...Pakistan is not out of the woods By Abdul Khaliq (CADTM Pakistan) Almost a year ago in August 2008, Pakistan was at the brink of default. Its foreign exchange reserves were hitting the bottom rock of $4 billion, depleting rapidly in the range of $250 to $330 million weekly, which were hardly sufficient to fulfill requirements of one month of imports. Pakistan’s sovereign debt and liabilities were the riskiest, which had crossed the $45 billion mark. Pak rupee had depreciated to 23 per cent. The gap between balance of trade was widening to the alarming extent. Poor law and order situation was scaring away the investors. Financial analysts were predicting Pakistan teetering on the edge of solvency, terming the situation as a natural consequence of Pakistan’s support to US-led war on terrorism. It was a tough time for a new PPP government. With begging bowl, Pakistan was imploring before Saudi Arabia and China to escape the impending default, but it could get nothing substantial. Finding no other option the desperate Pakistan decided to knock the IMF door. Despite strong opposition from many in Pakistan, the government finally entered into $7.6 billion Stand By Arrangement (SBA) loan with the Fund in November 08. A recent report by The Economist (April 23rd 2009) “Full Fear and Credit: Pakistan’s Political instability brings macroeconomic calm” claims that Pakistan has unique exemption from ill effects of the global contraction and under IMF program it has only...
Words: 1824 - Pages: 8
...Introduction: The current article “IMF programs: Who is chosen and what are the effects?” by Robert J. Barro, Jong-Wha Lee talks about the lending policies and practices of IMF which responds to economic conditions but are also sensitive to political-economy variables. Paper says that all developing countries have received IMF financial support at least once since 1970 with few exceptions including Botswana, Iraq, Malaysia, and Kuwait (Robert J. Barro, Jong-Wha, 2005) but the real question is why so many countries are sorting out financial assistance from IMF? and are these loans are really helpful for their economy? It further explains the determination and effects of IMF program on the country’s economic growth because it invokes a controversy among the claim of IMF which is to contribute the sustainable growth in the economy of its member countries and the calculations made from the current data of 130 countries which show that a higher loan participation reduces the economic growth plus a little indirect effects on other economic and political variables like investment, inflation, government consumption, international openness, the rule of law and democracy(Robert J. Barro, Jong-Wha,2005) which will lead us to investigate the importance of institutional and geopolitical influences in IMF program, approval and participation. From the results of this research paper we can say that IMF lending may be bad for the economy but good for the governments and individual politicians...
Words: 1463 - Pages: 6
...RESEARCH PROPOSAL TOPIC: Rising inflation in Pakistan: Causes and Remedies SUBMITTED BY: NAILA ERUM NATIONAL DEFENCE UNIVERSITY, ISLAMABAD Rising inflation in Pakistan: Causes and Remedies Introduction Pakistan is currently facing unprecedented high Inflation. High inflation is contributing to increase in vulnerability and fall in real income of lower, middle and fixed income segments of the society. It is increasing uncertainty about future scenario of the business environment and instability of the financial system, erosion of business and investors’ confidence, slowing down of real economic activities, investment, economic growth and employment. Inflation is known as a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, there is a decline in the real value of money and purchasing power. Inflation is an indicator of a country’s macro economic stability and provides important insight on the state of the economy and the sound macroeconomic policies that govern it. A stable inflation not only gives a nurturing environment for economic growth, but also uplifts the poor and fixed income citizens who are the most vulnerable in society. A numerous supply side and demand side factors could be responsible for this surge in inflation. Inflation can be a result of shocks to the supply of certain food items and to world...
Words: 2805 - Pages: 12
...nonetheless, insufficient to pace up the economic recovery (Figure 7.1). In the EU, growth was constrained by fiscal consolidation; deleveraging; and tight credit conditions to repair balance sheets by financial institutions and households. In the US, growth remained lackluster throughout 2012 and early 2013, despite a pick-up in credit and housing following the launch of the third round of quantitative easing (QE3) in September 2012.4 Figure 7.1: Global GDP Growth World Emerging economies 8 6 percent Advanced economies 4 2 0 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 Source: World Economic Outlook 2013, IMF Figure 7.2: Current Account Balance of Developing Countries 15 2010 2011 2012 (est.) 10 percent of GDP 5 0 -5 -10 Latin Middle America & East & Carreibean N.Africa Source: Regional Economic Outlook 2013, IMF China ASEAN India The spillover of a slow recovery in these regions weighed on the growth in the Middle-East, Latin America and Asia. Policymakers in these...
