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Month: August 2018

Top 5 Facts About Pakistan Loans from the IMF

[vc_row][vc_column][vc_column_text]Pakistan is reportedly preparing to seek up to $12bn (£9bn) from the International Monetary Fund after Imran Khan takes office, in a bailout that could curb his public spending pledges.

[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_toggle title=”Fact 1: Pakistan has had 12 IMF programmes since 1988, more than all the other countries of the region combined.”]South Asia’s second-largest economy has received 12 IMF bailouts since the late 1980s and completed its last loan program just two years ago. It has had more IMF loans than the region combined. India signed one facility with the IMF in 1991, Bangladesh has had three facilities since 1990, Sri Lanka has had two while Nepal has had three.

Most recently, in 2013, the government of Nawaz Sharif agreed to terms for an IMF loan of $6.6 billion disbursed over 36 months. During that time, the government mostly fell short of broadening the tax base or privatizing money-losing state-owned companies, as the IMF had hoped.[/vc_toggle][vc_toggle title=”Fact 2: The next IMF loan would be Pakistan’s largest-ever bailout.”]Pakistan has gone to the IMF repeatedly since the late 1980s. The last time was in 2013, when Islamabad got a $6.6-billion loan to tackle a similar crisis.

Today, the country “needs at least $12 billion”, says Zeeshan Afzal, the director of Insight Securities, a Karachi-based consulting firm.

The Financial Times reported last week that senior Pakistani finance officials were drawing up options for Khan to seek an IMF bailout of up to $12 billion.

This figure is double the $6.7 billion three-year loan program in 2013.

This bailout would also be the 13th IMF bailout for Pakistan.

Analysts also say that a return to the IMF is inevitable and it will damage Mr Khan’s reputation.

Charlie Robertson, global chief economist at Renaissance Capital, said: “This is the first time Imran Khan gets his hands on power and he is going to have to make some very tough decisions.

The new government may seek $10 billion to $15 billion, according to Karachi-based brokerage Insight Securities. That would be higher than the biggest IMF package extended to Pakistan until now, a $7.6 billion loan in 2008.

The IMF typically provides three-year loan programs under its Extended Fund Facility to help countries facing balance-of-payments crises. The loans are often tied to economic targets the government has to meet, for example curbing fiscal or current-account deficits, trimming inflation or allowing more flexibility in currency policy.

[/vc_toggle][vc_toggle title=”Fact 3: Pakistan paid over 1BN Rupees of interest in the 2017-2018 fiscal year”]Pakistan will pay Rs1,620 billion in interest payments for the next fiscal year 2018-19 against the estimates of borrowing loans from external and internal sources.

Documents show that Pakistan will pay Rs1,391 billion as interest to domestic banks and Rs229 billion to foreign institutions in 2018-19.

The government has paid Rs1,526 billion as the interest payment to both domestic and foreign lenders during the ongoing year 2017-18. An amount of Rs1,332 billion paid in servicing of domestic and Rs194 billion of foreign debt.

In addition to this, Pakistan has to repay an amount of Rs21,905 billion to domestic and foreign lenders in the upcoming year.

Full Article Here

[/vc_toggle][vc_toggle title=”Fact 4: Pakistan’s external debt to climb to $103b by June 2019″]Published in The Express Tribune, March 16th, 2018.

The International Monetary Fund (IMF) has assessed Pakistan’s gross external financing needs at a record $27 billion for the next fiscal year, but warned that arranging the financing at favourable rates will now be a challenge due to risks to the country’s debt sustainability.

In its post-programme monitoring report, the IMF also forecast that due to additional borrowings, Pakistan’s external debt would jump to $103.4 billion by June 2019, up from this June’s projected level of $93.3 billion.

Despite changing goalposts twice, Pakistan’s public debt would remain higher than the limit prescribed in the revised Fiscal Responsibility and Debt Limitation Act, showed the IMF report.

Certain tables in the report, which the IMF withheld in the past, show the adverse implications of the PML-N government’s borrowing spree over the past four and a half years. The policy of building foreign currency reserves through expensive loans and ignoring the export performance has come to haunt the policymakers.

The IMF said the elevated current account deficit and rising external debt servicing, in part driven by China-Pakistan Economic Corridor (CPEC)-related outflows, were expected to lead to higher external financing needs.

External financing would surge to $24.5 billion by June this year, the IMF said, adding the country’s needs were expected to rise to around $27 billion by the end of fiscal year 2018-19 (FY19) and would go up to $45 billion by FY23.

At that time, Pakistan’s external financing needs will be equal to 10% of the national output, which is a dangerous level.

“Risks to public debt sustainability have increased since the completion of the EFF (Extended Fund Facility) programme. Public and publicly-guaranteed debt is expected to remain elevated at 68% of GDP by FY23,” the IMF said.

Gross fiscal financing needs will likely exceed 30% of GDP from 2018-19 onwards, in part reflecting increased debt service obligations, it added.

However, the more alarming part is the growing challenges to arranging foreign loans. It said Pakistan had so far remained successful in contracting external borrowing that softened the impact of rising external imbalances on foreign exchange reserves.

