Difference in the IMF conditions

[Abdussamad]

Their credibility in unaffected by the Pak government requesting waivers. They are charter-bound to help member states in trouble.

They are indeed immune to failures. Until someone (China?) sets up competing institutions that is.

 

[VCheng]

They are indeed immune to failures. Until someone (China?) sets up competing institutions that is.

That will happen soon, I think by the end of this month. Then all the world will flock to China, of course.

 

[Abdussamad]

That will happen soon, I think by the end of this month. Then all the world will flock to China, of course.

Well they did try with the asian infrastructure bank which was supposed to be their version of the ADB or World Bank. We thought it might be the first of many.

 

[Protest_again]

Well they did try with the asian infrastructure bank which was supposed to be their version of the ADB or World Bank. We thought it might be the first of many.

Yet, that institution itself is so near yet so far for Pakistanis. ADB/World Bank/AIIB are all development banks, they only lend to countries that are able to return back the loan amount. So they all rely on IMF evaluation of a country for extending the loan. Pakistan itself went for IMF to get that certificate.

 

[Abdussamad]

China has been lending a lot of money to us:

Out of the $9.5 billion, China gave $6.7 billion in loans from July through May of the current fiscal year, which is equal to 70% of total disbursements.

We also got a further 5 billion from the Arabs:

They said the loan disbursements amounted to $9.5 billion, excluding $5 billion that Pakistan obtained from Saudi Arabia and the United Arab Emirates in cash deposits and did not book the amount as federal government obligation.

Source

The atheists and the arabs kept us afloat while we pondered an IMF bailout

 

[mastaan]

Please don't criticise for the sake of criticism or just because you have the right of free speech and don't know a thing about economy .
When you do have a massive current account deficit of 19 billion dollars you would get the most strict imf package ever . They arranged finding from forign countries and bought it down to manageable size hence relief in package . Power sector performed well with improvement in collections and millions of notices in work etc. This Totti phooti fbr seems to be doing the right things etc .
Interest rate was increase to control the inflation and inflation has not even touched double digits.and food inflation has not even increased ..

Not gonna defend or justify my knowledge of Economics - what is the point? But for sake of argument a few things to consider
- 19bn dollar CAD is nothing. you are a 300Bn economy with 6.5% CAD to GDP ratio. To give you a relative cue - US CAD is around 500Bn in 2018 and that is around 6% of GDP. So, absolutes don't matter
- I see no relief in the package except electricity and oil prices coming down, which would have come down anyways, if the assumptions proved to be wrong (which they did) - That is not negotiation, but a normal ratchet mechanism of IMF. Have done a couple of IMF deals in project financing side in Africa, so speak with some knowledge
- Power sector performance can only be acknowledged after the books are closed and audit is done - that would have happened only last month and therefore would not give enough time to change ratchet mechanism in such a big negotiation so quickly. Rates changed, because the assumptions were wrong and the previous govt either did not defend themselves properly or simply did not got to the defending point
- Lastly, Pakistan has not done any reforms in IK's first month to say that he brought the change in those numbers to that extended, or else those assumption numbers would have been hit

Largest point however is - Why would a country, which is on the amend (and you do seem to highlight that) not take a lower interest rate, if they know they will keep doing better? To allow 9% to go up to 10.75% is crime and could also be a big reason why the power prices and oil price increase is not that draconian, because the increased pricing on interest (and there is no reduction) would have priced in the higher risk coming from changes.. my 2 humble cents

 

[Pakistansdefender]

Not gonna defend or justify my knowledge of Economics - what is the point? But for sake of argument a few things to consider
- 19bn dollar CAD is nothing. you are a 300Bn economy with 6.5% CAD to GDP ratio. To give you a relative cue - US CAD is around 500Bn in 2018 and that is around 6% of GDP. So, absolutes don't matter
- I see no relief in the package except electricity and oil prices coming down, which would have come down anyways, if the assumptions proved to be wrong (which they did) - That is not negotiation, but a normal ratchet mechanism of IMF. Have done a couple of IMF deals in project financing side in Africa, so speak with some knowledge
- Power sector performance can only be acknowledged after the books are closed and audit is done - that would have happened only last month and therefore would not give enough time to change ratchet mechanism in such a big negotiation so quickly. Rates changed, because the assumptions were wrong and the previous govt either did not defend themselves properly or simply did not got to the defending point
- Lastly, Pakistan has not done any reforms in IK's first month to say that he brought the change in those numbers to that extended, or else those assumption numbers would have been hit

Largest point however is - Why would a country, which is on the amend (and you do seem to highlight that) not take a lower interest rate, if they know they will keep doing better? To allow 9% to go up to 10.75% is crime and could also be a big reason why the power prices and oil price increase is not that draconian, because the increased pricing on interest (and there is no reduction) would have priced in the higher risk coming from changes.. my 2 humble cents

Please go ask an independent economist of you don't believe me.
Interest rate was up to keep the inflation down . That's how economics work. While you should remember that inflation has still not touched double digits and food inflation was even lower . Compared to previous government where inflation was in double digits and much better then ppp when inflation was 25 percent.
You do have to sacrifice some where friend . As the budget passes and some other reforms took place inflation would fall even lower to 7 percent and interest rate would go down.

 

[Verve]

Why even go then if i may ask oh so politely?

What would you have done instead?

 

[El Sidd]

What would you have done instead?

declare banktrupcy
refuse to deal in interest by pointing out constitution of Pakistan.

declaring financial emergency gives the gormint legislative powers.

 

[Verve]

declare banktrupcy
refuse to deal in interest by pointing out constitution of Pakistan.

declaring financial emergency gives the gormint legislative powers.

This rotten constitution doesn't prohibit interest!

Rip the constitution apart and write a new one first before using it as a reason.

 

[El Sidd]

This rotten constitution doesn't prohibit interest!

Rip the constitution apart and write a new one first before using it as a reason.

nope.

you are wrong.

please do understand that Interpretation of law is subjektive.

the constitution Puts it as a duty to the government to reduce/eliminate usury and also provide simple enivironment for change and rehaul.

PTI simply is inkompetent if not corrupt as well

 

[mastaan]

Please go ask an independent economist of you don't believe me.
Interest rate was up to keep the inflation down . That's how economics work. While you should remember that inflation has still not touched double digits and food inflation was even lower . Compared to previous government where inflation was in double digits and much better then ppp when inflation was 25 percent.
You do have to sacrifice some where friend . As the budget passes and some other reforms took place inflation would fall even lower to 7 percent and interest rate would go down.

But i never even mentioned local fiscal measures in my post. i am simply quoting on the term sheet presented here.. I don't even know about the local fiscal measures.. i was merely making a point on how the data is presented as a win, when it is not.

 

[Verve]

PTI simply is inkompetent if not corrupt as well

Is your imaginary government going to be any better? PDP in the gutter so what's next?

 

[El Sidd]

Is your imaginary government going to be any better? PDP in the gutter so what's next?

PDP dissolved in best interest of the Country.

I refuse to take any part in Exploitation of Pakistanis. those who want are ruling Pakistan.

 

[Verve]

PDP dissolved in best interest of the Country.

I refuse to take any part in Exploitation of Pakistanis. those who want are ruling Pakistan.

So who is going to do every single thing you desire? YOU!?