Islamabad to start talks with International Monetary Fund for bailout loan

Mae Love
October 9, 2018

Top officials of government confirmed to The News that the IMF would be formally requested for providing a bailout package in the range of $6 to $8 billion depending upon the ability of Islamabad to convince the Fund management and its board members to jack up quota by 5 to 7 times along with provision of front loading by getting at least $2 billion upfront and the first tranche probably within next 4 to 6 weeks period.

Global growth will slow to 3.6 per cent by 2022-2023, as growth in rich nations falls back to potential, it said. "Any sharp reversal for emerging markets would pose a significant threat to advanced economies", he added.

China's rate of growth could decline by as much as a full percentage point or more by 2019 if a "worst-case" scenario materialises, involving further tariffs, a commensurate Chinese counter-response and a collapse in confidence by businesses and markets.

Umar is expected to lead a delegation to attend the annual meeting of International Monetary Fund and World Bank in Bali, Indonesia from October 12 to 14, where he will start initial talks for the bailout package.

The IMF warned Beijing not to completely shelve the debt clean-up and other regulatory reforms, saying that could "encourage risk-taking, leading to a further buildup of financial vulnerabilities".

For emerging market and developing economies, gradually tightening USA monetary policy, coupled with trade uncertainties and - for countries such as Argentina, Brazil, South Africa, and Turkey - distinctive factors, have discouraged capital inflows, weakened currencies, depressed equity markets, and pressured interest rates and spreads, he said.

"Securing US approval on the IMF Executive Board will require Pakistan to strike a fine geopolitical balance between the Trump administration's concerns over China's growing economic engagement in Pakistan and the country's bilateral commitments", said Bilal Khan, a senior economist at Standard Chartered Plc.

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United States stimulus also adds to the "already-unsustainable" debt and deficit that will undercut future growth, the report warned.

Some energy-rich emerging market countries have fared better due to higher oil prices, with Saudi Arabia and Russian Federation seeing forecast upgrades.

Maurice Obstfeld, Economic Counsellor and Director of IMF (L) and Wafa Amr, Communication Officer of IMF, react during their press conference at the 2018 International Monetary Fund (IMF) World Bank Group Annual Meeting at Nusa Dua in Bali, Indonesia, October 9, 2018 in this photo taken by Antara Foto. That is because new risks are building as long-term interest rates rise in the U.S.

"Where we are now is we've gotten some bad news". -China trade war, coupled with threatened global US automotive tariffs and retaliation from trading partners.

And it stressed "cooperative solutions" to help boost continued growth in trade "remain essential to preserve and extend the global expansion". Angola, contracting by 0.1 percent this year. It also assumes that Trump imposes a 25 percent tariff on imported cars and auto parts.

Medium term growth could drop below 1.4 percent.

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