IMF sees bleak future for Pakistan and several other states

[CaptainJackSparrow]

IMF sees bleak future for Pakistan and several other states​

The logo of the International Monetary Fund (IMF) at the organization's headquarters in Washington. The IMF expects Pakistan's fiscal deficit to further expand to 6.5 per cent of it's GDP.—AFP (File Photo)



WASHINGTON: The International Monetary Fund expects Pakistan’s 2011-12 fiscal deficit to widen to 6.5 per cent of gross domestic product, says a report released on Wednesday.

The IMF Outlook for the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) also forecasts GDP growth of 2.6 per cent for Pakistan in the fiscal year ending in June 2012, compared with the government’s target of 4.2 per cent.

It expects inflation to average 13 per cent compared with the government’s target of 12 per cent.

Pakistan’s fiscal deficit was 5.9 per cent in 2010-11 and 1.1 per cent of GDP for three months ending September 30.

The country’s current account deficit is shown as 1.7 per cent of GNP. Similarly, imports are estimated at around $46 billion, while the exports trail behind at an estimated $30 billion during 2011-12.

Massive energy subsidies are one of the reasons for the swelling deficit. The IMF warns that the widening deficit could threaten Pakistan’s economic stability and hit its sovereign ratings.

The IMF has pushed Pakistan to narrow the gap by eliminating subsidies and increasing its tax-to-GDP ratio, one of the lowest in the world.

The report, however, notes that strong exports and remittances from overseas Pakistanis have helped offset capital outflows.

The report portrays Pakistan and Libya as among those characterised as having the most difficult business environments in the MENAP region. Business environment indicators help shed light on how well labour markets function, and many MENAP countries, including Pakistan, are at the bottom of global labour market efficiency rankings. Matching labour market efficiency against the share in the population of those under age 14 reveals the gravity of the problem that some MENAP countries face in absorbing new entrants. The challenges are most acute in Pakistan, Egypt, Libya, Mauritania and Syria.

The survey identifies floods and violence as among the main reasons for weakening economic activity in Pakistan. Pakistan is also among the countries where real policy rates are close to zero or slightly negative.

The IMF predicts that moderating food and fuel prices and continued weak aggregate demand will exercise a dampening effect on inflation in 2011-12 in MENAP countries. But wage increases, recently granted in the public sector in Pakistan and other countries, could filter through to the private sector and result in inflationary pressures as the economy recovers.

In some countries, inflation will remain high in 2012 because of domestic factors. The report warns that structural factors and entrenched expectations of high inflation in Pakistan and Egypt will contribute to this pressure.

Pakistan is also among the countries experiencing smaller increases in import costs, because of weaker economic activity and lower oil intensity. Governments in Pakistan, Egypt, Jordan, Mauritania and Morocco have responded to growing social unrest, the economic downturn, and higher commodity prices, by significantly expanding subsidies and transfers. The increases have been only partially compensated for by cuts in expenditure.

In the region where the IMF has placed Pakistan, the overall fiscal deficit before grants is projected to exceed 8 per cent of GDP in 2011, while grants have expanded only modestly, borrowing costs in international markets have risen. As a result, governments in Pakistan, Egypt, Morocco and Syria are relying heavily on domestic financing.

The IMF’s outlook for MENAP takes into consideration the unparalleled uncertainty and economic pressures witnessed by the region from both domestic and external sources, including the worsening global economy.

It predicts that MENAP countries will face further slowdown in growth with diverging trends, amid uncertainty from the regional unrest and a possible slump in the global economy. In 2012, MENAP countries are expected to grow 3.7 per cent, slower than the 3.9 per cent expansion projected for 2011. The 2011 forecast is unchanged from a projection in April. In 2010, the region’s GDP grew 4.4 per cent.

As most countries in the region have already used their fiscal and international reserve buffers to respond to deteriorating economic conditions, there is less room left to respond to future shocks, the IMF warns.

IMF sees bleak future for Pakistan and several other states | Newspaper | DAWN.COM

 

[lem34]

IMF predictions have often proved not to be accurate in the case of the UK anyway

 

[manojb]

No worries, china hai na!

 

[CaptainJackSparrow]

The Pakistanis are pushing to avoid Indian finished goods into their country.

Pakistani pharmaceutical industry fears the onsluaght of cheap Indian medicines.

...but, seriously, how can a country with a business environment similar to Libya hope to avoid the import onslaught of practically any country in the world, let alone India?

---------- Post added at 12:55 AM ---------- Previous post was at 12:53 AM ----------

On a serious note, if I were a Pakistani, I wouldn't like to see my loved ones die because costly Pakistani medicines are out of their reach.

Why should a common Pakistani have to pay for the incompetence of Pakistani pharmaceutical industry in making cheap medicines with his life?

 

[Karachiite]

In all your excitement you didn't notice that this news has already been posted

http://www.defence.pk/forums/econom...eak-future-pakistan-several-other-states.html

This guy probably jizzed when he found this article while searching for anti Pakistani news. Anyways continue on with your wet dreams.

