Asian Development Bank offers to double Pakistan's aid: Monsters and Critics

Islamabad - The Asian Development Bank (ADB) on thursday offered cash-strapped Pakistan to double its annual assistance to three billion dollars during the incoming fiscal year staring on July 1, a senior official of the bank said.

'We can double Pakistan's assistance up to three billion per annum provided Islamabad makes a request and the funds available to ADB are increased,' the bank's vice president Zhao Xiaoyu told reporters in Islamabad.

For more on this article, please click on the following link: Asian Development Bank offers to double Pakistan's aid: Monsters and Critics

Pakistan repays maturing $500 mln Eurobond: Reuters

KARACHI, Feb 19 (Reuters) - Pakistan fully repaid a maturing $500 million euro bond, plus $17 million interest, on Wednesday, the central bank said on Thursday.

"We fully paid the amount yesterday," central bank spokesman Syed Wasimuddin told Reuters, referring to the bond which was issued in 2004 and matured on Thursday.

For more on this article, please click on the following link: Pakistan repays maturing $500 mln Eurobond: Reuters

Pakistan To Get $700 Million More In Loans From WB, ADB - Official: EasyBourse

ISLAMABAD-(Dow Jones)- Pakistan is likely to get a combined $700 million worth of loans from the World Bank and the Asian Development Bank, the country's Finance Advisor, Shaukat Tarin, said Monday.
"Pakistan has received $200 million from the Asian Development Bank, while the country is expected to receive $500 million from the World Bank within a fortnight," Tarin told reporters.
"We are also expected to get another $200 million from the Asian Development Bank during the second quarter of 2009."
The new loans will boost the country's foreign-exchange reserves, Tarin said.
Last week, the country received a $500-million loan from China, a senior government official had said Saturday.

By Haris Zamir and Islamabad Bureau, Dow Jones Newswires

For more on this article, please click on the following link: Pakistan To Get $700 Million More In Loans From WB, ADB - Official: EasyBourse

Pakistan gets $500 mln from China, officials say: Reuters

KARACHI, Jan 26 (Reuters) - Pakistan has received $500 million from China to help build foreign reserves, two government officials said on Monday.

"The deposit of $500 million from China to Pakistan's central bank is only to build foreign reserves," said one of the officials, both of whom declined to be identified.

"The Ministry of Finance cannot use it for budgetary purposes."

The official also said Pakistan had received $101 million from the United States for logistical support in the campaign against militancy.

Pressure on Pakistan's balance of payments and its currency was easing, partly because of the payments, the official said.

Another government official confirmed that Pakistan had received $500 million from China.

For more on this article, please click on the following link: Pakistan gets $500 mln from China, officials say: Reuters

Pakistan to get $500 million each from China, WB: The Nation

ISLAMABAD (APP) - Advisor to Prime Minister on Finance and Economic Affairs, Shaukat Tarin said on Wednesday that Pakistan would get an amount of US $ 500 million from China by January 5, 2009 while World Bank would extend a similar amount to Pakistan during the next three months. 

For more on this article, please click on the following link: Pakistan to get $500 million each from China, WB: The Nation

IMF tranche boosts Pakistan's reserves to $9.4 bln: Forbes

KARACHI, Dec 1 (Reuters) - Pakistan's foreign currency reserves stood at $9.4 billion by Nov. 26 after receiving the first tranche of $3.1 billion from the International Monetary Fund last week, the State Bank of Governor said on Monday.
Reserves had totalled $6.6 billion as of Nov. 22.



The IMF last week approved a $7.6 billion loan to avert a balance of payments crisis and prevent the government defaulting on its international debt obligations.



For more on this article, please click on the following link: IMF tranche boosts Pakistan's reserves to $9.4 bln: Forbes

Germany in 40bn euro debt swap with Pakistan: Gulf Times

By Anwar Elshamy

SETTING an example of innovative financing for development, Germany, Pakistan and the Global Fund to Fight Aids, Tuberculosis and Malaria have signed a new type of debt swap on the sidelines of the Second International conference on Financing for Development being held in Doha.

Under this Debt2Health agreement, Germany cancelled 40mn euros of Pakistani debt on the condition that Pakistan invests 20mn euros in domestic health programmes supported by the Global Fund.

