Published: Thu, October 11, 2018
Business | By Eloise Houston

Pakistan requests International Monetary Fund for bailout package

Pakistan requests International Monetary Fund for bailout package

Pakistan's currency plunged by almost 7 percent after the government said it would seek emergency bailout loans from the International Monetary Fund (IMF).

"Owing to these changes, our worldwide growth projections for both this year and next are downgraded to 3.7 per cent, 0.2 percentage point below our last assessments and the same rate achieved in 2017", the report said.

After a visit last week, the International Monetary Fund said Pakistan was facing significant economic challenges, with diminishing growth, high budget and current-account deficits, and low foreign-exchange reserves.

The IMF expects growth in Russian Federation at 1.7 percent this year and 1.8 percent next year, it said in an update to its World Economic Outlook on Tuesday. It left 2018 growth forecasts for the two countries unchanged at 2.9 percent for the USA and 6.6 percent for China.

It will be detrimental on both accounts for all participants, Lagarde told a news conference during the annual meetings of the International Monetary Fund and World Bank in Indonesian resort island of Bali.

Trump has led the escalating trade war because of what he believes are bad policies he said have created an $800 billion US trade deficit.

The Outlook said the global economy is expected to grow at 3.7 percent this year and next year - down 0.2 percentage points from an earlier forecast, as the trade war started to hit economic activity worldwide.

The downgrade reflects a confluence of factors, including the introduction of import tariffs between the U.S. and China, weaker performances by euro zone countries, Japan and Britain.

'Strong growth over the summer is likely to reassure policymakers that the recent interest rate rise was warranted, but they'll be hoping to see the momentum maintained as Brexit approaches.

On Monday, it downgraded world growth forecasts for next year, blaming new trade barriers.

Trade tensions are expected to continue although Fund officials view US-Mexico-Canada trade agreement as a positive sign.

On recent yuan declines, Lagarde said they were mainly driven by the strength of the dollar, noting that it has not depreciated as much against a basket of currencies.

"We are all deeply concerned about this news and the potential impact on the business. It's so tight. I think the Fed has gone insane", the United States president said.

Around 32,000 members of the global financial elite are on the Indonesian holiday island for a week of discussions that have been clouded by U.S. President Donald Trump's America First trade policy.

Trump renewed his threat to impose tariffs on $267 billion worth of additional Chinese imports if Beijing retaliates further with its own higher levies on US products entering China. The government has already hiked gas tariff on average by 35 percent and more could follow.

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