: The merchandise trade deficit swelled nearly 29 per cent to $15.03 billion in the first five months of this fiscal year, the Pakistan Bureau of Statistics said on Monday.
It rose 19.5pc year-on-year in November to $2.92bn.The year 2016-17 saw the trade deficit rise to an all-time high of $32.58bn, representing year-on-year growth of 37pc. The country’s annual trade deficit was $20.44bn in 2013. It has been continuously on the rise since then.
Analysts believe rising trade deficit is a serious challenge for the government. A commerce ministry official says the impact of government measures including increasing regulatory duties and introducing several non-tariff measures will apply to imports from December onwards.
The imports recorded a growth of 21.12pc to $24.06bn during the July-November period from $19.95bn a year ago. On a monthly basis, they grew 16.48pc year-on-year to $4.9bn in November.
It is claimed that the surge in import bill is driven by increase in imports of petroleum, food and capital products. The imports of mobile phones and apparatuses also witnessed tremendous growth during the period under review.
The import bill of LNG and other petroleum products will rise further following the depreciation of the rupee.
The export proceeds grew 12.35pc in November reaching $1.97bn from $1.75bn last year.
In the first five months of this fiscal year, the export proceeds recorded a growth of 10.49pc to $9.03bn as against $8.17bn in the corresponding period last year.
An official in the commerce ministry told Dawn that the impact of cash support under the prime minister package has revived exports. He said export proceeds entered double-digit growth owing to the cash support. Prime Minister Khaqan Abbasi has recently directed departments concerned to expedite process of clearing refund claims and jointly work to resolve all pending issues for facilitating exporters.
https://www.dawn.com/news/1375992/trade-deficit-jumps-29pc-to-15bn
The target was 8.9 Billion dollars for the fiscal year. It is already 15 billion in the first 5 months. One really wonders the worth of the figures Presented by Ishaq Dar in his budget. The Rupee closed as 108.40 yesterday. It should settle at 110 by the months end. And gradually Rs 115 till Mar 2018 i.e if the Govt survives till then. In case of any political instability, it should reach Rs 120.
Irked by PM’s absence, new IMF director cancels visit to Pakistan
ISLAMABAD:
International Monetary Fund’s (IMF) top man for Middle East and Central Asia Jihad Azour has postponed his scheduled visit to Pakistan due to non-availability of Prime Minister Shahid Khaqan Abbasi.
Azour was scheduled to join the post-programme monitoring talks currently going on between the IMF authorities and Pakistani officials to find solutions to the problems of the external sector and chronic circular debt, said sources in the Ministry of Finance.
Apart from meeting Premier Abbasi, Azour was also scheduled to meet Punjab Chief Minister Shehbaz Sharif, but now both these meetings had been cancelled, they added.
The talks that began on December 5 would now conclude before the scheduled date of December 14, said the sources, adding that Azour was scheduled to join the policy dialogue from Monday.
IMF wants safeguards against reckless borrowing, unchecked expenditures
“The visit of Azour has been postponed,” confirmed IMF’s Resident Representative in Islamabad Tokhir Mirzoev, adding that the postponement of the visit would not have any implications for the ongoing talks.
“The IMF’s director postponed his visit to Pakistan due to non-availability of PM Abbasi, who is leaving for Turkey to attend an emergency meeting of the Organisation of Islamic Countries,” verified Special Assistant to Prime Minister on Economic Affairs Miftah Ismail.
However, Ismail said that Azour would visit Pakistan in the future.
Azour had assumed the responsibilities of IMF director for Middle East and Central Asia in March this year. He replaced Pakistani-born Masood Ahmed who left the fund in October last year.
Azour has served as finance minister of Lebanon from 2005 to 2008.
Pakistan and the IMF are holding first post-programme monitoring talks under which the fund is assessing Pakistan’s ability to pay back its loans and meet medium-term challenges to the country’s economic viability.
The sources in the finance ministry said that the IMF and Pakistan had a difference of opinion on the issue of exact damage to the country’s external sector in the past one year.
They said the IMF was not accepting Pakistan’s projections for current account deficit, external financing requirements and exact financing gap that the country was facing during the current fiscal year. The IMF was terming Pakistan’s projection rosy, they added.
