Pakistan “engaged” with IMF for bailout package: Ministry of Finance

Pakistan has been negotiating a deal with the IMF since November last year to shore up the country’s dwindling foreign exchange reserves and avert the possibility of a balance-of-payments crisis. (Reuters/photo)
Updated 04 March 2019
0

Pakistan “engaged” with IMF for bailout package: Ministry of Finance

  • IMF program expected to be signed in April, says an EAC member
  • Pakistan’s urgency for IMF loan was somewhat reduced by $6 billion cash assistance from Saudi Arabia, UAE

ISLAMABAD: Pakistan’s Ministry of Finance said on Sunday that negotiations with the International Monetary Fund (IMF) for a bailout package have been in progress and the deal may mature in the coming week.

“We are still engaged with the IMF,” Saeed Javed, Media Director at the Finance Ministry, told Arab News without revealing further details.

Pakistan and the IMF will reach an agreement over a bailout soon, with a potential bailout size of about $12 billion, said FitchSolutions, a statistical rating organization headquartered in New York, in a statement issued last week.

However, Javed neither confirmed nor denied the report, saying “the volume of the loan from the IMF will become clear in the next few days.”

Pakistan has been negotiating a deal with the IMF since November last year to shore up the country’s dwindling foreign exchange reserves and avert the possibility of a balance-of-payments crisis. But the agreement is yet to be reached due to “tough economic conditions” the Fund may impose before it offers financial assistance.

“We expect to see a bailout package that focuses on fiscal consolidation, a review of monetary and exchange rate policy, financial reforms, and structural reforms, similar to measures implemented in the previous loan agreement,” the FitchSolutions said.

Hopes for the expected bailout package soared in the second week of February, when Prime Minister Imran Khan called on IMF Managing Director Christine Lagarde in Dubai and they both agreed to “work together” on policy priorities and reforms to fix the country’s fledgling economy. But Finance Minister Asad Umar has repeatedly said that Pakistan would sign the financial deal with the IMF only if it “gets the loan on favorable conditions.”

Dr. Ashfaque Hasan Khan, senior economist and a member of the Economic Advisory Council of the government, said the prime minister and his team have been looking for a “good deal,” thinking that this is the way forward to “steer the economy out of crisis.”

“I personally feel the deal with the IMF will be signed in April this year and it will be applicable from July,” he told Arab News.

This will be the country’s 13th loan program since the late 1980, though the government claims that this will be the last one to support the economy. Until now, Islamabad has managed to successfully complete only one IMF program – meaning that it received all the disbursements as planned – that ended in 2016.

Muzamil Aslam, senior economist and former CEO of EFG-Hermes Pakistan, said the government’s urgency for the IMF package was somewhat reduced by $6 billion direct cash assistance ($3 billion each) from Saudi Arabia and the United Arab Emirates and it had bought itself some “bargaining time” to deal with the Fund.

“If the government signs a financial package with the IMF by accepting all its terms and conditions, then Pakistan is likely to plunge deeper into the economic crisis instead of coming out of it,” he told Arab News.


‘Don’t be too optimistic’: Huawei employees fret at US ban

Updated 26 May 2019
0

‘Don’t be too optimistic’: Huawei employees fret at US ban

  • This week Google, whose Android operating system powers most of the world’s smartphones, said it would cut ties with Huawei
  • Another critical partner, ARM Holdings, said it was complying with the US restrictions

BEIJING: While Huawei’s founder brushes aside a US ban against his company, the telecom giant’s employees have been less sanguine, confessing fears for their future in online chat rooms.
Huawei CEO Ren Zhengfei declared this week the company has a hoard of microchips and the ability to make its own in order to withstand a potentially crippling US ban on using American components and software in its products.
“If you really want to know what’s going on with us, you can visit our Xinsheng Community,” Ren told Chinese media, alluding to Huawei’s internal forum partially open to viewers outside the company.
But a peek into Xinsheng shows his words have not reassured everyone within the Shenzhen-based company.
“During difficult times, what should we do as individuals?” posted an employee under the handle Xiao Feng on Thursday.
“At home reduce your debts and maintain enough cash,” Xiao Feng wrote.
“Make a plan for your financial assets and don’t be overly optimistic about your remuneration and income.”
This week Google, whose Android operating system powers most of the world’s smartphones, said it would cut ties with Huawei as a result of the ban.
Another critical partner, ARM Holdings — a British designer of semiconductors owned by Japanese group Softbank — said it was complying with the US restrictions.
“On its own Huawei can’t resolve this problem, we need to seek support from government policy,” one unnamed employee wrote last week, in a post that received dozens of likes and replies.
The employee outlined a plan for China to block off its smartphone market from all American components much in the same way Beijing fostered its Internet tech giants behind a “Great Firewall” that keeps out Google, Facebook, Twitter and dozens of other foreign companies.
“Our domestic market is big enough, we can use this opportunity to build up domestic suppliers and our ecosystem,” the employee wrote.
For his part, Ren advocated the opposite response in his interview with Chinese media.
“We should not promote populism; populism is detrimental to the country,” he said, noting that his family uses Apple products.
Other employees strategized ways to circumvent the US ban.
One advocated turning to Alibaba’s e-commerce platform Taobao to buy the needed components. Another dangled the prospect of setting up dozens of new companies to make purchases from US suppliers.
Many denounced the US and proposed China ban McDonald’s, Coca-Cola and all-American movies and TV shows.
“First time posting under my real name: we must do our jobs well, advance and retreat with our company,” said an employee named Xu Jin.
The tech ban caps months of US effort to isolate Huawei, whose equipment Washington fears could be used as a Trojan horse by Chinese intelligence services.
Still, last week Trump indicated he was willing to include a fix for Huawei in a trade deal that the two economic giants have struggled to seal and US officials issued a 90-day reprieve on the ban.
In Xinsheng, an employee with the handle Youxin lamented: “I want to advance and retreat alongside the company, but then my boss told me to pack up and go,” followed by two sad-face emoticons.