Dada Pota Show of 08-10-2018. The only program of business and economy in Pakistan.
IMF Bailout Package Urea Prices Iran Afghan Taliban CNG Political Economy Dada Pota Show 08-10-2018
Dada Pota Show 08-10-2018 based on IMF Bailout Package Urea Prices Iran Afghan Taliban CNG Political Economy.
Today, Dada G shared his opinion on important news that Govt hints at resorting to IMF bailout deal.
Pakistan on Friday announced that it was ready to take ‘decisive corrective measures’ to put the national economy back on track, raising the prospects for early finalisation of an International Monetary Fund (IMF) bailout package, carrying huge political and economic costs.
The Ministry of Finance issued an official handout that had striking similarity with IMF’s views. It indicated that the government had finally made up its mind to go to the IMF.
The handout was issued a day after the economic managers informed the Prime Minister that the IMF was the only viable option to steer the country out of its current economic crisis.
It said that the government believed that fiscal and price adjustments alone “are not sufficient”, and unless the much-delayed deep structural and institutional reforms were implemented “with (an) unflinching resolve, the entrenched imbalances plaguing the economy will keep resurfacing”.
“Additional decisive policy action, anchored in a comprehensive strategy, and significant external financing will be needed in the near term,” the IMF had stated after concluding its staff-level visit to Islamabad.
The Fund insisted that “policies should include more exchange rate flexibility and monetary policy tightening, further fiscal adjustment … strengthening the performance of key public enterprises together with further increases in gas and power tariffs”.
The government has already increased gas prices by 143% and is set to increase power tariffs by at least 61%.
The IMF said that these steps would help reduce current account pressures and improve debt sustainability.
The IMF, it is learnt, urged Pakistan to follow a free-float exchange rate regime, besides increasing its interest rate to a minimum of between 11 and 12.5%. But these measures could undermine the PTI government’s plan to create 10 million jobs in the private sector and building five million housing units.
The IMF said that Pakistan was facing significant economic challenges, with a declining economic growth, high fiscal and current account deficits, and low levels of foreign exchange reserves.
Official forex reserves plunged to $8.4 billion by September 28 this year, hitting the lowest level in nearly four years.
The finance ministry said that the IMF mission had highlighted imminent challenges facing Pakistan’s economy, including accumulation of losses in public-sector enterprises, non-execution of structural reforms, weakening of institutions and lack of domestic resource mobilisation, among others.
The finance ministry said that corrective measures recently taken by the government in the mission’s view were steps in the right direction. But it added that the visiting team was of the view that further actions were required for correcting major economic imbalances.
According to the finance ministry, the PTI government had inherited a fragile economy since critical economic decisions were delayed by the previous government in an election year. Prompt decisions on monetary, exchange rate and fiscal policies could have averted the economic downturn that Pakistan was now facing, it added.
The ministry underlined Pakistan’s commitment to protecting the poor and vulnerable segments of society, promising to invest more in social protection, human development and job creation to ensure that the burden of adjustment was not unjustly imposed on the weaker segments of society.
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