Words: 10790 - Pages: 44
...Department At the Pakistan Development Forum Islamabad, March 17-19, 2004 I. Introduction 1. The 2004 Pakistan Development Forum (PDF) provides a timely opportunity to discuss Pakistan's recently finalized Poverty Reduction Strategy Paper (PRSP) "Accelerating Economic Growth and Reducing Poverty: The Road Ahead." Last week the IMF Executive Board endorsed Pakistan's PRSP as a comprehensive and feasible poverty reduction strategy, and a good framework for further reform after the expiration of the Fund program. The Fund staff appreciates this opportunity to comment on Pakistan's economic developments and outlook. 2. The Pakistani economic reform program has been supported by the IMF with a three-year arrangement under the Poverty Reduction and Growth Facility (PRGF). This program was approved by the IMF Executive Board in December 2001 and it will be completed in December 2004. Since its approval, seven program reviews have been completed successfully and discussions for the eighth review are scheduled for April. 3. In light of the considerable improvement in economic fundamentals during recent years, the authorities have indicated to us that they will not request a successor arrangement to the current PRGF. This will be a very important milestone for Pakistan following a long history of financial assistancel from the IMF. The authorities should be commended for adhering to their commitments under the PRGF and for the impressive economic achievements. Of course, the IMF will continue...
Words: 2145 - Pages: 9
...marketing plan for launching Sephora in Pakistan. The background gives a brief insight of the company, the product and the foreign market chosen. The environmental analysis, to justify the foreign country, offers perspective across the Economic and Financial, Cultural, Political and Legal (PESTLE) elements that will affect the organization. A SWOT analysis has also been conducted to better exhibit the more holistic overall implications of Sephora investing in Pakistan. The “limitations” of this report include a limited word count and certain primary resource constraints. A summarized version of all external environmental elements has been formulated, analyzing their potential marketing implications for Sephora to overcome these constraints. Several graphs and tables are added to rationalize necessary investment decisions and illustrate key facts and findings that reinforce the merits for Sephora penetrating the market. It is essential to underscore that the rationale for launching Sephora in Pakistan are multifold. Pakistan is home to favorably high-density demographics with a consumer base of 180 million and growing which should not be ignored by any MNC or international brand seeking alpha-growth over the coming years. With increasing globalization, media liberalization and rapid urbanization, Pakistani citizens are becoming ever-more brand-conscious and quality-savvy. Sephora should grant a Master Franchise License for Pakistan as it is witnessing a rapidly rising...
Words: 1596 - Pages: 7
...AMB Country Risk Report September 28, 2011 Pakistan Country Risk Tier CRT-5 • The Country Risk Tier (CRT) reflects A.M. Best’s assessment of three categories of risk: Economic, Political and Financial System Risk. • Pakistan, a CRT-5 country, is itself the site of military and terrorist activity. Its fundamental lack of political stability is a challenge to its economic and financial outlook. Economic Risk Moderate Low High • Regional instability and domestic bureaucratic inadequacies challenge this economy that, though recently liberalized by the government, supports a relatively low-income population. • In addition to the need to eliminate terrorist violence in Pakistan, the government must continue to work to strengthen the legal system and transparency in government to increase growth in Pakistan’s economy and industry. Very Low Very High Political Risk Moderate Low High Very Low Very High Financial System Risk Moderate Low High Very Low Very High For information on companies followed Market Outlooks Copyright © 2011 by A.M. Best Company, Inc. All rights reserved. No part of this report may be reproduced, stored in a retrieval system or transmitted in any form or by any means; electronic, mechanical, photocopying, recording or otherwise. 1 AMB Country Risk Report Pakistan Regional Summary: South Central Asia • The region of South Central Asia, comprising the countries south of the Himalayans, is...
Words: 1701 - Pages: 7
...IMF Intervention and Relevance Abstract In todays modernised global financial markets technological advancements have transformed the way investors, financial institutions, governments and central banks operate. This has brought about a crisis of confidence in the ability of any one body to provide high quality surveillance, supervision and crisis management. Countries are unwilling to borrow from the IMF due to the intrusive economic reform policy conditionalities. Cocktail mixes of tax increases, spending cuts and privatisation of public sector assets have proven difficult for local governments to serve. The funds inability to keep pace with an expanding global economy suggest redefining itself with a more modest role that is fitting for such an international monetary system may be the best approach, As opposed to expanding the funds activities. Table of contents 1. Introduction page 1 2. Objectives page 1 3. Rationale page 1 4. Literature review page 2 4.1 The Mandate page 2 4.2 Consequences of IMF Programme Implementation page 2 4.3 IMF Relevance page 6 5. Conclusion page 9 6. Reference 1. Introduction This...
