Published: Thu, October 11, 2018

U.S. to evaluate Pakistan's bailout request on merit

U.S. to evaluate Pakistan's bailout request on merit

China has pledged some $60 billion in financing to Pakistan for ports, railways and roads, but rising debt levels have caused Islamabad to cut the size of the biggest Belt and Road project by some $2 billion.

But in its latest World Economic Outlook, the International Monetary Fund cut its global economic growth forecasts for 2018 and 2019, saying trade policy tensions and the imposition of import tariffs are taking a toll on commerce while emerging markets struggle with tighter financial conditions and capital outflows.

If projections are true, then India would regain the tag of fastest growing major economies of the world, crossing China with more than 0.7 percentage point in 2018 and an impressive 1.2 percentage point growth lead in 2019.

The IMF predicted United Kingdom growth to would be 1.4% in 2018, rising to 1.5% in 2019, while the eurozone 2018 growth forecast was cut to 2.0% from 2.2%. Fed Chair Jerome H. Powell recently said these are "extraordinary times" for the US economy.

A raising of USA interest rates has also helped send emerging market currencies into a tail spin, as countries that borrowed heavily in dollars race to pay back their debt.

Reflecting such sentiments, growth in trade of goods and services across the world was revised down 0.6 point from the July forecast to 4.2 percent in 2018 and 0.5 point to 4.0 percent in 2019, according to the report.

Speaking to journalists in Bali, the Deputy Director, Research, IMF, Gian Maria Milesi-Ferretti, said the largest economies on the continent were holding down economic development in Africa as a result of poor growth rate.

The report recommended emerging economies take steps to insulate themselves from a further exodus of funds from investors.


The tariffs stem from the Trump administration's demands that China make sweeping changes to its intellectual property practices, rein in high-technology industrial subsidies, open its markets to more foreign competition and take steps to cut a $375 billion US goods trade surplus.

Pakistan's finance minister told the daily Dawn newspaper on Saturday that the government had not yet decided whether it would go to the IMF, and had not sketched out a formal proposal to the fund ahead of the Bali summit. But it predicts that US growth will slow to 2.5 percent next year as the effect of recent tax cuts wears off and as President Donald Trump's trade war with China takes a toll.

DESPITE the steady rise of consumer prices in the country in recent months, the International Monetary Fund (IMF) believes inflation will likely stabilize and stay relatively low in the long term.

"We will be listening very, very attentively when and if they come to us", said Obstfeld.

This was the fifth devaluation of the rupee since December 2017, which has seen the local currency losing a cumulative 26 percent of its value against the greenback.

That initiative includes China, India and Japan, but not the United States.

Adjustments would occur as domestic production displaces higher-priced imports, the model shows, but in the long run, the U.S. GDP would still be 1.0 percent below a baseline without these tariffs, while China's GDP output would be one half percent below the baseline. In September, Trump imposed tariffs on almost $200 billion of Chinese imports, with China responding with higher tariffs on about $60 billion of US imports.

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