The agreement was concluded by the Heidermarie Wieczorek Zeul, the special envoy of the UN General secretary for the conference and Federal Minister of economic cooperation and development, Germany and Hina Rabbani Khar minister of state for finance and economic affairs, Pakistan and Dr Michel Kazatchkine, executive director of the Global fund. Speaking at a press conference, the Minister of Economic Co-operation and Development of Germany Wieczorek-Zeul said that Pakistan is only the second country to benefit from the Debt2Health creative financing instrument.

For more on this article, please click on the following link: Germany in 40bn euro debt swap with Pakistan: Gulf Times

Pakistan's Rupee Strengthens for a Fifth Week Against Dollar: Bloomberg

By Farhan Sharif

Nov. 21 (Bloomberg) -- Pakistan's rupee posted a fifth weekly gain, its best winning streak in a year, after the government said it expects to receive the first installment of an International Monetary Fund bailout this weekend. Bonds fell.

The currency closed at a six-week high after the government said it expects a minimum $3.2 billion of a $7.6 billion IMF loan to be transferred to the central bank as soon as the fund's executive board approves the payment. The rupee tumbled as much as 26 percent this year, reaching a record low last month as concern mounted the government would default on its overseas debt obligations.

For more on this article, please click on the following link: Pakistan's Rupee Strengthens for a Fifth Week Against Dollar: Bloomberg

Opportunities for Pakistan in the Global Financial Slump: Economistan

FREE MARKETS:Many opportunities abound for countries like Pakistan due to the dynamics of the essential commodity prices coupled with low shipping rates. Time to harness these to our advantage.

LIGHT AT THE END OF THE TUNNEL
By Saad Sarwar Muhammad

Monday, November 17, 2008

The whole world is undergoing a major financial crisis which has caused the downturn of almost all the developed world economies with job losses, bailouts and financial losses becoming the order of the day. In such unprecedented times of financial trouble the developed world is looking towards developing countries with huge reserves and financial muscle. Countries like China, Saudi Arabia and Turkey fit the bill. They were invited in the recently held summit of the G-20 to help the developed economies recover from the slump and in some way bail out the developed countries from the fiasco they are in.

The world has been undergoing a rollercoaster ride when it comes to the prices of different commodities, the stock market index levels and the value of dollar and yen versus other major currencies. Oil and Gold are two commodities that have hit a nosedive in recent times. Iran has reportedly given the intent to convert its reserves into Gold in order to overcome the deficit that can result in the reduction of price of oil. The value of dollar and yen is soaring at a time against major European currencies giving the indication of more trust in the resilience of the US economy as compared to the EU.

Pakistan has been suffering its own financial crisis lately, which somehow seems unrelated to the recent global recession. Pakistan’s problems have mostly been homegrown based on the energy crisis due to shortage of alternative energy power sources such as hydel, wind, solar and to some extent nuclear. Pakistan’s financial crisis has resulted from the withdrawal of funds from Pakistan’s stock market, the Karachi Stock Exchange (KSE) since the coming of the new civilian government. Pakistan’s stock market, KSE, has lost close to $36 billion dollars this year in market capitalization. Resultantly, the Pakistani rupee has also borne the brunt with the value of rupee falling from around 60 to a dollar from the beginning of the year to around 80 to a dollar at the moment (many currency dealers have also been arrested in the wake of the rupee devaluation, famous among them the firm of Khanani and Kalia). Not to mention the floor imposed on the KSE to allow the stock market to breathe a sigh of relief. The sigh has converted to deep sleep as the floor remains imposed after many many weeks.

For more on this article, please click on the following link: Opportunities for Pakistan in the Global Financial Slump: Economistan

Pakistan to get $7.6 billion under IMF programme: Tarin: Business Recorder

RIZWAN BHATTI

KARACHI (November 16 2008): Pakistan, after seven years' gap, has finally re-entered the International Monetary Fund (IMF) programme to receive $7.6 billion for replenishing its fast depleting reserves, after its friends, multilaterals and other donor agencies and international financial institutions showed reluctance to help it financially.The announcement to this effect was made by Shaukat Tarin, Advisor to Prime Minister on Finance, at a press conference, along with Dr Shamshad Akhtar, Governor, State Bank of Pakistan.Tarin said: "IMF has accepted Pakistan's formal request for funding, and an agreement with IFM has been reached on a rescue package to overcome the country's economic crisis." He said that Pakistan would receive $4.5 billion this year as part of the 23-month IMF deal, while the remaining amount would be received next year.