 

[CaptainJackSparrow]

In all your excitement you didn't notice that this news has already been posted

http://www.defence.pk/forums/econom...eak-future-pakistan-several-other-states.html

This guy probably jizzed when he found this article while searching for anti Pakistani news. Anyways continue on with your wet dreams.

May be the search feature also got a little too excited lol

 

[Emmie]

IMF has a crystal ball!! God, I didn't know that.

 

[Abu Zolfiqar]

obviously it's in IMF's personal interests to get Pakistan further embroiled in debt trap so that we can bow down to their ridiculous loan conditions ---conditions which compromise and intrude on our sovereignty. This is one of the key reasons why all developing countries only go to IMF as measure of last resort --and last resort takes place when forex reserves are dangerously low

in Pak's case, our forex position is much better than what it was in 2008 during the height of the crisis. Our economy is fairly stable now; the only issues of real concern are the low tax collection rate (which needs to be addressed) as well as the debt-burden. Even on balance of payments, Pakistan is reasonably stable (trade deficit decreased, increased remittances from overseas, decreased imports and stable exports (albeit the target was not met for fiscal 2010). Decreased FDI post 2008 is also an area of concern, but that is due more in part to the deteriorated security/political environment which will hopefully change soon.

people predicted ''inevitable collapse'' but as usual, Pakistan proves the armchair analysts wrong one step at a time.


the IMF is the measure of last resort; Pakistan should never under any circumstance opt for the IMF......it's an imperialistic and politicized organization which everyone loves to ridicule and despise, for obvious reasons.

 

[karan.1970]

obviously it's in IMF's personal interests to get Pakistan further embroiled in debt trap so that we can bow down to their ridiculous loan conditions ---conditions which compromise and intrude on our sovereignty. This is one of the key reasons why all developing countries only go to IMF as measure of last resort --and last resort takes place when forex reserves are dangerously low

in Pak's case, our forex position is much better than what it was in 2008 during the height of the crisis. Our economy is fairly stable now; the only issues of real concern are the low tax collection rate (which needs to be addressed) as well as the debt-burden. Even on balance of payments, Pakistan is reasonably stable (trade deficit decreased, increased remittances from overseas, decreased imports and stable exports (albeit the target was not met for fiscal 2010). Decreased FDI post 2008 is also an area of concern, but that is due more in part to the deteriorated security/political environment which will hopefully change soon.

people predicted ''inevitable collapse'' but as usual, Pakistan proves the armchair analysts wrong one step at a time.


the IMF is the measure of last resort; Pakistan should never under any circumstance opt for the IMF......it's an imperialistic and politicized organization which everyone loves to ridicule and despise, for obvious reasons.

Then why is Pakistan even considering having this meeting with IMF..??

 

[Abu Zolfiqar]

IMF has FOs and ROs; they happen to have one in Pakistan. So consultations or meetings never means that any program is being pursued per se.

on a related note:


Pakistan won't seek new IMF program - official | Reuters

 

[great]

obviously it's in IMF's personal interests to get Pakistan further embroiled in debt trap so that we can bow down to their ridiculous loan conditions ---conditions which compromise and intrude on our sovereignty. This is one of the key reasons why all developing countries only go to IMF as measure of last resort --and last resort takes place when forex reserves are dangerously low

in Pak's case, our forex position is much better than what it was in 2008 during the height of the crisis. Our economy is fairly stable now; the only issues of real concern are the low tax collection rate (which needs to be addressed) as well as the debt-burden. Even on balance of payments, Pakistan is reasonably stable (trade deficit decreased, increased remittances from overseas, decreased imports and stable exports (albeit the target was not met for fiscal 2010). Decreased FDI post 2008 is also an area of concern, but that is due more in part to the deteriorated security/political environment which will hopefully change soon.

people predicted ''inevitable collapse'' but as usual, Pakistan proves the armchair analysts wrong one step at a time.


the IMF is the measure of last resort; Pakistan should never under any circumstance opt for the IMF......it's an imperialistic and politicized organization which everyone loves to ridicule and despise, for obvious reasons.

I am sorry but that is just the most ignorant thing anybody could say about IMF. All the rants and screams on IMF are laid by poor countries who couldn't convince their people to mend their ways for better. They conveniently find IMF to be a scapegoat, it being an outside party to internal politics and all.

Now Mr.Abu Zolfiqar, I would like you to quote one such condition that IMF laid on you that was contrary to your sovereignty. IMF asked you to cut down subsidies, raise tax to GDP ratio, reduce fiscal deficit, improve security, cut down power loot, increase spending on education etc. I am failing to see of all this what was it that was against your country. Had you implemented these, instead of innocuously blaming them it would have served you and Pakistan better.

Now even so how can you whine when you are the one begging them? Its their money and they would like to see returns on their investment. If your country was good enough at managing the economy it shouldn't have even come to this. These are economists who are best in the world and their job is to help and also safeguard their investment as much as they can. Its not like IMF's money is free money.

Also your forex include $8.5 billion dollars IMF loan which you need to start paying back next year. That wouldn't look good on your position.

