Will Pakistan’s Economy Improve After the IMF Loan?

[WebMaster]

The Pakistan economy is going through some hard times and it is due to receive financial support from the IMF in the following weeks. The fiscal year 2018-2019 did not work how the PTI (Pakistan Tehreek-e-Insaaf) government expected, with most of the economic indicators well below their estimates.

GDP much lower than anticipated

Real GDP growth for the ongoing fiscal year dropped to 3.29%, well below an already revised estimate of 5.4%. The provisional GDP expansion was initially expected to come at 5.8% but the incumbent regime constituted a committee that revised downward the estimates.

Agriculture, manufacturing, and the construction sector, which had been the main drivers for growth until last year, performed well below their estimates. In US dollar terms, the Pakistan economy shrunk to $291 billion this year, as compared to $315 billion in the previous fiscal year.

Source: pixabay.com

Alt text: Pakistan economy 2019

The budget deficit is expected to reach new highs, estimated at 7.6% as a percent of the GDP, due to expenditures overrun.

Trading (not just online through FINQ or other brokerage companies) is expected to suffer and the only hope lies in the financial aid which is due to being received from the IMF, one that could have a meaningful impact on the government’s ratings.

$6 billion from the IMF

PTI’s government will receive a $6 billion loan from the IMF in the next few weeks, as it literally has no place to turn for financial support. The incoming financial assistance will be one of the potentially bad implications for the government in Pakistan.

Imran Khan, the country’s prime minister, had built a campaign discourse against international institutions like the IMF, and now, due to his team’s lack of knowing the country’s limits, he needs to accept help from the very institution he condemned.

The International Monetary Fund is in a better position in the negotiation process, and for the next few years, it will be able to implement an economic policy that will hardly be under government’s control.

Whether the government will manage to survive the rise of inflation and unemployment is still uncertain. However, the IMF program must put the economy back on its track, so the country won’t need new assistance three years later when the bailout package ends. In the meantime, uncertainty is expected to increase as pressure will be high on the current PTI government.

 

[VCheng]

Of course the economy will improve as and when the structural reforms committed to the IMF by the government take hold. To what extent is the improvement durable will depend on whether Pakistan completes its commitments, which it has never done with any of the previous bailouts. May be this time it will complete the program successfully.

 

[313ghazi]

It'll improve in the sense it'll be able to pay it's own bills, or at least borrow in a sustainable manner. Growth is all dependent on Pakistanis and their willingness to go out there are work/make money.

The state can help by having functional competent chambers of commerce to help businesses setup and grow, and also by ensuring affordable, easy loans are available to the business sector so they can grow.

Ultimately though - it's down to people to make the money, and then pay the taxes.

 

[KhanBaba2]

Interest rate are going to go up. Loans will get costly. Businesses will not increase production capacity. You will have stagflation for a few years.

 

[VCheng]

Interest rate are going to go up. Loans will get costly. Businesses will not increase production capacity. You will have stagflation for a few years.

And then, after that, things will get better.

 

[khail007]

Loan alone could not improve the economy until planned/utilised in effective way to boost manufacturing industrial base which will boost export. In agriculture, loan could be utilised to improve livestock/poultry breeding for milk/meat/eggs; e.g. eggs price in Pakistan depends upon weather and considerably decrease in summer; Pakistan could take opportunity to export eggs to ME as here this commodity's price remains constant through out the year. The price of per 30 eggs tray varied between AED 17 to 28. 17 to 20 for different size/weight of farm eggs; while 25 to 28 for organic/free range eggs.
IMF bound so called 'reforms' revolved only for withdrawal of subsidise facilities to commons and impose/increase taxation - this has no impact on betterment of economy but such process ensure that loan will be paid back in time, just a life support to suck IMF part of financial assistance provided.

 

[VCheng]

IMF bound so called 'reforms' revolved only for withdrawal of subsidise facilities to commons and taxation - such process ensure that loan will be paid back in time, just a life support to suck IMF part of financial assistance provided.

