IMF warns Pakistan over rising inflation * Fund says economic indicato

Discussion in 'Pakistan' started by Ray, May 11, 2014.

  1. Ray

    Ray The Chairman Defence Professionals Moderator

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    IMF warns Pakistan over rising inflation

    * Fund says economic indicators are generally improving, with growth gaining momentum, external finance improving and credit to private sector rising


    ISLAMABAD/WASHINGTON: The International Monetary Fund said Saturday that Pakistan’s economic reform programme remained broadly on track, but warned over rising inflation.

    Pakistan received a $6.7 billion IMF bailout package last year to help the country achieve economic reforms, particularly in its troubled energy sector.

    “The IMF is encouraged by the overall progress made in pushing ahead with policies to strengthen macroeconomic stability and reviving investment and growth,” Jeffrey Franks, the fund’s mission chief for Pakistan, said in a statement in Islamabad.

    The IMF’s Pakistan staff mission visited Dubai from May 1-9 to conduct discussions on the third review of the bailout package, which was approved by the fund’s executive board last September. The mission met senior officials from the finance ministry and the State Bank of Pakistan (SBP), weeks ahead of a scheduled $550 million fourth loan tranche that Pakistan is set to receive. “The IMF mission held constructive discussions with government and central bank officials on the economic performance under the EFF program and is encouraged by the overall progress made in pushing ahead with policies to strengthen macroeconomic stability and reviving investment and growth,” Franks said. The mission reached staff-level understandings with the authorities on a set of economic policies detailed in an updated Memorandum of Economic and Financial Policies.

    “Economic indicators are generally improving, with growth gaining momentum, external finance improving, and credit to the private sector rising,” Franks said, but added that core and headline inflation were also rising.

    The inflation rate currently stands at 9.2 percent but the IMF wants Pakistan to ‘target an additional reduction in inflation towards their medium-term goal of 6-7 percent in the next fiscal year’, which starts on July 1.

    “Led by large-scale manufacturing and service sectors, GDP will expand by about 3.3 percent in financial year 2013-14, accelerating further to reach four percent next year,” he said.

    The mission also noted an improvement in the balance of payments situation and efforts being made by Pakistan to build up SBP reserves and stabilise sentiment in the foreign exchange market.

    “The authorities’ reform program remains broadly on track,” Franks said, describing as ‘strong’ the fiscal performance of the government during the first nine months of the current financial year 2013-14.

    A report on the third review has been tentatively scheduled for consideration by the IMF Executive Board in late June, Franks said.
    If approved, it would make about $550 million available to Pakistan, he added.

    The indicative target on social transfers to the poor under the Benazir Income Support Program (BISP) was also met, the mission said, and welcomed the government’s efforts to deepen its support to the poor through the BISP program and the commitment to ensure timely payments to 4.7 million eligible families.

    “The mission recognises the authorities’ determination to pursue agreed structural reforms to enhance medium term growth prospects. Two of three structural benchmarks for this review were met, including the structural benchmark on tax administration and the benchmark on the audit of the National Electric Power Regulatory Authority (NEPRA). The mission supports the government’s ambitious privatization agenda and encourages stronger reform efforts in loss-making companies remaining in the public sector to improve resource allocation and limit poor performance”.

    The fund noted that the Pakistani authorities are also preparing trade policy and business climate reforms which will improve investment and economic growth.

    IMF warns Pakistan over rising inflation
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    In today's economic climate, inflation is very difficult to contain. There is always the tendency to spiral out of control.

    Good luck to Pakistan, but its track record in this field, i believe, is not very encouraging.

    Further, the IMF and the WB practically frogmarches nations that get aid to do their bidding. This affects all the national programmes and leads to discontent.

    It is easy to comment on structural benchmark on tax administration and the benchmark on the audit of the National Electric Power Regulatory Authority (NEPRA), but then national priorities cannot be overlooked.

    It is high time that Pakistan gets out of the stranglehold of the IMF and WB and get their own domestic act together so that they can be fiscally independent.
     
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  3. Ray

    Ray The Chairman Defence Professionals Moderator

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    Re: IMF warns Pakistan over rising inflation * Fund says economic indi

    Cosmetic build-up not responding

    In spite of repeated assurances by the Finance Minister Senator Ishaq Dar, Pakistan’s economic situation has not improved. According to the latest figures released by the Ministry of Finance, there are large gaps between the goals achieved and the targets set for the current fiscal year. To begin with, the budget deficit could not be brought down to 6.3 percent from the whopping 8.8 percent and has settled at 8.0 percent, showing that the government could neither achieve its revenue targets nor control expenditure. Tax collection has remained at 19 percent against the targeted 23 percent in spite of (if not because of) the concessions given to taxpayers to incentivise them to pay taxes. To make up the fiscal deficit the government has been leaning heavily on the State Bank to meet its expenditures. The federal government's domestic debt has risen to Rs 1,166 billion during July-February 2013-14, with the result that private investment has gone down because of what is called the ‘crowding out effect’. Government’s inability to manage its finances at a time when the economy is affected by terrorism and the energy crisis is bound to stifle economic activities. How could the prime minister in this scenario fulfil his ambition to bring investment into the country? Or has he accepted the fact that it is only through some targeted loan schemes, smacking of expediency, that he can gain political mileage? Reports are that even this endeavour has not been appreciated and welcomed as was desired by the government.

    The government has been unable to raise the tax-to-GDP ratio in spite of every effort. Considered a business-friendly government, the finance ministry has been lenient with taxpayers, treating them more with the carrot than the stick. Hence the enormous concessions given to taxpayers to oblige the government by paying more taxes. Similarly, in spite of the IMF’s goodheartedness of revising downwards the tax target for its next performance review, the government has been unable to perform. On the surface there has been a change in the number of tax filers. However, little did anyone bother to look at the number of those who actually paid. The result is that we are stuck with the same nine percent tax-to-GDP ratio. The government has now decided to take back the concessionary feast. Still, unless we expand the tax net, our miseries attached to the fiscal deficit are not going to be ameliorated.

    It goes without saying that the government has to come out of the cosmetic build-up of economic management and do something substantial. *

    Cosmetic build-up not responding

    ****************************************************************************

    Here is the true picture of Pakistan's fiscal state.
     
  4. Blackwater

    Blackwater Veteran Member Veteran Member

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    Re: IMF warns Pakistan over rising inflation * Fund says economic indi

    As all pakistani has toilets so they can spend more:p:p:p


    atleast this was the logic of our pakis members
    :cool2::cool2:
     
  5. Ray

    Ray The Chairman Defence Professionals Moderator

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    Re: IMF warns Pakistan over rising inflation * Fund says economic indi

    I didn't know money grew in toilets
     
  6. Blackwater

    Blackwater Veteran Member Veteran Member

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    Re: IMF warns Pakistan over rising inflation * Fund says economic indi

    if not grow but can be print in toilets.if they install printing machine to print jaali note
     
  7. abhi_the _gr8_maratha

    abhi_the _gr8_maratha Senior Member Senior Member

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    Re: IMF warns Pakistan over rising inflation * Fund says economic indi

    I think pakistan can globalise there toilets for 2rs/entry with a note- 'should carry battery at night cause no electricity , no guaranty there is bomb or not, can't say anything will there be water in pipeline so bring stone'
    .
    really scary pakistan
     

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