IMF programme: 'We tried, we failed, we give up'

[JAISWAL]

ISLAMABAD:
Having failed to honour yet another agreement with the International Monetary Fund (IMF), Pakistan has abandoned its efforts to seek a restoration of the $11.3 billion bailout programme, which had been suspended last year.
A key government official told The Express Tribune that Islamabad would no longer request the IMF to send a review mission, a preliminary step that could ultimately have led to the revival of the programme, after recognising "harsh ground realities."
The official said that Pakistan has also decided not to push 'friendly countries' – a reference mainly to the United States – to pressure the IMF into restoring Pakistan's bailout programme.
However, there are still some officials in the finance ministry who believe that Finance Minister Abdul Hafeez Shaikh should use his personal relationship with David Lipton – former advisor to US President Barack Obama and newly appointed deputy managing director at the IMF – to seek such a restoration.
(Read: Islamabad mulls new IMF strategy sans US support)
It is unlikely that Lipton would be able to help, though. The decision on whether to restore the programme must be taken by the IMF collectively and no single individual can sway the decision one way or another.
The premature end of the most recent bailout programme confirms Pakistan's image in the international financial community as a 'single tranche country' – a nation that applies for a bailout and then fails to live up to its conditions, leading to a suspension of payments after the release of the first tranche.
Since 1988, Pakistan has sought bailouts from the IMF 11 times and failed to complete all but one of them. The one signed in December 2001 was completed ahead of schedule.
"It will be a setback to Pakistan's image and the policymakers will be known as the ones with a non-serious attitude," admitted one high-ranking economic policymaker.
The current programme was signed on November 24, 2008 – at the height of the global financial crisis – and was originally meant to last 23 months. It was originally meant to be only $8 billion, but was later expanded. The deadline was also extended, first for one month and then for a further ten months to allow Islamabad more time to implement reforms.
Five tranches worth $8 billion have thus far been released, with the last tranche coming in May 2010. The last two tranches, worth $3.4 billion, remained undisbursed after the government failed to live up to its commitments on reducing the budget deficit and introducing fiscal reforms and energy sector reforms.
The programme will now end in suspension and be remembered as a "failure", confessed an official at the Planning Commission.
Following this colossal failure, however, the government may plan on seeking a new IMF programme, according to one senior government official, to pay back the loans from the first programme. The country's financial position is expected to begin deteriorating sharply in February 2012, when several loans are due for repayment.
The government is planning on asking the IMF to send a mission for consultations, a right to which any IMF member country is entitled under Article IV of the IMF charter, regardless of whether they are in any programme.
According to a finance ministry official, the consultation would send a signal that, despite its failure to reform, the government is still committed to remaining engaged with international lenders.
Performance under the programme
When Pakistan started the programme, inflation had just hit 25.6%, the budget deficit was projected at 7.4% of the total size of the economy and foreign exchange reserves would barely cover six weeks' worth of imports.
During the first year of programme, the budget deficit came down to 5.2% of gross domestic product, still higher than the IMF-approved limit. In fiscal years 2010 and 2011, the deficit has been 6.2% and 6.5% of GDP respectively, bringing the three-year average to above 6% of GDP and far beyond what would be acceptable to the IMF.
Foreign exchange reserves have risen to $18 billion. But if one removes the effect of the IMF loan and aid from friendly nations, the central bank's foreign exchange reserves would drop to more or less the same level as 2008. Inflation is still in double digits.
The government was required to increase the tax-to-GDP ratio but, at 8.5%, it is the lowest it has been in 27 years.
Published in The Express Tribune, August 13th, 2011.

IMF programme:

 

[thakur_ritesh]

if this is a call taken by the US and allies, make sure these guys also take a call on trade that happens with pakistan and strangulate them there, nothing will hurt them more, and that will bring their economy to a stand still quite literally.

china wont be able to do a damn about it.

 

[LETHALFORCE]

This is a good test to see if China can put their money where their mouth is,during the earthquake in Pakistan they were worst than stingy misers. Let's see if they can give a few billion to their sweetest ally.

 

[Yusuf]

Chinese money is firmly in their pockets. Pakistan is just a tool for them, nothing more. Even in Africa, they invest rather than donate. They give long term "credit at low interest" but still no aid.

With all due respects, in India, Marawaris have the tag of being stingy, the Chinese will beat them hands down any day in stinginess.

 

[Pakistani Nationalist]

The Pak-China trade has reached over 25+ billion dollars............ We would like usa n IMP for withdraw the few hundred million in aid................ we will stand on our feet......... these shackles have made us crippled for long.

