Archive for the ‘International Monetary Fund’ Category

Pakistan secures IMF loan of at least 7.6 billion dollars

November 15, 2008

Pakistan announced Saturday it will receive a loan of at least 7.6 billion dollars from the International Monetary Fund, the Fund’s first rescue in Asia since the global financial crisis began.

by Hasan Mansoor, AFP

Shaukat Tarin, top finance adviser to Pakistan’s premier, said the financial crisis had severely impacted the country’s foreign exchange reserves as he announced the package, aimed at staving off a balance of payments crisis.

“We have reached an agreement with the IMF with the help of our friends and other officials,” Tarin told a news conference, adding Pakistan would receive four billion dollars this year as part of the 23-month IMF deal.

Pakistan needs up to 4.5 billion dollars (3.5 billion euros) to deal with a balance of payments crisis that has raised the prospect of the violence-hit nation defaulting on its foreign debts.

State Bank of Pakistan Governor Shamshad Akhtar speaks during ...
State Bank of Pakistan Governor Shamshad Akhtar speaks during a news conference in Karachi, November 12, 2008. Pakistan hiked its key interest rate on Wednesday in a move to find favor with the International Monetary Fund as the government seeks billions of dollars in loans to fend off a balance of payments crisis.(Athar Hussain/Reuters)

“The impact of the financial crisis in the world and the difficulties we faced at home impacted gravely, particularly to our foreign exchange reserves which were 16.4 billion dollars in October 2007 and now are less than 7 billion dollars,” Tarin said.

He added that the interest rate on the IMF programme will be 3.51 to 4.51 percent and Pakistan will repay the loan over five years starting from 2011.

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At the Washington summit meeting, China holds the cards

November 14, 2008

It is not clear how much the leaders of developed and developing countries from around the world, gathered to discuss a fast-moving financial crisis with a soon-to-depart president of the United States, can hope to accomplish.

By Mark Landler and Stephen Castle
International Herald Tribune

But the summit meeting in Washington this weekend may clarify one thing: how fundamentally the crisis is reshaping the economic map, rendering obsolete the old club of Western powers that fashioned the financial pillars of the post-World War II era at a conference in Bretton Woods, New Hampshire, in 1944.

While President Nicolas Sarkozy of France proposed the meeting and President George W. Bush agreed to be host of an expanded conference of G-20 nations, the most sought-after country at the gathering some are calling Bretton Woods II is likely to be China.

With nearly $2 trillion in foreign exchange reserves and an economy that is still growing – even if more slowly than it was before the crisis erupted – China is one of the few participants with the financial power to aid countries in distress, either directly or by contributing to the coffers of the International Monetary Fund.

“We will actively participate in rescue activities for this international financial crisis,” Yi Gang, deputy governor of the Chinese central bank, told a news conference Friday in Beijing, according to Reuters. It was one of the clearest indications yet that China stood ready to help the IMF aid countries hit by the global credit crisis.

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N.Y. Fed Chief Touted for Top Treasury Post; Obama To Meet With Econ Advisors

November 7, 2008

On an Obama economic brain trust studded with high-profile heavyweights, mTimothy F. Geithner, the low-key president of the Federal Reserve Bank of New York, has emerged as a top candidate to head the Treasury Department or another top policy post in the new administration.

New York Federal Reserve President Timothy Geithner testifies ... 
New York Federal Reserve President Timothy Geithner testifies at the U.S. House Financial Services Committee about financial market regulatory restructuring in Washington July 24, 2008.(Larry Downing/Reuters)

Mr. Geithner, 47, is two weeks younger than the president-elect but has served in top Treasury and Federal Reserve positions since the late 1980s. He joined Treasury Secretary Henry M. Paulson Jr. and Federal Reserve Chairman Ben S. Bernanke to oversee the Bush administration’s effort to contain the crises in the world’s credit and financial markets.

By David R. Sands
The Washington Times
Mr. Obama and Vice President-elect Joseph R. Biden Jr. will hold their first press conference since the election Friday in Chicago after a meeting with the transition economic advisory board. Mr. Geithner is not listed as a member of the transition team.

The New York Fed is considered the most influential of the regional Federal Reserve Banks. By virtue of his position, Mr. Geithner serves as vice chairman of the central bank’s Federal Open Market Committee, the key body guiding monetary policy.

Like Mr. Obama, Mr. Geithner is described by colleagues as even-tempered and wonkish at times, comfortable debating abstract financial concepts and not likely to break the bureaucratic crockery as an administrator.

