Published: Tue, October 09, 2018
Worldwide | By Myra Stephens

Pakistan To Open Talks With IMF For Emergency Financial Assistance

Pakistan To Open Talks With IMF For Emergency Financial Assistance

"We have to find a way to get out of this hard situation", he said.

But China's involvement could also bring potential risks, he said.

In the United States, momentum is still strong as fiscal stimulus continues to increase, but the forecast for 2019 has been revised down due to recently announced trade measures, including the tariffs imposed on $200 billion of USA imports from China.

Growth estimates for the euro area and Britain also was revised down.

The IMF has been recommending that Chinese authorities de-emphasize the quantity of growth to focus more on its quality and sustainability to allow the economy to better withstand shocks, Obstfeld said.

"However, further reforms are needed to increase policy certainty, improve the efficiency of state-owned enterprises, enhance flexibility in the labour market, improve basic education, and align training with business needs", it stated. These were reduced by 0.2 and 0.4 percentage points for this year and next, partly as a result of higher interest rates making these nations' debts more costly to service.

Pakistan's current account deficit widened 43 per cent to $18 billion in the fiscal year that ended June 30, while the fiscal deficit has ballooned to 6.6 per cent of gross domestic product.

"Growth is now much more uneven" than six months ago, he told reporters.

The fund left its 2018 U.S. forecast unchanged but cut its expectation for next year, citing the impact of the trade conflict.

In the World Economic Outlook report released in July, the Bretton Wood institution had projected that Nigeria's economy would grow by 2.1 percent in 2018 and 2.3 percent in 2019.

If the trade war continues, it could take a significant bite out of global growth, according to the fund. -China tariff war's impact to be felt next year, the Fund cut its 2019 US growth forecast to 2.5 percent from 2.7 percent previously, while it cut China's 2019 growth forecast to 6.2 percent from 6.4 percent.

Gian Maria Milesi-Ferretti, deputy director at IMF's research department made this known on Tuesday while addressing journalists at the ongoing annual meetings of the International Monetary Fund and World Bank Group in Bali, Indonesia.

Top officials of government confirmed to The News that the IMF would be formally requested for providing a bailout package in the range of $6 to $8 billion depending upon the ability of Islamabad to convince the Fund management and its board members to jack up quota by 5 to 7 times along with provision of front loading by getting at least $2 billion upfront and the first tranche probably within next 4 to 6 weeks period.

United States stimulus also adds to the "already-unsustainable" debt and deficit that will undercut future growth, the report warned.

However, stimulus measures by Beijing are likely to soften the impact of the tariffs.

At a news conference at the International Monetary Fund and World Bank annual meetings in Bali, Obstfeld said Pakistan is facing financing gaps as it has been hit by a large fiscal and current account deficit, a low level of reserves and a currency he described as "too rigid" and over-valued.

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