Words: 4129 - Pages: 17
...financial crisis, is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s. Many causes for the financial crisis have been suggested, with varying weight assigned by experts. The U.S. Senate's Levin–Coburn Report asserted that the crisis happened because of: 1-High risk 2 Complex financial products 3-Undisclosed conflicts of interest 4-The failure of regulators 5-The credit rating agencies 6-The market itself to rein in the excesses of Wall Street 7-Weak and fraudulent underwriting practices 8-Deregulation 9-Predatory lending 10-Increased debt burden or over-leveraging 11-Boom and collapse of the shadow banking system 12-Commodities boom Financial crisis in Pakistan and Reasons 1-One of the immediate causes is Political instability due to Musharaf’s position as president, delay in restoring judiciary and resultantly withdrawal of PML (N) from the alliance leaving behind ‘dead’ ministry of finance. In contrast the present government is not showing strong will to cope with the situation. Though some Positive Measures. To end Load Shedding till 14th August, 2009, Benazir income Scheme programmed, Distribution of Land in Sindh, tight Tariff System against luxury items 2-Suicide attacks in the industrial cities-fear among people, disinvestment and maximum outflow of capital, especially in Dubai stock exchange crash. 3-Foreign investment in 2007 was $ 700,63.5 million but in 2008 only $329 million...
Words: 2046 - Pages: 9
...Impact of Global financial crisis On Pakistan By: Nauman Ayubi Butt Roll # 8511 Table of contents 1) Reason of choosing this topic 2) Introduction 3) The term ‘Financial Crises’ 4) Financial Crisis 2007-2009 5) Causes of the crisis 6) The crisis getting global 7) The Financial crisis and Pakistan: 8) Sectoral impact of the crisis in Pakistan: 9) External sector impact i) Exports ii) Imports 10) Financial Sector impact on i) Foreign exchange ii) Banking sector iii) Circular debt iv) Stock market: 11) Inflation 12) Economic business sector impact i) Impact on textile industry 13) Social Sector Impacts 14) Poverty and unemployment: 15) IMF 16) Technique to tackle the situation Reason for choosing this topic: The reason for choosing this topic is that it has a direct relationship with the poverty, unemployment, literacy, wealth distribution and also with the increased level of terrorism in Pakistan. Introduction: Capitalism is an economic system in which land labor production pricing and distribution are all determined by the market. There is a strong history of capitalism that it can shift from extended period of rapid growth to very short periods of contraction The global financial crisis in 2008-09 which are still on the go, they actually started from the 20th century and they have been increasing since then. In the end of 20th century the U.S housing prices after a multiyear started declining, the mortgage prices had been at...
Words: 5046 - Pages: 21
...INTERNATIONAL BUSINESSs Name SIDRA IFTIKHAR SECTION: Ah REGISTERATION NO :078 Submitted to sir saqib fareed sheikh GLOBALIZATION Globalization is the process of international integration arising from the interchange of world views, products, ideas, and other aspects of culture. In particular, advances in transportation and telecommunications infrastructure, including the rise of the Internet, are major factors in globalization and precipitate further interdependence of economic and cultural activities. GATT General agreement on tariffs and trade, an international treaty (1948–94) to promote trade and economic development by reducing tariffs and other restrictions. it was superseded by the establishment of the world trade organization in 1995 History of GATT • Following World War II, the victor nations sought to create institutions that would eliminate the causes of war. • Their principles were to resolve or prevent war through the United Nations and to eliminate the economic causes of war by establishing three international economic institutions. GATT, 1947 Because the ITO was stillborn the provisional agreement for the ITO, the General Agreement on Tariffs and Trade (GATT) became the agreement...