The sources said that according to the IMF the financing gap that the country was facing during the ongoing fiscal year was close to $10 billion – significantly higher than roughly $6 billion that Pakistan pitched.
They said that the projections of the current account deficit and trade deficit that IMF made just six months back also went wrong.
The IMF also wanted steep devaluation of the rupee against the dollar and demanded that the rupee value be set at Rs112-Rs114 to a dollar within a week as against Rs105.50 on the day both the countries began talks.
Although the State Bank of Pakistan allowed the rupee to settle around Rs110 to a dollar, the IMF demanded that over a few months the rupee should value Rs120 to Rs122 to a dollar, said the sources.
However, Ismail said Pakistan had not made any promise with the IMF to devalue the rupee.
Sheer size of CPEC portfolio appals IMF
According to the sources, the IMF was not satisfied either with Pakistan’s explanation on mounting circular debt. After the end of the IMF programme, the flow of circular debt crossed Rs400 billion that Pakistan had promised to restrict to Rs322 billion, and that made the IMF uneasy. The Rs400 billion flow of circular debt was in excess to the stock of the circular debt that is also over Rs400 billion.
The sources said that the IMF had also set a budget deficit target of Rs1.479 trillion, which is equal to 4.1% of the gross domestic product (GDP). They said the IMF’s assessment was that the deficit would be close to 5.5% of the GDP in the current fiscal year.
The sources said the IMF was also skeptic that the government would revive the privatisation plan in its last months in power, although the government tried to assure the Fund that it would put the privatisation programme back on track.
https://tribune.com.pk/story/1581855/2-irked-pms-absence-new-imf-director-cancels-visit-pakistan/
ISLAMABAD:
International Monetary Fund’s (IMF) top man for Middle East and Central Asia Jihad Azour has postponed his scheduled visit to Pakistan due to non-availability of Prime Minister Shahid Khaqan Abbasi.
Azour was scheduled to join the post-programme monitoring talks currently going on between the IMF authorities and Pakistani officials to find solutions to the problems of the external sector and chronic circular debt, said sources in the Ministry of Finance.
Apart from meeting Premier Abbasi, Azour was also scheduled to meet Punjab Chief Minister Shehbaz Sharif, but now both these meetings had been cancelled, they added.
The talks that began on December 5 would now conclude before the scheduled date of December 14, said the sources, adding that Azour was scheduled to join the policy dialogue from Monday.
IMF wants safeguards against reckless borrowing, unchecked expenditures
“The visit of Azour has been postponed,” confirmed IMF’s Resident Representative in Islamabad Tokhir Mirzoev, adding that the postponement of the visit would not have any implications for the ongoing talks.
“The IMF’s director postponed his visit to Pakistan due to non-availability of PM Abbasi, who is leaving for Turkey to attend an emergency meeting of the Organisation of Islamic Countries,” verified Special Assistant to Prime Minister on Economic Affairs Miftah Ismail.
However, Ismail said that Azour would visit Pakistan in the future.
Azour had assumed the responsibilities of IMF director for Middle East and Central Asia in March this year. He replaced Pakistani-born Masood Ahmed who left the fund in October last year.
Azour has served as finance minister of Lebanon from 2005 to 2008.
Pakistan and the IMF are holding first post-programme monitoring talks under which the fund is assessing Pakistan’s ability to pay back its loans and meet medium-term challenges to the country’s economic viability.
The sources in the finance ministry said that the IMF and Pakistan had a difference of opinion on the issue of exact damage to the country’s external sector in the past one year.
They said the IMF was not accepting Pakistan’s projections for current account deficit, external financing requirements and exact financing gap that the country was facing during the current fiscal year. The IMF was terming Pakistan’s projection rosy, they added.
The sources said that according to the IMF the financing gap that the country was facing during the ongoing fiscal year was close to $10 billion – significantly higher than roughly $6 billion that Pakistan pitched.
They said that the projections of the current account deficit and trade deficit that IMF made just six months back also went wrong.
The IMF also wanted steep devaluation of the rupee against the dollar and demanded that the rupee value be set at Rs112-Rs114 to a dollar within a week as against Rs105.50 on the day both the countries began talks.