 

[Yusuf]

The Pak-China trade has reached over 25+ billion dollars............ We would like usa n IMP for withdraw the few hundred million in aid................ we will stand on our feet......... these shackles have made us crippled for long.

You ask, they give. You ask, they don't give, you blackmail, they give. Just after the US suspended it's own aid, after a few days of bravado, Shuja Pasha ran to Washington to see if the aid could be restored.

Aid is not shackles but sustenance that has kept your country on it's feet.
Two way trade of 25 billion but how much of it is in Pak favor? And I also wonder how it jumped to that figure in one year http://www.dawn.com/2011/02/04/pakistans-exports-to-china-increased-by-37-per-cent-china-customs.html

 

[pankaj nema]

Mr Pakistani Nationalist

First of all Happy Independence day .At least TODAY you should not LIE

Just check the figures for Pakistan China Trade . The Total trade was 9 BILLION Dollars in 2010

It is expected to be 15 billion in 2 years

Out of this 9 billion Pakistani exports are 2 billion to China

Pakistan's TOTAL trade in the year ended 30 June was 24 Billion Exports and 40 Billion Imports

If you say that 25 Billion ALONE is the Total trade with China you are either IGNORANT or LYING

 

[thakur_ritesh]

The Pak-China trade has reached over 25+ billion dollars............ We would like usa n IMP for withdraw the few hundred million in aid................ we will stand on our feet......... these shackles have made us crippled for long.

quite interesting, the target for 2015 has been set at 15b usd.

in the year 2010 it was 8.7b usd, primarily which was china led exports to pakistan and china imported goods worth only 3.85b usd, with as much as 5b usd dumped in pakistan, yes that is what china does, dumping, but the sold out pakistanis will never raise the objection and the much in love with china, the pakistani populace will never figure it out. dont worry it happened the same with the US and it took you chaps a near half a century to get what was happening, waste another half a century on another country which will hollow you out and half a century in your case means a near three generations going a waste, yet again.

pakistan does not have trade with china worth 25b usd but their complete exports are worth that much and now with the economic slow down on the horizon, expect a decline on this figure, this fiscal.

a few hundred million dollars? right!

8b usd from IMF are a few hundred million dollars, and from WB and ADB which account for couple of billions dollar each it must just add to a few more million dollars, right? if the 3 lending bodies were to immediately ask for their money back, then the inflated 18b usd worth of forex reserves will come down to a mere 6b usd, and this is accounting for just the principal amount, without the interest rate added to it, add a billion dollar or two more and pakistan's forex reserves will be no more than a mere 4b usd stand at as of date. the immediate impact will be flight of capital, the 4b usd too will vanish as was happening in 2008, and you are as close to being bankrupt as you chaps were in 2008 and let alone any sort of investment coming in, the wealthy pakistanis with all their loot will be leaving pakistan for someother country.

have you ever wondered what is the inflation rate in pakistan and how that has been played up to present all those fake figures?

in the fiscal 2007-08, the economy was 160b usd, the exchange rate to a dollar depreciated from rs60 to rs 85, the real growth was a little over 1%, rest was all accounted for inflation, somewhere between 30-35%, the resulting figure of gdp for 2008-09 came as 160b usd.

2009-10, the economy was at 175b usd, real growth a little over 3%, factually it was just over 2%, but to present a rosy picture, and like what musharraf used to do, they inflated the real growth rate figure, and rest was accounted for inflation. there is some fraud even here, the inflation rate was in 20s%, but the calculations shows only 10-15% being adjusted.

2010-11, the economy is at 210-215b usd, with just 2% real growth rate, ever wondered how the calculations were done? and if it is by any chance true, then what was the official inflation rate?

should we discuss how musharraf and his appointed pm faked the pakistanis on the what was happening in pakistan?

if just the last 3years inflation rate was to be taken, the compounded figure would be any where between 80-100%, do you even realize how many 10s of millions would have been pushed below the poverty line as a result in these 3years and the real size of pakistan's economy if all that inflation was to be taken away? heck the economy size would have been no more than 105-130b usd, with the per capita at a mere 600-750 dollars, do you realise when was the last time when pakistan's per capita was that? the year 2000, which means you chaps live in the year 2011 but factually you are in exact the same situation that you were in 2000!!! talk about going back by a decade at a snap of a finger.

please, my humble request is not just ask the US and the IMF, but demand them to get the hell out of pakistan and why just demand, kick them out of pakistan, and throw them out with all their money, and tell them that you chaps dont need them for trade but you will only trade with china, iran, north korea and turkey and we will enjoy seeing pakistan's economy go back by a few decades more, 1970 would be wonderful, why just 2000? all the best.