Inflation in PHL to ease — International Monetary Fund long-term outlook

Andrew Cummings
October 10, 2018

Markets in South Korea were closed for a national holiday. Public debt would enhance by over Rs900 billion due to the recent rupee depreciation.

News circulating that International Monetary Fund will devalue Pakistani Rupee are all romours, said Fawad Chaudhry. He added that federal government and State Bank of Pakistan apparently decided not to intervene in the market to control the rupee depreciation.

Pakistani currency is under pressure since December previous year. However, since December 2017, dollar has gone up to Rs138. A second market participant confirmed the central bank was keeping out of the market, effectively letting the currency devalue.

The IMF had recently termed the exchange rate as "overvalued".

The report said: "In the United Kingdom, where the output gap is closed and unemployment is low, a modest tightening of monetary policy may be warranted, although at a time of heightened uncertainty, monetary policy should remain flexible in response to changing conditions associated with the Brexit negotiations". "Any sharp reversal for emerging markets would pose a significant threat to advanced economies", said Obstfeld.

Foreign investors warmed to the news on IMF's possible involvement. Meanwhile friendly countries are being approached to deposit funds in the State Bank to boost reserves.

"Approaching the International Monetary Fund was not part of our policy but have to make hard decisions to run the economy".

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.

Also notably, the Philippines's inflation will be below the median 3.3-percent forecast inflation among emerging and developing Asia five years from now. Gas and power tariff hikes.

The government now will have to increase regulatory duties (RD) and customs duty (CD) on imports to contain trade deficit.

Its chief economist said further trade barriers would hit households, businesses and the wider economy.

The three leading economies of the continent, Nigeria, South Africa and Angola were projected "to witness sluggish growth in 2019 and beyond".

"It seems windfall for exporters but it would not last long".

Pakistan's new government has made a decision to open talks on emergency financial assistance with the International Monetary Fund amid a mounting balance of payments crisis, the finance minister told local television on Monday.

The IMF said the RRR cut, together with other easing and stimulus policies, "may help support economic growth in the near term in the face of rising external pressures.(but) may entail greater risks to financial stability over the medium term should they set back progress toward reducing financial vulnerabilities". "Our probability that we would attach to further bad news has gone up", Obstfeld said.

An assessment by the State Bank of Pakistan and the finance ministry showed that Pakistan needed Dollars 11.7 billion to service its external debt in the current fiscal year 2018-19.

The IMF's cut to its outlook was broad-based.

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