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Economic growth: perception may be different from reality

  With announcement of the budget, it has been widely documented that inflation will be on a rise. We have already witnessed devaluation with the government resorting to the new IMF program. Dollar has crossed Rupees 100 per USD and is expected to further slide reaching Rupees 110 per USD by the close of this year, hence expected to reflect in higher prices across the board. No relief has been …

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Is there any logic behind keeping interest rate high?

  It is often said that the fiscal and monetary policies of the country have been dictated by the multilateral lenders i.e. International Monetary Fund (IMF) and the World Bank. This statement is partly correct and partly wrong. Since the lenders give money they also want to ensure its return as per agreed schedule. Therefore, they have a major say in the formation of these two critically important policies. However, …

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Economic developments and outlook

  The State Bank of Pakistan (SBP) has taken various measures to manage inflation and interest rate. In September 2013, SBP linked minimum rate of return on average balances held in saving deposits with the floor of the interest rate corridor, which means return on saving deposits cannot be more than 50 bps lower than the floor of the interest rate corridor, which is currently at 7.5 percent. This measure …

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Has IMF’s loan a soothsayer for ailing economy of Pakistan?

  Following its ninth review of the program, the International Monetary Fund (IMF) asked Pakistan to focus on accelerating steps to widen the tax net and raise funds for more infrastructure investment and social assistance after the country failed to reach its fiscal deficit and tax revenue targets under an IMF Extended Fund Facility (EFF). However, the IMF welcomed the government’s plans to take action to attain the budget deficit …

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Flaws and drawbacks of the IMF’s currency basket

  Established following World War II to help with post-war recovery, the International Monetary Fund (IMF) serves as a lender to modern governments and an overseer of international financial markets. Both the International Monetary Fund and the World Bank were created in 1944 at a conference in Bretton Woods, New Hampshire, and are now based in Washington, DC. The IMF was originally designed to promote international economic cooperation and provide …

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