Words: 1751 - Pages: 8
...978-1-58906-842-1 “MAY09.” Includes bibliographical references. 1. Economic forecasting – Middle East. 2. Economic forecasting – Asia, Central. 3. Middle East – Economic conditions. 4. Middle East – Economic conditions – Statistics. 5. Asia, Central – Economic conditions. 6. Asia, Central – Economic conditions – Statistics. I. International Monetary Fund. II. Series: World economic and financial surveys. HC415.15.R445 2009 Please send orders to: International Monetary Fund, Publication Services 700 19th St. N.W., Washington, D.C. 20431, U.S.A. Tel.: (202) 623-7430 Fax: (202) 623-7201 E-mail: publications@imf.org Internet: www.imfbookstore.org The views expressed in this publication are those of the contributors, and not necessarily of the IMF. The coordinating team from the Middle East and Central Asia Department comprised Adam Bennett, Aasim Husain, Gene Leon, Mandana Dehghanian, Muriel Vimond, and Patricia Poggi. In addition to the authors noted in specific chapters and boxes, Henry Ma provided valuable input with research support from Gohar Abajyan. Country desk economists, research...
Words: 26796 - Pages: 108
...Introduction The IMF is an intergovernmental institution established by an international treaty in 1945 to create a framework for international economic cooperation focusing on balance of payment problems and the stability of currencies. IMF headquarters is in Washington D.C, U.S.A History / establishment of IMF: IMF was founded on 27th December, 1945. During the closing years of world war second, different countries realized that there must be a common International Forum for achieving economy cooperation, promoting International Trade and providing help to needy nations during emergency. So IMF was formed for this purpose. World War Second has its adverse effect on global economy. To remedy the situation, an international monetary conference was convened in 1944, at Bretton Woods in America. It was attended by the representatives of 44 countries. It was decided in this Conference to set up IMF for the economic development of all countries. Problems: Three main problems are: ▪ Economic order and piece ▪ Reconstruction of economies ▪ Stable world piece Role: The IMF was intended to play two major roles in the Bretton Woods System: o The fund should discourage aggressive exchange rate behavior by members and help them manage their balance of payments efficiently; o The fund was given resources to lend international reserves to countries with balance of payments difficulties. Purposes/ objectives The purposes...
Words: 5009 - Pages: 21
... Judiciary is the only istitute in Pakistan who is giving fair to masses and cheif justice Iftikhar chaudry is the only person who keep maintain judiciary but unfortunatly our federal government are making conflict with judiciary and impacts shows on on the poor people of pakistan.ppp colition parties and opposition are standing like dumb and enjoying the play.in this situation judiciary is grace for us from allah but govt is making rumours against judiciary.some months ago they traped Arsalan iftikhar in a case through Malik riaz and try hard to defame the judiciary and iftikhar chaudry but chief justice is still is on his way and govt is keeping on publishment of scandles against judiciary when supreme court disqualified ex.pm Gillani after this tregidy the War started b/w them benefits and advantages are being received by foriegn agencies.colition parties are also consoliding the federal govt.in rental power case supreme court issued the warrant of pm raja ashraf.these all shows that the pppp is guilty and they should mind their ways if this tussle b/w these continue then i think no one will save the image and base of pakistan.on the other end pakistan is debtor of world bank and Imf and passing through wave of terrorism no one is thinking about it that what will be the Future of pakistan they must united and should find a corridor in this situation in last i will use a proverb for current democracy...
Words: 262 - Pages: 2
...indicator of political, economical, social and technological influences on organization. Political & Legal Factors As far as the Lever Brothers Pakistan Limited concerns according to them that political instability have do affect but not particularly Lever Brothers Pakistan Limited same as it affects any other organization around and specially they are in consumer products business which never make them out of business. In case of legal factors, any trade policy or import duties is not affecting particularly Lever Brothers Pakistan Limited. In Pakistan right now following liberalization policy under SAP by IMF made which they have to waive off all restrictions and moreover due to huge investment by Lever Brothers Pakistan Limited no government can afford to create hurdles in the way of an organization like Lever Brothers Pakistan Limited. And they don’t have to go for only lobbying or what so ever as not action of Pakistan government has affected them adversely as such. Economical Factors Economical factors affect Lever Brothers Pakistan Limited in the same way as it affect any other organization like current economic situation in Pakistan and inflation has reduced consumer’s disposable income too, which in turn has reduced the purchasing power of consumer but affect is same for every organization and according to them Lever Brothers Pakistan Limited have edge that they have targeted all possible segments through their vast product category i.e. the width and length too. So one...
Words: 611 - Pages: 3