It was PMIK's decision to go to IMF. He could have said no to the choice he made. He must have decided what serves Pakistan's national interests the best.

 

[Pakistansdefender]

It'll improve in the sense it'll be able to pay it's own bills, or at least borrow in a sustainable manner. Growth is all dependent on Pakistanis and their willingness to go out there are work/make money.

The state can help by having functional competent chambers of commerce to help businesses setup and grow, and also by ensuring affordable, easy loans are available to the business sector so they can grow.

Ultimately though - it's down to people to make the money, and then pay the taxes.

And then, after that, things will get better.

Things are not that bad .
The problem is media and the narrative they create.
There is a storm in a teacup and every media person is a bigger cartoon then the other with.no knowledge of the word economy.
Saudi Arabia pledged 20 billion, Qatar is going to pledge 20 billion . Ml 1 would start etc . Fdi and investments can start poring on once imf lending is improved .
This time we cannot cheat in reforms .
Why? Just see the remarks by the Americans, they are going to be more tough the easy .

So it's all based upon the perspective .
When people would go after tax evaders and you see whole transmissions discouraging people creating uncertainty then nothing would happen .
It is a mind game.

They are doing everything to control inflation.

 

[fitpOsitive]

The Pakistan economy is going through some hard times and it is due to receive financial support from the IMF in the following weeks. The fiscal year 2018-2019 did not work how the PTI (Pakistan Tehreek-e-Insaaf) government expected, with most of the economic indicators well below their estimates.

GDP much lower than anticipated

Real GDP growth for the ongoing fiscal year dropped to 3.29%, well below an already revised estimate of 5.4%. The provisional GDP expansion was initially expected to come at 5.8% but the incumbent regime constituted a committee that revised downward the estimates.

Agriculture, manufacturing, and the construction sector, which had been the main drivers for growth until last year, performed well below their estimates. In US dollar terms, the Pakistan economy shrunk to $291 billion this year, as compared to $315 billion in the previous fiscal year.

View attachment 565607

Source: pixabay.com

Alt text: Pakistan economy 2019

The budget deficit is expected to reach new highs, estimated at 7.6% as a percent of the GDP, due to expenditures overrun.

Trading (not just online through FINQ or other brokerage companies) is expected to suffer and the only hope lies in the financial aid which is due to being received from the IMF, one that could have a meaningful impact on the government’s ratings.

$6 billion from the IMF

PTI’s government will receive a $6 billion loan from the IMF in the next few weeks, as it literally has no place to turn for financial support. The incoming financial assistance will be one of the potentially bad implications for the government in Pakistan.

Imran Khan, the country’s prime minister, had built a campaign discourse against international institutions like the IMF, and now, due to his team’s lack of knowing the country’s limits, he needs to accept help from the very institution he condemned.

The International Monetary Fund is in a better position in the negotiation process, and for the next few years, it will be able to implement an economic policy that will hardly be under government’s control.

Whether the government will manage to survive the rise of inflation and unemployment is still uncertain. However, the IMF program must put the economy back on its track, so the country won’t need new assistance three years later when the bailout package ends. In the meantime, uncertainty is expected to increase as pressure will be high on the current PTI government.

IMF loans are not for improvement, don't you get it?

 

[Śakra]

Probably not because pakistanis don't seem motivated to improve their condition. They are in a “chalta hai” attitude and your civil servants are not a particularly educated class. If utilized correctly though, the IMF conditions can propel you economy. The question is really, “how can pakistan motivate her people?” To that I have no clue.

 

[VCheng]

This time we cannot cheat in reforms .
Why?

Because the reforms are actually good for us, no matter what the umreekans say?

 

[Pakistansdefender]

The Pakistan economy is going through some hard times and it is due to receive financial support from the IMF in the following weeks. The fiscal year 2018-2019 did not work how the PTI (Pakistan Tehreek-e-Insaaf) government expected, with most of the economic indicators well below their estimates.

