Friday, September 11, 2009

LAHORE: The International Monetary Fund either adopts country specific policies on bank mark-up or perhaps deliberately waits for an economy to bog down before suggesting a hike in interest rates as is evident from its advice to keeping current policy rates to India. The inflation in India is on rise it crossed 8 per cent in August with fear that the drought would further impact food prices and inflation. The policy rate in India is 3.5 per cent. Even at such low policy rate IMF has advised India not to increase it on the fear of stalling economic recovery. Pakistan on the other hand is still being pressed to keep a check on its interest rates though the inflation has halved from a peak of 25 per cent last October 2008 to 12 per cent in June 2009. The central bank of Pakistan during this period has decreased its policy rates by 3 per cent from 16 to 13 per cent. This has stifled demand of private sector credit. In fact the private sector has shown negative credit growth during past seven months. Kalpana Kochhar the Asia Pacific Deputy Director of IMF told media at the sidelines of an event that he believes it is too early to withdraw policies that have ensured liquidity and monetary easing in India. He said there are signs of the Indian economy recovering, but it is prudent to wait and see that these signs become well established Kochhar warned that unwinding the stimulus policies would be led by withdrawal of liquidity which would be followed by rate hikes. The most interesting observation he made about increasing inflation in India was that it was supply-driven and it certainly complicates matters. But even then he opined that it has not driven at this point by runaway demand and overheating....

Want to read full story? visit finance.kalpoint.com now!

• 0 comments »

Thursday, September 03, 2009

ISLAMABAD: Pakistan's economy is showing signs of recover - its remittances are up despite global downturn, local economy is stabilising and global trends are showing signs of improvement, foreign portfolio investment is improving and electricity problems would be mostly over by next year, said an IMF official in an exclusive interview with a leading Pakistani Financial daily.

"Pakistan's inflation rate came from 25 percent to 11 percent, its forex reserves position is better and fiscal side is also somewhat stable, despite challenges," said Adnan Mazarei, Assistant Director, Middle East and Central Asia Department of the IMF, who also heads the IMF review missions. Pakistan remittances were 19.13 percent in July at $747.22 million and maintained a similar trend in last few months.

Pakistan received $22.6 million in July in foreign private investment from developed countries though $26 million were repatriated by Developing Asia. The IMF in its report has envisaged a growth rate of 3 percent for the current year, which was at 2 percent in 2008-09. Foreign portfolio investment is a sign of sentiments while FDI is more important but this improvement signals somewhat betterment in sentiment of investors towards Pakistan.

However, Adnan did not shy away from counting challenges the country is facing now - revenue mobilisation, the key issue for the country which also creates room for social sector spending which is badly hurt in the country, believed probably the most optimistic observer of Pakistan economy in the IMF. "Pakistan's tax revenues are among the lowest in the world right now and any improvement in it will allow spending on health, education and infrastructure," said Adnan.

(BRecorder)

• 0 comments »

Monday August 31, 2009

ATHENS: World unemployment will continue to rise in 2010 and perhaps in 2011 in more developed economies despite the expected recovery, International Monetary Fund Managing Director Dominique Strauss-Kahn said on Sunday.

"We must continue to work hard to ensure that a sustainable recovery comes indeed in the first half of 2010. But, despite the recovery, unemployment will continue to rise in 2010 and perhaps in the more developed economies even in 2011," he said in an interview with the Greek Kathimerini newspaper.

He warned against taking the recovery for granted, saying risk still remained. "The basic short-term risk is for the recovery to stop, something that could be caused by a series of negative developments," he said.

"A possible premature exit from a loose fiscal and monetary policy constitute a risk, if fiscally supported growth is erroneously seen as a sustained recovery." He said another key concern is that higher oil prices could hinder recovery.

Visit Finance.KalPoint.Com for latest financial stories...