He said: "The interest rate on the IMF programme will be 3.1 to 3.5 percent, with some changes as per market conditions, which would be repaid during the fiscal years 2012 to 2016."However, he made it clear that this fund would not be used for any non-development expenditures and stock markets, saying that the loan would be utilised for maintaining the declining foreign reserves, besides overcoming its balance of payments crisis. He said that the IMF financing facility would give confidence not only to the markets and the investors but also to other IFIs and friends.

For more on this article, please click on the following link: Pakistan to get $7.6 billion under IMF programme: Tarin: Business Recorder

China offers $500 million for Pakistan: domain-b

China has offered to lend up to $500 million to Pakistan as part of its obligation to address concerns over the global financial market crisis and the ensuing economic slump.
China's offer was announced in a statement issued by Shaukat Tarin, economic adviser to Pakistan's prime minister.

The move comes after the Japanese offer to lend up to $100 billion to an IMF bailout fund.
China and Japan are the two Asian countries with the largest dispossable resources at their command. But, for China, the only country with a larger foreign-currency stock than Japan, with nearly $2 trillion in reserves, it's a much smaller donation.

For more on this article, please click on the following link: China offers $500 million for Pakistan: domain-b

Pakistan can raise $5bn in 30 days: Dawn

By Yousuf Nazar

Given the current ‘political realities’, Pakistan seems to have little option but to go to the IMF. But the truth is Pakistan can raise $5 billion in the next 30 days if it wants to; even if Saudi Arabia does not extend oil credit facility.The United States wants Pakistan to work with the IMF and the government does not want to upset Washington. Otherwise why would it sit on proposals (like the exchangeable bonds and the securitisation of remittances) for months that could have raised a few billion dollars? The proposal from the Chinese to buy minority stake in the National Bank of Pakistan, likewise, was put in cold storage.Raising $5 billion will take Pakistan’s foreign exchange reserves to about $12 billion. This would represent a comfortable level of four months worth of next 12 months of imports as Pakistan’s annual import bill is likely to drop sharply to $33 billion from $40 billion in FY 2007-08 due to the collapse of the price of oil and these of other commodities such as edible oil. Four months of import cover is considered a reasonable level and the country can use this time to take steps, such as privatisation or joint ventures in strategic areas, to mobilise funds for its medium- term needs.Just consider the following four of the many ways the government can use to raise $5 billion for meeting the current crunch. These are not necessarily the most desirable options but are far better than carrying a begging bowl around the world.— Pakistan has about $1.8 billion in gold reserves. Borrowing or leasing against gold is a standard international practice. Pakistan can borrow for six months at the rate of around 2.1 per cent from the central bank of a friendly country such as the United Arab Emirates. India did this in 1991 for a short period.— Pakistan can borrow (not beg) at least US$1.5 billion from China on commercial terms by putting its shares in large government-owned corporations as collateral. China has, in the past year, extended loans to other countries (e.g. Congo) on the basis of proper collateral. The cost of loans secured against collateral can be significantly cheaper compared with other options.— Pakistan can get another $800 million in a few days if the US reimburses the remaining amount for 2008 it should pay under the Coalition Support Fund relating to expenditure incurred on combating terrorism. Pakistan has received only one instalment ($364.7 million in September 2008) for this year’s expenses. A senior military source told Internews that the amount for reimbursement was calculated on the basis of six-monthly reports. He said all bills related to the expenditure had been audited jointly by a team of Pakistani military officers and the US embassy.

For more on this article, please click on the following link: Pakistan can raise $5bn in 30 days: Dawn

Pakistan's Economy:Treacherous ground: Economist

Oct 30th 2008 | DELHI

From The Economist print edition

An earthquake adds to Pakistan’s woes

ON TOP of a bloody insurgency and a listing economy, Pakistan must now contend with a natural calamity. Before dawn on October 29th, an earthquake of magnitude 6.4 or greater struck the mountainous province of Baluchistan not far from its capital, Quetta. The death toll quickly exceeded 200.

It was the biggest earthquake since one in October 2005 that killed over 70,000 in Pakistan-controlled Kashmir. After that catastrophe, America spent almost $1 billion on relief operations, ferrying supplies to mountain villages by Chinook helicopter. According to one American official, cited by an independent working group on Pakistan policy, the goodwill America earned represents “the most successful strategic confrontation to date in the battle with the terrorists in South Asia.”

