Pakistan resorts to begging bowl - IMF loan announced

Society Pakistan & World Affairs
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Well it’s finally happened. Pakistan has sold itself to the IMF for the next 2 years.

Pakistan claims that the necessary tax revenue increases needed for the IMF agreement can be done by plugging holes in the existing revenue collection. The IMF claims that Pakistan will have to introduce additional taxes.

Daily Times - Leading News Resource of Pakistan

KARACHI: The country has finally swallowed the bitter pill of recourse to IMF, for stabilising the ailing economy, by almost shelving the oft-repeated Plan A & B.

Finance Adviser, Shaukat Tarin on Saturday announced that IMF would extend $7.6 billion to Pakistan under 23-months loan arrangement at 3.5 to 4.5 percent interest.

The loan is issued under IMF’s standby facility, which is designed to help countries address short-term balance of payments problems. Stand-Bys have provided the greatest amount of IMF resources. The length of a SBA is typically 12 to 24 months, and repayment is normally expected within 2 to 4 years.

The official announcement has finally put all the speculation, circulating in the cross-section of the country about the possible financial assistance from the IMF, to rest.

“It proves that government miserably failed to secure financial assistance from avenues other than IMF,” suggests the opinions expressed by industrialists, economists and analysts.

An economy considered resilient just one year back collapsed like ninepins and now is compelled to use the IMF option, which is very unpopular amongst the people.

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Re: Pakistan resorts to begging bowl - IMF loan announced

Jiyay Bhutto Legacy !!!!!!!!

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Stupid comment as usual

Read what economists were saying about the direction of the economy since 2006

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Re: Pakistan resorts to begging bowl - IMF loan announced

well political affiliation aside! its sad as a nation that we had to go back to IMF once again and are back to square one! previous bad government actually got rid of IMF, seems like world community doesnt like that Pakistan out of its grips via IMF, thats why not even so called friends listen to Pakistan beggers cause they were strictly asked to say no!

Timepass / Uncle Ehsan's Baithak - August 2012
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thank you .. for the enlightenment....seems that you are a jiyala as well.

But, what ever your jiyala mind will think. this chaos is also directly proportional to the patheticness of the current Jiyala govt. had it be some other sane PM and President, things would have been different. Period.

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Re: Pakistan resorts to begging bowl - IMF loan announced

PPP is confined to emotional slogans, I feel. Time and again they have failed miserably while in Government.

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Half of it will go into Ghaddari's pocket and half will go to government, poor people of Pakistan will not get anything.

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Re: Pakistan resorts to begging bowl - IMF loan announced

Ina lilahi wa ina ilaihi rajioon

China came into being after pakistan and its the biggest lender in the world :) and we are still borrowing money and playing the blame game even in this thread :)

indeed everyone should take a economy class b4 putting all the blame on zardari.

PS. m not a jayala, and i hate ppp and 10% government.

Ehsan Uncle I'll Miss you
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China works for WalMart and gets paid in Dollars.

Pakistan doesn't want to work for the walmart and the only alternative is to borrow money.

China doesn't print dollars, it earns it by working 24 hours for the American companies. Pakistan too can do the same if we work for Americans like Chinese do.

Bastakiya Dubai
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Brother, you are so right :) Many people do not know but it was Z A Bhutto who showed Pakistan the door to IMF and whenever PPP jiyala government comes, the first thing they do is go to IMF. For instance, when I found out, this is how Pakistan relation with IMF went:

It was Z A Bhutto who took Pakistan to IMF first time in May 1972 ... Since then Pakistan went to IMF 11 times, 7 times under Jiyala government. But not only that, actually every Jiyala government went to IMF, Z A Bhutto once, BeNazir Bhutto 5 times ( 2 times in first term and 3 times in second term), and Zardari Bhutto once.

Worst is that, total loan Pakistan got sanctioned from IMF is SDR 8.668 billion. SDR is unit of currency ... Special Drawing Rights ... that IMF give and at the moment, one SDR = $1.48.

Anyhow, out of that SDR 8.668 billion, Jiyala government sanctioned SDR 7.729 billion or around 90 percent sanctioned loans Pakistan had from IMF.

Another thing is that, all 3 head of Jiyaa took more than SDR 1 billion from IMF (note, rest took less than SDR 1 billion together).

Z A Bhutto= SDR 1.393 billion
B Bhutto = SDR 1.166 billion
Zardari Bhutto = SDR 5.17 billion (that comes to $7.65 billion)
Total of Jiyala government = 7.729 billion

Rest = SDR 0.939 billion.

Another thing to notice is that: First time it was Z A Bhutto who went to IMF in May 1972. Second time it was BeNazir Bhutto who took Pakistan to IMF in Dec 1988. Further, Pakistan was under IMF program throughout once Pakistan started going to IMF but Pakistan came out of IMF program in Dec 2004 under Musharraf. Now, Pakistan went again to IMF and this period would last until 2016, but that is if Pakistan does not extend the period or go back to IMF again before 2016.

So, you are right ... Jiye Bhutto legacy of Jiyala Raj and slavery of IMF :)

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Good analysis. This brings up a question. Why other governments were able to avoid IMF. And especially in case of 2004 Musharraf government, how were they able to get off IMF handouts?

I mean in any government wether Bhutto or non-Bhutto, Pakistan has to live. Right?