• 0 comments »

Thursday July 16, 2009

WASHINGTON: The International Monetary Fund on Wednesday said that Japan would likely wrestle with deflation through 2011 as it struggles to recover from severe recession. "Inflation is projected to remain negative until 2011," the IMF said in a report. The IMF sees prices falling 1.1 percent this year, 0.8 percent in 2010 and 0.4 percent in 2011. (AFP)

• 0 comments »

Wednesday July 15, 2009

NEW YORK: Pakistan has asked some $4 billion in additional financing from the International Monetary Fund as an "insurance" against the economic crisis, a top Finance Ministry official said on Tuesday. "The world has not come out of recession, so I might as well have more insurance," Finance Ministry chief Shaukat Tarin told investors in an event organised by the Asia Society in New York.

Pakistan has already signed a $7.6 billion loan deal with the IMF in November to avert a balance of payment crisis. Now the South Asian country is requesting additional financing worth two times its quota, or $3.1 billion, plus $1 billion worth of capital increase in the fund, Tarin told Reuters on the sidelines of the event.


(Reuters)

• 0 comments »

Saturday July 04, 2009

ISLAMABAD: 'Flexible Credit Line' is a new IMF instrument, created in April 2009, which seeks to provide large and upfront financing to members with very strong fundamentals and policies. According to IMF website, "access to FCL is restricted to those members that meet strict qualification criteria, drawings under it are not tied to policy goals agreed with the country".

Mexico received 47 billion dollars under FCL, to buttress strong economies against fallout from the global crisis. Mexico's major trading partner is the US and its exports have suffered due to the recession in US. This facility is for one year.


(BRecorder)

• 0 comments »

Friday July 03, 2009

ISLAMABAD: The International Monetary Fund (IMF) has requested Pakistani authorities to provide statistics with respect to interest and amortisation payments of major public enterprises, budgetary expenditures, including subsidies, grants, net lending and earthquake-related spending, official sources reported.

The IMF is to review performance of Pakistan's economy from July 3, as scheduled under the 7.6 billion-dollar standby arrangement, for which a team of the Finance Ministry, led by Finance Secretary Salman Siddique will face the Fund's panel in Istanbul, Turkey. The sources said the Pakistani team had been requested to provide details of Federal Board Revenue (FBR) revenue data for June 2009, including a two-year time series with a breakdown of direct taxes into its components.

Major revisions to the taxes, announced on June 13 in the budget, were revised downward a mere five days later, which are estimated to reduce the government revenue by Rs 22 billion. In addition, the government announced a rise in pay and pensions from 15 percent (as announced on June 13) to 20 percent as announced five says later.

The only reduction, announced by the State Minister for Finance and Economic Affairs, was Rs 183 million in the annual allocation for National Accountability Bureau (NAB). The consequent rise in the budget deficit was not noted by the government. It is a foregone conclusion that this raised serious concern within the IMF team dealing with the Pakistan authorities.

Budgetary revenues for all categories, including all non-FBR collected revenue, ie carbon tax and non-tax revenues and external budgetary financing with a detailed breakdown as well as domestic bank and non-bank financing and public debt, will be provided to the IMF team and will be an integral component of the discussions.

The sources said the IMF had also asked the Finance Ministry to provide detailed breakdown of the sub-category of current spending labelled "running of the civil government", separating in particular the wage bill and goods and services, for the FY 2005-06, FY 2006-07 and FY 2007-08, the first three quarters of the FY 2008-09 (actual execution data).

(BRecorder)

• 0 comments »

Thursday June 25, 2009

SEOUL: The International Monetary Fund is likely next month to upgrade its growth outlook for South Korea and other emerging Asian economies as stability begins to return, a senior IMF economist said Wednesday. "We haven't finalised the new numbers (for emerging markets).

But it is very likely that many of the numbers are going to be revised upward on average by about one percentage point," Olivier Blanchard, senior IMF economic counsellor, told a conference co-hosted by the Seoul government and the World Bank. The economies due for an upgrade include South Korea, Thailand and Indonesia, Blanchard was quoted by Yonhap news agency as saying, adding that the outlooks for China and India will probably be maintained.