Even before the latest earthquake, Pakistan was again hoping its strategic position would persuade the world to rush to its aid. The ground is giving way beneath its economy. A distracted, overstretched government has allowed inflation to soar (see chart), the rupee to plummet and foreign-exchange reserves to seep away. On October 17th the central bank’s stash of hard currency was just over $4 billion, enough to cover just four to five weeks of imports.

Pakistan hoped for an infusion of cash from the “Friends of Pakistan”, an informal circle including China, America and Saudi Arabia. But to its dismay, only the IMF appears ready to offer the sums it needs as quickly as it needs them. The IMF is expected soon to approve a loan of up to $12 billion, probably spread over two years.

Pakistan and the IMF may not be “friends”; but nor are they strangers. Some of the politicians and civil servants now in power were “pretty traumatised” by the IMF programmes they endured during the 1990s, says Mohsin Khan of the fund. In those days, the IMF twisted their arms to make tough fiscal commitments they could not keep. In 2005 the military regime, having proudly turned down the last two instalments of its loan, declared that it had “broken the begging bowl forever”.

For more on this article, please click on the following link: Pakistan's Economy:Treacherous ground: Economist

WSJ slams IMF's prescriptions: Business Recorder

NEW YORK (October 30 2008): An influential US newspaper has criticised the prescriptions of the International Monetary Fund (IMF)--cuts in government expenditures, devaluation, and tax increases--for bailing Pakistan out of the financial crisis, saying that the measures would have opposite effect.

"Pakistan needs market-oriented reform along the Chilean and Irish models, not the IMF's austerity prescriptions," The Wall Street Journal said in an editorial, titled 'Does the IMF have no fresh ideas?' "Pakistan's economic wellbeing matters not only for its 165 million citizens but also because it's a key country in the world-wide war on terror," the editorial said.

The Journal said the IMF declined comment on a Pakistan Finance Ministry spokesman's statement last week that the Fund "wants Pakistan to reduce its government expenditures, maintain a 'flexible' exchange rate and 'increase' its tax-to-GDP ratio".

For more on this article, please click on the following link: WSJ slams IMF's prescriptions: Business Recorder

China assures to stand by all weather ally Pakistan: PTI

Islamabad, Oct 26 (PTI) Pakistan has been assured by it's all weather ally China that it will stand by it under all circumstances and strengthen their strategic partnership.The assurance to this effect was re-conveyed by the Chinese leaders to Prime Minister Syed Yousuf Raza Gilani during his visit to Beijing that concluded yesterday, Pakistan Ambassador to China Masood Khan said.China said it will help safeguard Pakistan's sovereignty and territorial integrity, while maintaining existing strong bonds of friendship.It was both symbolic and substantial in nature that helped to reinforce strong commitment of the two countries to push forward their decades' old relationship, as strong time-tested traditional allies in the region, the envoy said commenting on Premier Gilani's just concluded visit to Beijing for Asia Europe meet.Gilani during his interactions with the Chinese Premier Wen jiabao received strong indications that China will continue to help Pakistan to meet new challenges, in the wake of terrorism and financial crisis.China said it support's Pakistan's stand on counter-terrorism, normalisation of its relations with India and role as a front-line state to wipe out menace of terrorism, the Ambassador said, according to the official APP news agency.

For more on this article, please click on the following link: China assures to stand by all weather ally Pakistan: PTI

Pakistan Prefers Friends’ Aid to IMF Package: Khaleej Times

ntensive Pakistan-IMF consultations have been taking place in Dubai since Tuesday, for a bailout plan to avert possible debt default.

Pakistan has been trying to get International Monetary Fund endorsement for its current strategies for economic recovery that is imperative to persuade other multilateral lenders and friendly countries to come to its rescue.

Islamabad immediately needs 4 to 5 billion dollars to stabilise the economy and enhance confidence in its financial system — a pre-requisite to arrest ever-widening gap in balance of payments position amid rapidly depleting reserves and steep slide in rupee value. High inflation (25 per cent), unsustainable budget deficit, liquidity squeeze in the banking system due to government borrowing has multiplied economic woes.