With the economy declining, plunging financial confidence and a $700 billion Wall Street rescue program just getting under way, the Treasury secretary selection will be one of the most critical for the new president, and one of the most closely scrutinized.

Mr. Obama’s economic advisory team during the campaign contained an unusually large number of heavy hitters, including former Federal Reserve Chairman Paul A. Volcker, billionaire investor Warren Buffett, and two Clinton administration Treasury secretaries — Robert E. Rubin and Lawrence H. Summers.

Mr. Rubin, who had been rumored to receive a top post in the new administration, told Bloomberg News on Thursday that he was not interested in returning to government.

It was Mr. Summers who boosted Mr. Geithner’s career at several points after he joined the Treasury Department’s international affairs division as a civil servant in 1988. He became a top aide to Mr. Summers and was named Treasury undersecretary for international affairs in 1999, a post previously reserved for political appointees.

Mr. Geithner left the department in 2001 and spent time as a fellow at the Council on Foreign Relations and at the International Monetary Fund before joining the New York Fed….

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Obama To Meet With Economic Advisors Today

By NEDRA PICKLER, Associated Press Writer

President-elect Obama is seeking some economic advice from leaders of business, government and academia, making the struggling economy — the nation’s No. 1 concern — his first order of public business.

Obama and Vice President-elect Joe Biden were to meet Friday with 17 members of their transition economic advisory board. Members include former presidential Cabinet officials and executives from Xerox Corp., Time Warner Inc., Google Inc. and the Hyatt hotel company. Investor Warren Buffett was participating by telephone.

Obama also was holding his first news conference as president-elect after the meeting.

It was to be Obama’s first public appearance since Tuesday’s election, where exit polls showed that the economy was far and away the top issue for voters. He’s been using the time for private meetings with his transition team, receiving congratulatory phone calls from U.S. allies and intelligence briefings, and making decisions about who will help run his government.

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Pakistan, Seeking to Avoid Loan Default, Seeks IMF Help

October 20, 2008

By Khaleeq Ahmed

Oct. 20 (Bloomberg) — Pakistan may be forced to seek a loan from the International Monetary Fund to prevent the nation defaulting on its debt, according to a government official.

South Asia’s second-largest economy, which has seen its foreign reserves plunge more than 74 percent to about $4.3 billion in the past year, is also seeking financial support from the World Bank and the Asian Development Bank, said Shaukat Tarin, financial adviser to the prime minister. The country has $3 billion in debt-servicing costs in the coming year.

“They are going to have to bite the bullet and sign for the IMF,” said David Fernandez, the Singapore-based head of emerging markets research at JPMorgan Chase & Co. “It has to come now.”

Pakistan’s first civilian government since 1999 is facing economic turmoil after the rupee plunged to an all-time low, the current account deficit widened to a record, and inflation jumped to a 30-year high. The nation, which only came off its last IMF program in December 2004, may need as much as $4.5 billion in loans to tide over the crisis, Tarin said.

“If I don’t feel the comfort level with the multilateral agencies and our bilateral friends in three to four weeks, then I’ll have to write to the IMF,” Tarin said in an interview in Islamabad yesterday. A default is “out of the question.”

Unpopular Decision

Pakistan faces the politically unpopular decision to seek an IMF bailout after China rebuffed its neighbor’s request for cash, the New York Times reported Oct. 18. The U.S. and other nations are preoccupied with the financial crisis, and Saudi Arabia, a traditional ally, refused to offer oil concessions, the newspaper said.

The U.S. has helped Pakistan financially for its support in the global war against terrorism, providing $10 billion in funds and canceling more that $1 billion of loans. The Bush administration has urged the Pakistan government to do more to fight al-Qaeda and Taliban militants in its tribal areas, which the U.S. says the militants are using to regroup and attack the coalition forces in Afghanistan.

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Pakistan Says China is “All Talk;” Rebuffed, Pakistan May Be Forced to Seek I.M.F. Aid

October 18, 2008

By Jane Perlez
The New York Times
October 18, 2008

ISLAMABAD, Pakistan — President Asif Ali Zardari returned from China late Friday without a commitment for cash needed to shore up Pakistan’s crumbling economy, leaving him with the politically unpopular prospect of having to ask the International Monetary Fund for help.

Pakistan was seeking the aid from China, an important ally, as it faces the possibility of defaulting on its current account payments.