“While the level of external debt has remained moderate, continued mobilisation of external financing at favourable rates could become more challenging in the period ahead against the background of rising international interest rates and increasing financing needs,” said the IMF.

It said continued scaling up of CPEC investments could accelerate the build-up of related external payment obligations, adding Pakistan’s capacity to repay could deteriorate at a faster pace, with faster depletion of foreign exchange reserves having adverse effects on economic growth.

Debt levels are higher than envisaged during the 2017 Article IV consultation, largely reflecting a significantly higher fiscal deficit.

The IMF’s projections show a bleak path for the next five years. Public and publicly-guaranteed debt is projected to remain close to 70% of GDP by 2023 under the baseline scenario.

“In the absence of strong consolidation measures, the fiscal deficit is expected to remain close to 6% of GDP in the medium term, resulting in elevated debt levels,” it added.

Adverse shocks, notably to economic growth and the primary balance, could lead to public debt ratios rising well above 70%, said the IMF.

Contingent liabilities from restructuring of loss-making public sector enterprises represent additional fiscal risks. High gross financing needs may also pose potential rollover risks.

The IMF said high levels of public debt and gross financing needs presented significant fiscal risks and needed to be addressed in a timely fashion through fiscal tightening to improve debt sustainability.

“In the absence of significant policy effort, the projected public debt trajectory sits higher than that stipulated in the revised FRDL Act with a limit of 60% of GDP on net general government debt until FY18 and a gradual transition towards 50% of GDP over a 15-year period,” said the IMF.

“While the depreciation allowed in December was a step in the right direction, further steps to phase out foreign exchange interventions and allowing greater exchange rate flexibility on a more permanent basis will be critical to contain the external pressures.”

Published in The Express Tribune, March 16th, 2018.

[/vc_toggle][vc_toggle title=”Fact 5: The State Bank of Pakistan has just $9bn in reserves”]The Financial Times reported that Pakistan’s foreign currency reserves have declined rapidly in recent months, as higher oil prices have pushed up the costs of imports, while exports continue to lag.

According to the latest published figures on July 20, the State Bank of Pakistan had just $9bn in reserves — not even enough to cover two months’ worth of imports.

So far, Islamabad has kept going with the help of loans from Beijing — it borrowed at least $5bn from Chinese commercial banks in the past financial year — and by allowing the Pakistani rupee to depreciate 20 per cent against the dollar. Western economists say they believe the currency is still overvalued and think it could fall at least another 10 per cent.

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Top 5 Facts about the Qatar-Gulf Crisis

[vc_row][vc_column][vc_column_text]One year ago, an air, sea and land blockade was imposed on Qatar by four Arab countries: Saudi Arabia, the United Arab Emirates (UAE), Bahrain and Egypt. We take a look at the top five facts surrounding the latest developments of the blockade.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_toggle title=”Fact 1: Despite the drop in oil revenues, Qatar’s economy has grown.”]Despite the drop in oil revenues, Qatar achieved a growth rate of 2.1 per cent in 2017, almost unchanged from the previous year, and is forecast to rise to 2.6 per cent this year, according to the IMF.

“Growth performance remains resilient. The direct economic and financial impact of the diplomatic rift between Qatar and some countries in the region has been manageable,” the International Monetary Fund said in a report on Wednesday (May 30).

Gas-rich Qatar tapped into its massive wealth to absorb the early shocks to its financial system, and secure alternative food supplies, maritime routes and ports, reports said.

“The latest data from Qatar reiterate that the worst of the hit to the economy from its diplomatic crisis with Saudi Arabia and its allies has now passed,” said Capital Economics in a report in May.

Doha injected tens of billions of dollars to offset a drop in banking deposits at the start of the crisis and succeeded in bringing the banking sector back to normal operations.

“Qatar’s economy has suffered on several fronts as new logistics links proved to be more expensive in the short term,” Andreas Krieg, a professor at King’s College London, told AFP.

“However, Qatar has been able to transform this crisis into an opportunity.”

Economic diversification has made a huge leap, such as the opening of Hamad Port to bypass Jebel Ali in Dubai. The multi-billion-dollar mega projects connected to the 2022 football World Cup have continued unabated, said Krieg.

In addition, Doha’s gas and crude oil exports have not been disrupted, providing a revenue lifeline.

Despite the rift, Qatari gas continues to flow into the UAE through the Dolphin pipeline.

Since the blockade began, Qatar – home of Al-Udeid, the largest US base in the region – has agreed a raft of military purchases worth tens of billions of dollars with the United States and Europe.

“Qatar made a large drawdown of its reserves and investment assets when the blockade began,” said Middle East commentator Neil Partrick.

Although it sustained losses in tourism revenue, it has enjoyed “economic success” assisted by Iran, Turkey and Oman, Partrick said.

The blockade’s negative impacts on Qatar were in real estate, tourism and Qatar Airways, which is expected to announce large losses because of longer routes.

According to Capital Economics, in the first six months of the blockade, visitors to Qatar dropped by 20 per cent, flights into Doha by 25 per cent, and Qatar Airways flights by 20 per cent.