It is apparent that both sides have agreed in principle on the need for help that was decided in their meetings in Washington in September. But Pakistan insists the IMF is only the last option and the current talks are a health-check and assessment of its financial restructuring plan, which does not include IMF funding at this stage. The plan is already underway to control expenditures side by doing away with subsidies on POL and electricity.

“It is not an extraordinary meeting but, yes, the circumstances have made it so”, says the Adviser Finance Shaukat Tareen. The IMF also confirms a formal request has yet to come but has been encouraging Islamabad to accept funding that may go up to $7 to 10 billion during next two years. The last time Pakistan came off an IMF programme was in December 2004, vowing it would never borrow from the agency again.

For more on this article, please click on the following link: Pakistan Prefers Friends’ Aid
to IMF Package: Khaleej Times

Bond spreads hit record high: bworldonline

HONG KONG — Asian bond spreads widened to record levels yesterday as fears about a balance of payments crisis in Pakistan and Argentina’s takeover of its private pension system rocked confidence in broader emerging markets.

Fears about Asian companies also deepened after S&P and Moody’s downgraded ratings on Chinese conglomerate CITIC Pacific , which this week revealed a potential $2 billion loss on unauthorized currency trades.

"There’s a scare going on in emerging markets overall. Yesterday there were jitters about Pakistan, and right now, adding to the pressure is the news from Argentina," said a Manila-based bond trader.

The iTRAXX investment-grade index widened by by about 40 basis points (bps) to 380.

The equivalent high-yield index jumped some 100 bps to as high as 1,200.

Both marked new records levels, a Hong Kong-based trader said.

The steep widening comes amid concerns about the deteriorating health of emerging markets. Pakistan is feared to be in critical condition as the central bank holds barely enough foreign currency to cover six weeks of imports and was expected to seek IMF help.

Shaukat Tarin, economic adviser to the prime minister of Pakistan, told Dawn News on Tuesday that the country required up to $15 billion of support from foreign lenders to avert a crisis.

Also on Tuesday, news that Argentina will take over its $30 billion private pension system in order to guarantee payments to retirees sent the country’s stocks and bonds tumbling.

For more on this article, please click on the following link: Bond spreads hit record high: bworldonline

Pakistan central bank cuts cash ratio to inject liquidity: AFP

KARACHI (AFP) — Pakistan's central bank moved to inject liquidity into the country's struggling financial system on Saturday by cutting the amount of cash commercial banks must hold in reserve.

The bank lowered the cash reserve ratio two percentage points to six percent, and said it would be cut to five percent on November 15, as it sought to ease tight credit conditions that have hit economic demand around the globe.

Shamshad Akhtar, governor of the State Bank of Pakistan (SBP), said the move would inject 180 billion rupees (2.2 billion dollars) into the system and that the overall package would total 270 billion rupees.

"The State Bank will monitor the liquidity flow after the injection of massive liquidity into the banking system," she said.

"We would like judicious use of liquidity," she said, adding Pakistan's banking sector was "quite resilient and fully capable of withstanding market shocks and adverse macro economic conditions."

For more on this article, please click on the following link: Pakistan central bank cuts cash ratio to inject liquidity: AFP

Pakistan banks on other lenders saving it before IMF: Reuters

Pakistan - (Releads)

By Augustine Anthony

ISLAMABAD, Oct 18 (Reuters) - Pakistan might need to borrow from the International Monetary Fund if other multi-lateral lenders and friendly governments fail to help out in the next few weeks, the country's new troubleshooter said on Saturday.

A balance of payments crisis is expected to climax soon, but there was no danger of Pakistan defaulting on its international debt obligations, Shaukat Tarin said a day after returning from overseas visits to Washington and Beijing to drum up support.

"I am very confident that I have plans to make sure, whatever it takes, that we should build our reserves and that we do not default," said Tarin, appointed last week as adviser to the prime minister on economic affairs.

"Now, there is no danger," he told journalists after a news conference, but he said lenders were running out of time to come to Pakistan's rescue.

"We think we will be in very good shape ... within the next 30 to 60 days," Tarin said of the prospects of sewing up funds to cover a balance of payments financing gap that the IMF estimates at up to $4.5 billion, and Pakistan reckons at $3.0 billion for the fiscal year ending on June 30 next year.

For more on this article, please click on the following link: Pakistan banks on other lenders saving it before IMF: Reuters