The point is how economically educated are you for your judgment to be taken seriously?

 

[Abu Zolfiqar]

I am sorry but that just is the most ignorant thing anybody could say about IMF. All the rants and screams on IMF are laid by poor countries who couldn't convince their people to mend their ways for better. They conveniently find IMF to be a scapegoat, it being an outside party to internal politics and all.

to some degree, you are correct. . . but most countries see their reforms and conditional approach as intrusive, which they are. I have had lunch with retired senior IMF officials who themselves agree.

cut down subsidies, raise tax to GDP ratio, reduce fiscal deficit, improve security, cut down power loot, increase spending on education etc.

they are not aid providers, they provide loans....loans are money that are repaid with interest. So given that we pay back what we owe, we have a right to decide what and where to allocate the funds. However, such is not the case. I agree with all those conditions. If you remotely even followed what I said, i am in favour of massive reforms and ending the populist approach towards Pakistan politics (e.g. massive subsidies). But they should not tell us where to allocate the funds.

The IMF basically gets its funding from quota subscriptions; it's like a membership fee which countries pay --from which they run not only operational budgets, but loans as well. It is a fund that has to be paid back; conditionality is designed to insure that they're re-paid -so they say at least.

they claim that an effort to make sure that the conditionality imposed is really relevant for the problem that they're trying to fix; but the second you dig deep into the matters (at least as far as Pakistan is concerned) you know that they are talking through their arses. Pakistan doesn't even need IMF support --and i outlined a few of the reasons WHY in my earlier post.

Its their money and they would like to see returns on their investment.

theyve made handsome returns already; their receivables are principle + interest + membership fees.....they profit the most off countries like Pakistan. So don't talk to me about RoI.

If your country was good enough at managing the economy it shouldn't even come to this.

it's a rich country that is mismanaged...however, perhaps you are having such a poor memory --that you forgot that we have had 2 earthquakes and 2 massive floods in just the past 6 years. 4 natural disasters of titanic proportions (beyond our locus of control) in just 6 years. Did that ever cross your mind? The country has found itself having to steal from its social programs in order to divert them towards immediately needed assistance for affectees (and i havent even brought up the COIN efforts, and the cost of providing even basic assistance to IDPs and Afghan refugees)

These are economists who are best in the world and their job is to help and also safeguard their investment as much as they can. Its not like IMF's money is free money.

you talk as if you are their mouth-piece. It's mildly funny.

and kiddo, nothing in life comes for free.

How economically educated are you?

Bachelor's in Economics, MBA Candidate 2012.

Much more versed than you ever will be.

 

[Donatello]

Indians are as usual worried about Pakistan.

I love my Indian brothers..................................(NOT)

 

[great]

to some degree, you are correct. . . but most countries see their reforms and conditional approach as intrusive, which they are. I have had lunch with retired senior IMF officials who themselves agree.



they are not aid providers, they provide loans....loans are money that are repaid with interest. So given that we pay back what we owe, we have a right to decide what and where to allocate the funds. However, such is not the case. I agree with all those conditions. If you remotely even followed what I said, i am in favour of massive reforms and ending the populist approach towards Pakistan politics (e.g. massive subsidies). But they should not tell us where to allocate the funds.

The IMF basically gets its funding from quota subscriptions; it's like a membership fee which countries pay --from which they run not only operational budgets, but loans as well. It is a fund that has to be paid back; conditionality is designed to insure that they're re-paid -so they say at least.

they claim that an effort to make sure that the conditionality imposed is really relevant for the problem that they're trying to fix; but the second you dig deep into the matters (at least as far as Pakistan is concerned) you know that they are talking through their arses. Pakistan doesn't even need IMF support --and i outlined a few of the reasons WHY in my earlier post.




theyve made handsome returns already; their receivables are principle + interest + membership fees.....they profit the most off countries like Pakistan. So don't talk to me about RoI.




it's a rich country that is mismanaged...however, perhaps you are having such a poor memory --that you forgot that we have had 2 earthquakes and 2 massive floods in just the past 6 years. 4 natural disasters of titanic proportions (beyond our locus of control) in just 6 years. Did that ever cross your mind? The country has found itself having to steal from its social programs in order to divert them towards immediately needed assistance for affectees (and i havent even brought up the COIN efforts, and the cost of providing even basic assistance to IDPs and Afghan refugees)





you talk as if you are their mouth-piece. It's mildly funny.

and kiddo, nothing in life comes for free.




Bachelor's in Economics, MBA Candidate 2012.

Much more versed than you ever will be.

May be I was bit harsh but you don't know me to judge me. Anyways, I don't want to give out my credentials to boast myself. But lets just agree to disagree. I disagree to your point that IMF is bent on attenuating your sovereignty. That in my opinion is plain BS.

In any case if you don't like IMF then don't go to them. Its not like IMF is begging you to take their money.

 

[CaptainJackSparrow]

Indians are as usual worried about Pakistan.

I love my Indian brothers..................................(NOT)

Ohhhooo!

Itna pyaar...meri aankhon mein aansoo aa gaye.