Will approach both friendly countries, International Monetary Fund to overcome economic crisis: Pak PM

Lester Mason
October 12, 2018

Any reforms prescribed by the International Monetary Fund would threaten Khan's lofty campaign promises, like his vow to create 10 million jobs and establish an "Islamic welfare state" modelled on the ideas first voiced by the Prophet Mohammad in the holy city of Medina.

"To get there, they have to go through these painful measures now". The fund lent Islamabad $6.7 billion in 2013.

"Our strong recommendation is to escalate work for a world trade system that is stronger, that is fairer and is fit for the goal", she said in opening remarks.

"The ministry should inform us regarding where the money from the loans was spent", PM Imran said. Officials now expect the debt to GDP ratio to rise above 70 percent.

The prime minister mentioned the trend for the borrowing of house building loans in other countries and said that in the Unites States, nearly 80 per cent people construct houses through loans, in Malaysia 33 per cent, India 11 per cent, Bangladesh 3 per cent, while in Pakistan only 0.25 per cent.

Khan's government blames many of Pakistan's current economic woes on the previous administration's "strong rupee" policy, which rendered Pakistan's exports uncompetitive.

While banks have increased their capital and liquidity buffers since the global financial crisis a decade ago, they remain exposed to highly indebted companies, households and sovereigns, as well as to holdings of opaque and illiquid assets, and to the use of foreign currency funding. Analysts say Pakistan is seeking $8 billion in loans to deal with a balance of payments crisis. But rising debt levels have caused Islamabad to cut the size of the biggest Belt and Road project by about $2 billion.

"In the United States, momentum is still strong as fiscal stimulus continues to increase, but the forecast for 2019 has been revised down due to recently announced trade measures, including the tariffs imposed on $200 billion of US imports from China", IMF report said.

Trump has levied or threatened tariffs on goods from economies around the world, notably China, but also on traditional allies such as the European Union.

He said the previous governments had taken loans recklessly, which has resulted in the country's debt ballooning from Rs 6 trillion to Rs 30 trillion in the past 10 years alone. "And there would also be lots of innocent bystanders", including countries that supply commodities and components to China, such as Indonesia.

Southeast Asian leaders pose for family photo during ASEAN Leaders Gathering on the sidelines of International Monetary Fund and World Bank Annual Meeting 2018 in Nusa Dua, Bali, Indonesia, October 11, 2018.

The IMF last week commended Pakistan for curbing gas and electricity subsidies, raising interest rates and devaluing the currency.

In a tweet a day after the inauguration, the PM said: "We have launched our most ambitious, landmark housing policy of building 5mn homes in 5 yrs. InshaAllah this will provide affordable houses for our less privileged strata of society, plus 6mn jobs, create demand in 40 industries directly involved in house building & attract FDI".

The downgrade was due to the impact of financial market stress and monetary tightening in some economies, as well as the damage from the tit-for-tat tariff actions between the United States and China, the IMF said.

They show that a burst of strong growth, fueled partly by U.S. tax cuts and rising demand for imports, was starting to wane. But he didn't explain how the government will pay for it.

Other reports by Iphone Fresh

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