And in order to live, we have

Yearly expenses = X
Yearly income = Y

If X is more than Y, we have to get the difference X-Y from someone. If Bhuttos took this X-Y from IMF, and others didn't, then there must be a reason. Did non-Bhutto governments go to someone other than IMF?

I mean was X not greater than Y in case of non-Bhuto governments? If not, why? Did they reduce X or increase Y? If X was reduced then how, or if Y was increased then how?

To make this problem simpler, we can stick to 2004 Musharraf government.

Thanks.

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WRONG, Pakistan does work for Walmart but the problem is Pakistani products are only "garments" hence suffering from quota.

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I couldnt thank you more... I knew the facts,,, but you gave the figures, yet made it more credible. the facts are published a few times in Urdu News Papers, many old columnist do write the facts and figures with great deal... ... Now only the not so stupid **TheRealDeal **read them and whine....

I also read in an article, that once Swedish or Norwegian govt wanted to give loan or aid to Pakistan during Actual Bhutto times, hence they requested Bhutto to come there with five officials, Bhutto took like 100+ plane to the country.

So Sweden or Norway got the impression that Pakistan does not need aid since it can handle a 100+ strength delegation to a European country.

After few years, Swedish//Norwish bureacrates revealed it to our Counsellor that we approved the official expenses of 5 persons not 100+, therefor your aid was cancelled...

So in all its a legacy thats going on.. nothing new :D..

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yup :D,, i saw smaller towels of Caesars Palace in Vegas were made in Pakistan ( standard textile)..

the slight bigger ones were made in Israel ( standard textile yet again),,, but every other damn thing was made in our best friend CHina :D

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Re: Pakistan resorts to begging bowl - IMF loan announced

IMF loan is not a begging...its just a sum with some stringent conditions subject to be repaid with interest in the coming years... :)

PS: Whan a **faqir **asks some money...he doesn't have to give it back to his giver...I guess the difference is clear...lol

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Dear Jabardast, you'v hit the nail right on the head.

P.S: Hope one day Pakistanis will stop cursing themselves...

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I agree, IMF loan is not bheek, but for some reason last govt didn't need to goto IMF, IMF doesn't give loans on easy terms rather they dent the economy their own way making us dependent on them in future.

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Ameen Summa Ameen!

Self-flagellation is the art perfected by Pakistanis from all walks of life. Ordinary people on the street, to media moguls, to bureaucrats, everyone is on a quest to curse Pakistan.

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Even though Musharraf government took Aid in beginning, Pakistan stopped taking Aid after a year or two of Musharraf government. I hope that you remember when first time President Musharraf went to USA in 2002, USA offered Aid and President Musharraf told Americans that instead of Aid he would like facilities in trade. In return, instead of giving Aid, USA forgave a portion of past Aid amounting to around 1 billion dollars, and gave some facilities in trade. It was same reason Pakistan under President Musharraf preferred to bill American for all services and get paid as reimbursement, rather take Aid from USA.

I hope you remember President Musharraf speech that a country could not be an independent country that lives on Aid, as once Aid is taken, a part of sovereignty is lost. Actually, it is better to get grants than Aid (concessional loans) because grants are for specific purpose where sovereignty is not at stake, but sovereignty gets compromised with Aid. So, even though country has to pay back money taken in Aid with interest, many could not realise why taking Aid means losing sovereignty and why Aid is bheek :).

Well, from what I understand, Aid comes in the form of concessional loans or goods at concessional price. Thus, all Aid has a portion of bheek built in. For instance, in present Pakistani economical situation, it would be difficult for Pakistan to borrow even at around 10 percent interest ... as most banks would not give loan to Pakistan even at 10 percent ... that is the reason Pakistan sovereign guaranteed bonds are selling at less than half the price carrying much more than 10 percent interest. IMF loan carries around 4 percent interest. It means a third (possibly half) of IMF loan is bheek. You might say how?

Just imagine, Pakistan got $7.6 billion sanctioned from IMF at around 4 percent interest. The condition of payment and interest is such that if Pakistan borrows $5 billion commercial loan at 9 percent interest, payment would be similar to paying $7.6 billion IMF loan. So, one can say that Pakistan got around $5 billion commercial loan and rest $2.6 billion is bheek. That is the reason Pakistan lost a bit of sovereignty to IMF because of that loan.

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All the posts in this thread have been criticizing Pakistani govt to goto IMF under present conditions while most of them cursing PPP govt to fall for IMF every time.

Rightly so, going to IMF will increase the problems, never decrease it. I'm also not a Jyala (before anyone accuses me) to defend PPP to contact IMF. But did we analyze the conditions when the govt had to consult IMF to rescue? Are we fully aware of how the country is working right now, or we may say how was it working when the previous govt left? Look at the situation of Stock Exchange, does it depict anywhere that this may carry on unless some heavy resource is injected. The whole situation was not just severe, it was very formidable.

So we are actually disgusted on the side-effects of a life saving drug for a dying body, without analysing how come this body reached this state!
And if you see the whole scenario, Pakistan did go to US, Emirates, Saudia, China and Europe for urgent aid but no one was ready to give them what they wanted to keep Pakistan alive. This was all part of a deal to push Pakistan to contact IMF as the last resort. Now u'll very soon see Pakistan getting Quick aid from all countries named above, ofcourse cuz the task is achieved. i.e. Pakistan has fallen for IMF again.