With the United States and other nations preoccupied by a financial crisis, and Saudi Arabia, another traditional ally, refusing to offer concessions on oil, China was seen as the last port of call before the I.M.F.

Pakistan President Asif Ali Zardari (L) meets with Chinese Premier ...
Above: Pakistan President Asif Ali Zardari (L) seems delighted as he meets with Chinese Premier Wen Jiabao in Beijing. China vowed Thursday to do what it could to help cash-strapped Pakistan avert financial disaster as Islamabad’s leader continued an official visit aimed at rustling up crucial Chinese investments.  But Zardari returned home to Pakistan only with smiles, a photo-op and promises from China: no cash.(AFP/POOL/Kyogoku Kotai)

Accepting a rescue package from the fund would be seen as humiliating for Mr. Zardari’s government, which took office this year.

An I.M.F.-backed plan would require Pakistan’s government to cut spending and raise taxes, among other measures, which could hurt the poor, officials said.

The Bush administration is concerned that Pakistan’s economic meltdown will provide an opportunity for Islamic militants to capitalize on rising poverty and frustration.

The Pakistanis have not been shy about exploiting the terrorist threat to try to win financial support, a senior official at the I.M.F. said.

But because of the dire global financial situation, and the reluctance of donor nations to provide money without strict economic reforms by Pakistan, the terrorist argument has not been fully persuasive, he said.

“A selling point to us even has been, if the economy really collapses this is going to mean civil strife, and strikes, and put the war on terror in jeopardy,” said the official, who declined to be identified because he was not authorized to speak to the news media.

“They are saying, ‘We are a strategic country, the world needs to come to our aid,’ ” he said.

Pakistani officials said they had received promises from the Chinese to help build two nuclear power plants, and pledges for business investment in the coming year.

But Pakistan had also hoped China would deposit $1.5 billion to $3 billion in its central bank, according to senior officials at the I.M.F. and Western donor countries.

The infusion of cash would have helped with payments for oil and food as currency reserves dwindle, officials said.

Shaukat Tareen, the new Pakistani financial adviser who accompanied Mr. Zardari to China, began to prepare the public for an I.M.F. program on Saturday, saying for the first time at a news conference that if Pakistan could not stabilize its economy within 30 days, it “can go to the I.M.F. as a backup.”

“We may have to go to Plan B,” he said.

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Gordon Brown’s New Rules for Our Global Economy

October 17, 2008

By Gordon Brown
The Washington Post
Friday, October 17, 2008; Page A25

This is a defining moment for the world economy.

We are living through the first financial crisis of this new global age. And the decisions we make will affect us over not just the next few weeks but for years to come.

The global problems we face require global solutions. At the end of World War II, American and European visionaries built a new international economic order and formed the International Monetary Fund, the World Bank and a world trade body. They acted because they knew that peace and prosperity were indivisible. They knew that for prosperity to be sustained, it had to be shared. Such was the impact of what they did for their day and age that Secretary of State Dean Acheson spoke of being “present at the creation.”

British Prime Minister Gordon Brown listens to questions after ... 
British Prime Minister Gordon Brown listens to questions after an EU summit in Brussels, Thursday Oct. 16, 2008. European Union leaders have agreed to stick to ambitious plans to cut greenhouse gases by 20 percent by 2020, but divisions over how to share out the cuts have been widened by fears over the impact of the financial crisis.(AP Photo/Yves Logghe)

Today, the same sort of visionary internationalism is needed to resolve the crises and challenges of a different age. And the greatest of global challenges demands of us the boldest of global cooperation.

The old postwar international financial institutions are out of date. They have to be rebuilt for a wholly new era in which there is global, not national, competition and open, not closed, economies. International flows of capital are so big they can overwhelm individual governments. And trust, the most precious asset of all, has been eroded.

When President Bush met with the Group of Seven finance ministers last weekend, they agreed that we all had to deal with not only the issue of liquidity in the banking system but also the capitalization and funding of banks. It was clear that national action alone would not have been sufficient. We knew we had to send a clear and unambiguous message to the markets that governments across the world were prepared to act in a coordinated manner and do whatever was necessary to stabilize the system and address the fundamental problems.

Confidence about the future is vital to building confidence for today. We must deal with more than the symptoms of the current crisis. We have to tackle the root causes. So the next stage is to rebuild our fractured international financial system.