Although the State Bank of Pakistan allowed the rupee to settle around Rs110 to a dollar, the IMF demanded that over a few months the rupee should value Rs120 to Rs122 to a dollar, said the sources.
However, Ismail said Pakistan had not made any promise with the IMF to devalue the rupee.
Sheer size of CPEC portfolio appals IMF
According to the sources, the IMF was not satisfied either with Pakistan’s explanation on mounting circular debt. After the end of the IMF programme, the flow of circular debt crossed Rs400 billion that Pakistan had promised to restrict to Rs322 billion, and that made the IMF uneasy. The Rs400 billion flow of circular debt was in excess to the stock of the circular debt that is also over Rs400 billion.
The sources said that the IMF had also set a budget deficit target of Rs1.479 trillion, which is equal to 4.1% of the gross domestic product (GDP). They said the IMF’s assessment was that the deficit would be close to 5.5% of the GDP in the current fiscal year.
The sources said the IMF was also skeptic that the government would revive the privatisation plan in its last months in power, although the government tried to assure the Fund that it would put the privatisation programme back on track.
https://tribune.com.pk/story/1581855/2-irked-pms-absence-new-imf-director-cancels-visit-pakistan/
RS 111 and counting!
https://www.geo.tv/latest/171915-do...-year-record-reachs-rs111-in-interbank-market
https://www.geo.tv/latest/171915-do...-year-record-reachs-rs111-in-interbank-market
BABA AGHORI
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Truely said. but bad for imports, and when imports are more than exports and currency devaluate it is not good.
Laozi
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Pakistan Rupee Drops to Record Low in World’s Biggest Decline
In an effort to shore up its finances, Pakistan raised .5 billion in dollar-denominated debt last month to pump up foreign-exchange reserves that have slumped 29 percent to .9 billion in the year through October. (Reuters)
Pakistan’s rupee dropped to a record low on Tuesday after the central bank continued to ease its grip on the currency as economic pressures mount. The rupee continued its decline for a third day, falling 1.9 percent to 109.5 a dollar at 4:57 p.m. in Karachi, according to data compiled by Bloomberg, making it the biggest decliner globally since Friday, when the State Bank of Pakistan first initiated the apparent devaluation. The move to lower the rupee’s value came as Pakistan’s current account deficit continued to widen and foreign-exchange reserves dwindle this year, leading to increasing calls from investors and economists for the central bank to abandon its managed float. The rupee was the most stable currency in Asia since 2014 before the fall. A devaluation was initially blocked by Finance Minister Ishaq Dar, who voiced opposition in July after the central bank let the rupee slide for the first time since 2015. Since then however — facing corruption charges and arrest in Pakistan — Dar was granted medical leave in London last month by Prime Minister Shahid Khaqan Abbasi, who has taken over the finance portfolio himself.
“This is extraordinary,” said Waqar Masood, a former Pakistani finance secretary. “There is more focus on dealing with economic issues now.” In an effort to shore up its finances, Pakistan raised $2.5 billion in dollar-denominated debt last month to pump up foreign-exchange reserves that have slumped 29 percent to $12.9 billion in the year through October.
http://www.financialexpress.com/wor...-record-low-in-worlds-biggest-decline/971172/
I rearely tag people but I guess you are interested in this thread since you posted here: @SunilM , @Spy Master , @Syed.Ali.Haider , @Imran Khan , @MULUBJA
In an effort to shore up its finances, Pakistan raised .5 billion in dollar-denominated debt last month to pump up foreign-exchange reserves that have slumped 29 percent to .9 billion in the year through October. (Reuters)
Pakistan’s rupee dropped to a record low on Tuesday after the central bank continued to ease its grip on the currency as economic pressures mount. The rupee continued its decline for a third day, falling 1.9 percent to 109.5 a dollar at 4:57 p.m. in Karachi, according to data compiled by Bloomberg, making it the biggest decliner globally since Friday, when the State Bank of Pakistan first initiated the apparent devaluation. The move to lower the rupee’s value came as Pakistan’s current account deficit continued to widen and foreign-exchange reserves dwindle this year, leading to increasing calls from investors and economists for the central bank to abandon its managed float. The rupee was the most stable currency in Asia since 2014 before the fall. A devaluation was initially blocked by Finance Minister Ishaq Dar, who voiced opposition in July after the central bank let the rupee slide for the first time since 2015. Since then however — facing corruption charges and arrest in Pakistan — Dar was granted medical leave in London last month by Prime Minister Shahid Khaqan Abbasi, who has taken over the finance portfolio himself.