In April the IMF downgraded South Korea's 2010 growth projection to 1.5 percent from 4.2 percent earlier, while maintaining its forecast for this year of a 4 percent contraction. "The downgrade was due to a decrease in exports... but the fiscal stimulus and monetary policies taken by the authorities are taking effect, while the deprecation of the (local) currency helped," Blanchard said.


(AFP)

• 0 comments »

Thursday, June 18, 2009

DUSHANBE: The global economy should begin showing signs of recovery by next year, IMF managing director Dominique Strauss-Kahn said on Wednesday during a visit to the Central Asian state of Tajikistan. The fund chief said that although 2009 was likely to continue to bring difficulties, negative global financial trends should begin to retreat by 2010.

"We.... expect that the rate of growth in the global economy will begin to recover in 2010, and with the rate of growth recovering in the world economy, so too will it grow in your country," he told reporters through a translator. Strauss-Kahn made the comments to reporters after meeting with Tajik president Emomali Rakhmon as part of a tour of Central Asian states, many of which have been badly affected by the global financial downturn.

Despite data that the plunge in remittances from Tajik labourers working in Russia and China is straining the economy, Strauss-Kahn said Dushanbe had pursued largely sound anti-crisis measures.

"I think what has been done by the government was correct given the situation in the economy, especially on the monetary side and by letting the currency depreciate," he said. Tajikistan - a mountainous former Soviet republic which borders China and Afghanistan - has struggled to provide even basic services for its citizens in recent years, with blackouts the norm across much of the country last winter. The IMF boss began his regional tour on Monday in Central Asia's economic powerhouse, Kazakhstan, whose resource-driven economy has been battered as the global economic downturn has forced down commodities prices.

The trip comes as China and Russia are both seeking to increase their influence in this strategically vital region, as evidenced by billions in loans, aid and investment from Moscow and Beijing in recent months. Strauss-Kahn is due to arrive in Bishkek later today, where he will meet with Kyrgyz President Kurmanbek Bakiyev before wrapping up his trip in reclusive Uzbekistan on Thursday.

(BRecorder)

• 0 comments »

Wednesday, June 17, 2009

ISLAMABAD: The Advisor to Prime Minister on Finance, Shaukat Tarin, has said that talks with International Monetary Fund (IMF) will be held on June 28 in Dubai to review the economic performance of Pakistan along with budgetary measures taken to increase revenue collection in the next fiscal year before the release of third tranche.

The Advisor said this at the post-budget meeting of Senate standing committee on finance here on Tuesday. Senator Ali Ahmed in the chair. IMF was earlier scheduled to release third tranche of about $850 million on June 30, but later announced to release it in July.

During the talks in Dubai, IMF team will review the measures announced by the government of Pakistan in the 2009-10 budget to enhance revenue collection. The review will pave the way for releasing the third tranche. Pakistan, in April had received $848 million as second instalment of a $7.6 billion loan from the IMF under the standby arrangement.

Tarin informed the committee that the economic managers of the country would brief the IMF team about the fiscal measures taken by Pakistan government to meet IMF targets and the targets set in the budget. He said that Federal Board of Revenue (FBR) would conduct audit of taxpayers, at random, and audit officers would not take away the record of a company in the process of audit.

The senate committee proposed that the Advisor to Prime Minister on Finance should be banned from attending post-budget seminars until the budget is approved by National Assembly. The meeting was told that the Federal Bureau of Revenue (FBR) would amend the Sales Tax Act to cap the powers of the collectors that cause harassment among the taxpayers. The members of the committee strongly criticised the role of finance managers in preparing budget and complained that they had ignored their budget recommendations while finalising the budget proposals for 2009-10. The members asked the chairman to take up the matter with Senate Chairman and Speaker.

The members regretted that they were the people's representatives but their recommendations were not given due consideration to provide relief to the masses during the upcoming financial year 2009-10. The committee also showed reservations over heavy supplementary grants issued during financial year 2008-09, and proposed that the finance division should hold quarterly budget meeting with Senate standing committee on finance to conduct mid-year budget review.


(BRecorder)

• 0 comments »