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Petraeus seeking broad support for U.S. strategy

October 16, 2008

By David Morgan

WASHINGTON (Reuters) – Even before he takes command of U.S. military strategy for Afghanistan and Pakistan, Gen. David Petraeus is reaching beyond the military sphere to encourage international support for stabilizing the region.
U.S. General David Petraeus addresses journalists after a meeting ... 
U.S. General David Petraeus addresses journalists after a meeting with British Prime Minister Gordon Brown at 10 Downing Street in London September 29, 2008.(Andrew Winning/Reuters)

Petraeus, whose innovative thinking is credited with helping save Iraq from civil war, met International Monetary Fund and World Bank representatives last week in preparation for new efforts in Afghanistan and Pakistan, officials said.

The move, unusual for a military commander, underscores the Pentagon’s emphasis on unifying military, economic, political and diplomatic aid to help the two countries cope with militant violence and economic dislocation, officials said.

On October 31, the Army general will become head of Central Command, responsible for American military interests in 20 countries across the Middle East and Central and South Asia.

“The purpose (of the World Bank and IMF meetings) was to touch base and note the Central Command’s interest in supporting comprehensive approaches in Pakistan, Afghanistan, and others,” said a military official close to Petraeus.

His arrival at Centcom is widely expected to reinvigorate U.S. strategy in Afghanistan, where U.S. and NATO efforts face grave challenges from an increasingly confident Taliban.

The United States has 32,000 troops in Afghanistan, including 19,000 under Centcom command and 13,000 under NATO.

Petraeus will launch a 100-day assessment of U.S. strategy for Afghanistan, Pakistan, Iran, Iraq and other countries in the Centcom region once he takes over, officials said.

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IMF in global ‘meltdown’ warning

October 11, 2008


The world financial system is teetering on the “brink of systemic meltdown”, the head of the International Monetary Fund (IMF) has warned in Washington.

Dominique Strauss-Kahn (second from left) joins G7 finance ministers and President Bush (centre) at the White House on Saturday 11 October 2008

Mr Bush said nations must stand together amid the global financial crisis

Dominique Strauss-Kahn said the crisis was being fanned by fears over debt-ridden banks but added rich nations had so far failed to restore confidence.

He spoke after talks with US President George W Bush, Group of Seven (G7) finance ministers and the World Bank.

Mr Bush said the global economic crisis needed a united international response.

Speaking in the US capital on Saturday, Mr Strauss-Kahn said: “Intensifying solvency concerns about a number of the largest US-based and European financial institutions have pushed the global financial system to the brink of systemic meltdown.”

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China Cuts Asia Imports as Korea, Malaysia, Singapore Lose Jobs

October 21, 2007

By Michael Dwyer

Oct. 22 (Bloomberg) — The U.S. isn’t the only country watching jobs and manufacturing migrate to China. Increasingly, so are China’s closest neighbors.

The nation is reducing its reliance on imports from Southeast Asia as it makes more of the higher-value-added intermediate and capital goods it previously bought from abroad. That is threatening growth in countries whose export sales are already in danger of erosion from the U.S. slowdown.

More than 13,500 electronics-product workers in Singapore have lost their jobs since 2004, according to Ministry of Manpower statistics. An International Monetary Fund forecast released last week calls for weaker expansion there next year and in the Philippines, Malaysia, Taiwan and South Korea.

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World Bank, IMF face competition in China, Russia

October 19, 2007

By Patrice Hill
The Washington Times
October 19, 2007

The World Bank and International Monetary Fund are grappling with diminished roles and relevance since China, Russia and other rapidly developing countries have amassed wealth to the point they now outstrip the Bretton Woods institutions as the biggest lenders in the world.

The $600 billion in reserves amassed by China and other emerging nations just in the first half of this year doubled the total reserves of the IMF, while those same nations have established “sovereign wealth funds” totaling $3 trillion that dwarf the aid budgets of the World Bank, IMF and Western nations. The U.S. government, by comparison, provides about $11 billion a year in international aid.

China, dipping into its more than $1 trillion in cash reserves, has taken the lead and is particularly eclipsing the World Bank in Africa by providing resource-rich countries such as Sudan with no-strings-attached loans in exchange for stable supplies of raw materials for its fast-growing economy.

The World Bank, by contrast, usually attaches unpopular conditions such as forced privatization to its loans and scrutinizes the corruption and human rights records of client countries. Development experts say the Chinese loans to corrupt regimes in Africa has made it easier for them to avoid international pressure to clean up graft.

Robert B. Zoellick, the new president of the World Bank, “has his work cut out,” said Elizabeth Stuart …..

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