Pakistan may part ways with IMF

Discussion in 'Pakistan' started by LETHALFORCE, Sep 17, 2011.

  1. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    Pakistan may part ways with IMF

    ISLAMABAD: Pakistan is mulling to wean itself from International Monetary Fund (IMF) stand-by loan programme, a step that would deny it a couple of yet to be received tranches worth $3 billion, Geo News reported Thursday.

    According to details country’s financial managers are pondering upon the prospects of breaking the debt-shackles, but a final decision will wait till a meeting slated for September 23-25 with the IMF authorities in US.

    Sources privy to the matter told Geo News that it is quite probable that Pakistan may neither apply for an extension nor engage in a new loan programme. If it comes to pass then country’s economy will break free form any direct IMF loan agreement by October 1 this year.

    Sources in ministry of finance added that Pakistan was to receive two tranches worth $3 billion in the successful culmination of the loan programme it is currently in, which is a far cry in the given circumstances.

    Pakistan is also deliberating about a borrowing $5-7 billion from the lender of the last resort to boot.

    By going for it government would be able to take economic decision keeping nest elections in mind in 2012. Moreover it would not have to bow down to any IMF diktats on subsidies and its borrowing form the banks to check fiscal deficit.

    According to sources country’s foreign exchange reserves are enough to foot IMF’s repayments due in 2012. In addition to that government is also giving a serious thought to buying oil from Saudi Arabia and Iran on deferred payments.

    Pakistan economic team is most likely to leave for USA next week to hold important meeting with International Monetary Fund at the sidelines of a World Bank and IMF annual meeting to be held from September 23-25 in Washington.

    Finance Minister Dr Abdul Hafeez Shaikh would lead the Pakistani side in the annual meeting of WB and IMF.
     
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  3. Tomcat

    Tomcat Regular Member

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    so pakistan is going to take it self of the ventilator support of the IMF That is really intresting
     
  4. nitesh

    nitesh Mob Control Manager Stars and Ambassadors

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    Negotiating with guns on there head lol. What about paying the loans taken till now? Will these beggars pay it or not
     
  5. thakur_ritesh

    thakur_ritesh Administrator Administrator

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    Its not a case of Pakistan willing or wanting to break free, absolutely not.

    Pakistan has continuously failed to keep with the commitments made to IMF on the much needed economic reforms that economy requires and it is IMF which has not been dispersing the loan amount for quite some time now because they don’t remain sure what the end result would be, as in, will they be getting their money back or not, so why would they risk dumping in more money.

    But then I guess we are all used to the usual twists and the lies that these Pakistanis tend to give.

    Some food for thought. They have so far taken a loan of 8b usd from the IMF, the forex reserve as of date is between 16-17b usd, off this 8b usd as principal amount will be repaid but wait they first need to repay the interest on this amount which would be running into if not more anywhere between 1-2b usd. So the repayment amounts to 9-10b usd which if you take off from the forex reserves, they reach the same levels to what they were in ’08, 6b usd to be precise.

    And that’s not all, they owe money to WB, ADB and if they were to repay that, one wonders would they even be left with any money as forex reserves and if so who will invest there, who will trade with them?

    Let us go back to ’08 and recall what was happening. Flight of capital which forced them to close their stock exchange, absolute loss of faith in the currency back then it jumped from rs60 to rs85 in a matter of months, runaway inflation at over 30% which all quite literally crippled them economically and mind you none of this had anything to do with the Taliban, a farce put forth by them.

    Its just that trigger that this economy is waiting for which will cripple it again and then they will again line up in front of others with the usual begging bowls, which they anyways are already doing by asking KSA and iran, for whom they are otherwise full of curse, to lend them oil on deferred payments which will eventually be written off by the two host countries as bad debts.

    This country has no other option but to beg, heck they came running to MMS and begged him to not stop EU from giving them trade benefits over and above than what are due to them.
     
  6. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    It really depends on Pakistan's debt levels and interest payments as to how much of a risk it will be.
     
  7. sob

    sob Moderator Moderator

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    The total external debt of the Govt. of Pakistan is US$ 60 Billion and the Foreign Exchange Reserves are US$ 15.6 Billion. this data is as of 30th June 2011.
    Source : http://www.sbp.org.pk/ecodata/pakdebt.pdf

    GOP has to repay around US $ Billion 8 Billion every year.
    Balance of Trade is US $ 1Billion in Negative.
    Remitance by Non Resident Pakistanis : 13 Billion Dollars
    Foreign Investment : Net US$ 500 Million

    So they will be ending with approximately US $ 4 Billion free every year. But then if this was the case then why go in for emergency funding from the IMF. Something does not meet the eye clearly in the above figures released by SBOP.
    GOP will have to see out of this how much is hot money ready to flee at a moments notice.
    We need somebody with economics background to guide us that with the current debt level if GOP pays the absolute minimum every year how long will it take to repay this US 60 Billion Dollar Debt.
     
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  8. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    Pakistan's current account deficit has only gone slightly surplus this year. It is third quarter and it is only up $1 billion. Historically it is -$6 billion.
     
  9. Blackwater

    Blackwater Veteran Member Veteran Member

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    Aab Na-pakistan ko naya papa mil gaya ha. Chink -land. Purane papa ki kya jarorat. Na-pakistan is like spoil child, who calls anybody papa who give toys and lollipop.this time its china:whistle::whistle::sad::sad::sad:
     
  10. sob

    sob Moderator Moderator

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    China has always been reluctant to hand cash to Pakistan. They are ready to invest money in projects but no cash bailout to their all weather friend.
     
  11. Blackwater

    Blackwater Veteran Member Veteran Member

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    true china is not fool as USA. chinks are very good business man
     
  12. Patriot

    Patriot Senior Member Senior Member

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    With this kind economy Pak will never be able to repay it's debt. There is low FDI, high defence budget & administrative expenditures. Forget about repaying debt, there economy is on the verge of going bankrupt.
     
  13. johnee

    johnee Elite Member Elite Member

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    Pakistan will not pay back a single dime. It would need another loan to pay erstwhile loans...
     
  14. Daredevil

    Daredevil On Vacation! Administrator

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    Whenever I see a new news about the Pakistan, the first question I ask is "what is new in this?". Pakistan news doesn't excite anymore just like a cesspool of sh!t doesn't excite anyone.
     
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  15. johnee

    johnee Elite Member Elite Member

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    Exactly what I felt. Pakistan is indeed like a cesspool of defecation. All municipal workers around the world are giving up...
     
  16. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    This may be an indirect way of telling the IMF forget about collecting on the loans you gave us?
     

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