Pakistan’s currency plunges as it seeks IMF loan

11 October, 2018, 23:03 | Author: Eric Barnett
  • Govt decides to ‘immediately’ approach IMF

International Monetary Fund chief Christine Lagarde met with Pakistani delegation headed by Finance Minister Asad Umer on Thursday and said a team would visit Islamabad for talks on a possible bailout of its shaky economy.

Donors have warned Pakistan that its budget deficit, which hit 6.6 percent of the GDP in the year to end of June, was unsustainable.

Thousands of security personnel have fanned out around key venues in Nusa Dua, just south of Bali's main global airport, with some 32,000 delegates, including finance ministers and central bankers, attending the IMF-World Bank meetings.

He stated, "Nigeria's growth, 1.9 per cent this year; 2.3 next year".

Lagarde said later that she believed Chinese authorities were taking steps to maintain growth, stability and investor confidence amid the trade conflict, but faced a "complicated" balancing act to keep its fiscal situation under control.

One of the International Monetary Fund (IMF)'s most detailed studies of the state of banking since the financial crisis reveals trade tensions are building and claims a "growing anxiety" around a breakdown in negotiations between Britain and the European Union could lead to financial uncertainty.

The IMF said Monday that the global economy will grow 3.7 percent this year, the same as in 2017 but down from the 3.9 percent it was forecasting for 2018 in July.

"Trade is very critical because that is what has lifted people out of extreme poverty", Kim said.


He contended that China had "already retaliated" against his tariff increases.

Lagarde said the International Monetary Fund was yet to receive anything formal from Islamabad but that she and other International Monetary Fund officials would meet with the Pakistani delegation in Bali on Thursday afternoon.

"Since mid-April, rising USA interest rates and a stronger USA dollar - coupled with intensified trade tensions - have triggered a reversal in portfolio flows, an increase in borrowing costs, and a weakening in local currencies in some emerging markets", the report noted.

The formal request follows an apparent 7 per cent central bank devaluation of Pakistan's rupee currency on Tuesday after Pakistani President Imran Khan announced it would seek financial assistance to ease a mounting balance of payments crisis.

The IMF said the balance of risks was now tilted to the downside, with a higher likelihood that financial conditions will tighten further as interest rates normalize, hurting emerging markets further at a time when US -led demand growth will start to slow as some tax cuts expire. During the meeting the current level of Pak-World Bank cooperation was reviewed.

The IMF releases its annual WEO ahead of its meeting with the World Bank. Beijing has pledged $60 billion to build infrastructure and energy projects to help turn Pakistan into a major overland route linking western China to the world.

The annual summit for global finance brings together central bankers and finance ministers, development experts and civil society groups from across the globe. "They're so tight. I think the Fed has gone insane", Trump said in Pennsylvania before a political rally.

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