GDP much lower than anticipated

Real GDP growth for the ongoing fiscal year dropped to 3.29%, well below an already revised estimate of 5.4%. The provisional GDP expansion was initially expected to come at 5.8% but the incumbent regime constituted a committee that revised downward the estimates.

Agriculture, manufacturing, and the construction sector, which had been the main drivers for growth until last year, performed well below their estimates. In US dollar terms, the Pakistan economy shrunk to $291 billion this year, as compared to $315 billion in the previous fiscal year.

View attachment 565607

Source: pixabay.com

Alt text: Pakistan economy 2019

The budget deficit is expected to reach new highs, estimated at 7.6% as a percent of the GDP, due to expenditures overrun.

Trading (not just online through FINQ or other brokerage companies) is expected to suffer and the only hope lies in the financial aid which is due to being received from the IMF, one that could have a meaningful impact on the government’s ratings.

$6 billion from the IMF

PTI’s government will receive a $6 billion loan from the IMF in the next few weeks, as it literally has no place to turn for financial support. The incoming financial assistance will be one of the potentially bad implications for the government in Pakistan.

Imran Khan, the country’s prime minister, had built a campaign discourse against international institutions like the IMF, and now, due to his team’s lack of knowing the country’s limits, he needs to accept help from the very institution he condemned.

The International Monetary Fund is in a better position in the negotiation process, and for the next few years, it will be able to implement an economic policy that will hardly be under government’s control.

Whether the government will manage to survive the rise of inflation and unemployment is still uncertain. However, the IMF program must put the economy back on its track, so the country won’t need new assistance three years later when the bailout package ends. In the meantime, uncertainty is expected to increase as pressure will be high on the current PTI government.

Dude the targets are set by the previous government who is in election year . They even knew they don't come back .
They tried to remove as many people from tax net as they can and left behind a fiscal deficit of 19 billion dollars. Even their own finance miniater did 2 devaluation and dollar reached 136 in their tenure .
The discussion in media before the election was that Pti would win but the condition of economy is so bad that no one can run it .
They survived going to default.
Bridge the gap with their neighbouring countries. And bring imf to a little east terms.
No one can achieve 5.4 percent growth with 19.billion dollars deficit.
It was like it would say that I would buy a 12 carore house with no money in my Pocket . And again those are not figures of 12 months buy only 9 months.
Media is the curse on the Pakistani nation .
Probably one of the biggest mistakes made by musharaf.

 

[American Pakistani]

Probably not because pakistanis don't seem motivated to improve their condition. They are in a “chalta hai” attitude and your civil servants are not a particularly educated class. If utilized correctly though, the IMF conditions can propel you economy. The question is really, “how can pakistan motivate her people?” To that I have no clue.

Another factor is imports being way too high compared to exports.

 

[Pakistansdefender]

Because the reforms are actually good for us, no matter what the umreekans say?

Reforms are good for us but have we ever done them ....
No
We are always chums with us and get waivers . No imf program we are able to carry out reforms and our masters America make them look away .
This time we are compelled to do reforms because no other.option is left . Uncle Sam is not going to save us .
Even after we made imf sure of reforms only then the agreed to the package.
So this time we are compelled to do reforms only that's why I am more hopeful because we won't do it otherwise But we can do it if forced.

 

[VCheng]

Reforms are good for us but have we ever done them ....
No
We are always chums with us and get waivers . No imf program we are able to carry out reforms and our masters America make them look away .
This time we are compelled to do reforms because no other.option is left . Uncle Sam is not going to save us .
Even after we made imf sure of reforms only then the agreed to the package.
So this time we are compelled to do reforms only that's why I am more hopeful because we won't do it otherwise But we can do it if forced.

The choice of what to do is with Pakistan, of course.