“This is extraordinary,” said Waqar Masood, a former Pakistani finance secretary. “There is more focus on dealing with economic issues now.” In an effort to shore up its finances, Pakistan raised $2.5 billion in dollar-denominated debt last month to pump up foreign-exchange reserves that have slumped 29 percent to $12.9 billion in the year through October.
http://www.financialexpress.com/wor...-record-low-in-worlds-biggest-decline/971172/
I rearely tag people but I guess you are interested in this thread since you posted here: @SunilM , @Spy Master , @Syed.Ali.Haider , @Imran Khan , @MULUBJA
VCheng
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Pakistan Rupee Drops to Record Low in World’s Biggest Decline
In an effort to shore up its finances, Pakistan raised .5 billion in dollar-denominated debt last month to pump up foreign-exchange reserves that have slumped 29 percent to .9 billion in the year through October. (Reuters)
Pakistan’s rupee dropped to a record low on Tuesday after the central bank continued to ease its grip on the currency as economic pressures mount. The rupee continued its decline for a third day, falling 1.9 percent to 109.5 a dollar at 4:57 p.m. in Karachi, according to data compiled by Bloomberg, making it the biggest decliner globally since Friday, when the State Bank of Pakistan first initiated the apparent devaluation. The move to lower the rupee’s value came as Pakistan’s current account deficit continued to widen and foreign-exchange reserves dwindle this year, leading to increasing calls from investors and economists for the central bank to abandon its managed float. The rupee was the most stable currency in Asia since 2014 before the fall. A devaluation was initially blocked by Finance Minister Ishaq Dar, who voiced opposition in July after the central bank let the rupee slide for the first time since 2015. Since then however — facing corruption charges and arrest in Pakistan — Dar was granted medical leave in London last month by Prime Minister Shahid Khaqan Abbasi, who has taken over the finance portfolio himself.
“This is extraordinary,” said Waqar Masood, a former Pakistani finance secretary. “There is more focus on dealing with economic issues now.” In an effort to shore up its finances, Pakistan raised $2.5 billion in dollar-denominated debt last month to pump up foreign-exchange reserves that have slumped 29 percent to $12.9 billion in the year through October.
http://www.financialexpress.com/wor...-record-low-in-worlds-biggest-decline/971172/
I rearely tag people but I guess you are interested in this thread since you posted here: @SunilM , @Spy Master , @Syed.Ali.Haider , @Imran Khan , @MULUBJA
As I said a while ago, both sides are now building up their negotiating positions before a bailout package is finalized in a few months.
Do you think Abbasi's govt is in a position to negotiate? I don't see the govt in a position of strength. Also Would IMF negotiate with the a govt which is at the fag end of its term? It surely wont with a care taker govt. Also with all the politics going on regarding census, can elections be held in time? What a pickle!
Also, this time 6-7 billion dollars wont do. The budget deficit is 15 billion dollars in the first five months and by any estimate should cross 25 billion dollars for the fiscal year and I am being on the conservative side. which means the bailout will be around 12-16 billion dollars this time. And to get that package with Trump sitting as POTUS, things are going to get very difficult for Pakistan.
Also the recent Minutes of Meeting on the CPEC meeting should be an interesting read. Apparently the Chinese are worried about being paid on time for producing all the energy through the early harvest power projects since they have seen that IPPs are not paid in time and have to at times resort to International arbitration! They have asked for a creation of a separate fund for the purpose of payment to chinese power producers which guarantees payment to them. I dont see Pakistan being able to meet that demand due to lack of fiscal space, placating already existing IPPs amongst various other reasons.
Its going to be an interesting season in Pakistan in the first quarter of next year. Big challenges lie ahead.
VCheng
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Just another chapter in Pakistan's history, nothing more. It will muddle through this one too, somehow.
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