It estimated loss in tourism revenue during the same period at US$600 million (S$803 million), and real estate prices fell by 10 per cent.

Mandagolathur Raghu, head of research at the Kuwait Financial Centre, said his company estimates Qatar Airways has lost around US$3 billion in revenues.

The blockading nations also suffered from the diplomatic crisis, though to a lesser degree.

“I think that the economic impact of the blockade on the entire region should not be underestimated. The loss due to the disruption of free trade is in the tens of billions of dollars for all countries,” Krieg said.

Dubai in particular has suffered billions of dollars in losses due to Qatari companies no longer being able to work there, he said.

Lost Qatari investments in the UAE real estate sector are worth hundreds of millions, while both Saudi Arabia and the UAE have taken a blow worth billions after cutting food exports to Qatar.

Capital markets suffered as a whole and GCC economic programmes will be delayed further.

“Projects that require GCC-wide coordination could be shelved or timelines indefinitely postponed,” Raghu told AFP.

Article Source – Straits Times[/vc_toggle][vc_toggle title=”Fact 2: Qatar has taken the United Arab Emirates (UAE) to the UN International Court of Justice over human rights violations”]

Doha has filed a motion against the Emirates for triggering a series of measures that discriminate against Qataris and the country’s residents.

The measures include expelling Qataris from the UAE, prohibiting them from entering or passing through the Emirates, and closing UAE airspace and ports to Qatar.

“As set forth in detail in Qatar’s application to the International Court, the UAE led these actions, which have had a devastating effect on the human rights of Qataris and residents of Qatar,” the government in Doha said today.

According to Al Jazeera, Qatar believes that that the UAE’s measures violate the International Convention of the Elimination of All Forms of Racial Dissemination (CERD).

In December last year, the National Human Rights Committee based in Qatar published a report detailing the restriction on the freedom of movement, expression and the forceful separation of families as a result of the siege.

Qatar is seeking compensation for those impacted, although no information has been provided as to the value.

Article Source – Middle East Monitor[/vc_toggle][vc_toggle title=”Fact 3: The US is expanding a major base in Qatar”]Qatar and the US signed a military cooperation agreement after Operation Desert Storm in 1991. The Al Udeid Air Base was built in 1996, and the US military moved its operations there in 2003, shortly after the invasion of Iraq.

The base currently houses around 10,000 US military personnel, and has been essential for air operations in Afghanistan, Iraq, and Syria.

The base is now the home of the US Air Force Central Command, and has proven essential for American air operations in the region.

“Qatar is strategically placed. Afghanistan, Iraq, Syria — these are all hotspots in the region. I am not exaggerating when I say 80% of aerial refueling in the region is from Udeid,” al-Attiyah said. “We’re the ones that keep your birds flying.”

Military personnel from the UK and other allies are also stationed at Al Udeid.

On August 2, Qatari Defence Minister Khalid bin Mohammad al-Attiyah visited Washington to meet with the US Department of Defense to discuss the upcoming expansion of a major US base in Qatar, and the strategic military partnership between both countries.

On July 24, al-Attiyah laid the foundation stone for the expansion project of Al Udeid base where roughly 11,000 US military personnel are stationed.

The ceremony was also attended by US Army Brigadier-General Jason Armagost, commander of the 379th Air Expeditionary Wing at Al Udeid.

The planned expansion will include construction of additional housing facilities and service buildings.



http://uk.businessinsider.com/qatar-al-udeid-us-air-base-middle-east-permanent-2018-1?r=US&IR=T[/vc_toggle][vc_toggle title=”Fact 4: Qatar Airways will make a loss due to the blockades”]

  • On June 9, Qatar Airways CEO Akbar al-Baker said Qatar Airways has been impacted by the blockade, “it increased our flying time, and put pressure on [our] operational cost, but it did not stop the will and our determination to keep on our part of growth.”
  • Losses: On Wednesday, April 25, Qatar Airways CEO Akbar al-Baker told reporters that the airline has made a “substantial” loss in its financial year because of the regional dispute.
  • Acquisitions: On April 10, Qatar Airways bought a minority stake in JetSuite, a US private aviation company, potentially expanding the semi-private model across the US.
  • On February 20, Italian airline Meridiana changed its name to Air Italy with the backing of its new shareholder, Qatar Airways. The airline aims to become Italy’s flagship carrier, as UAE-backed Alitalia filed for bankruptcy.
  • The blockading countries have targeted Qatar Airways by forbidding it from using their airspace, but it has found alternative routes and expanded its travel network with new international partnerships.

Verbatim from Al Jazeerah[/vc_toggle][vc_toggle title=”Fact 5: Russia will supply Qatar its S-400 Surface-to-air defence systems despite Saudi’s Opposition”]In January, Qatar’s ambassador to Russia said talks for the acquisition of Russia’s S-400 Surface-to-air- defence system were “at an advanced stage”.

This came after the signing of an agreement on military and technical cooperation between the two countries in October 2017 to further cooperation in the defence field during a visit by Russian Defence Minister Sergei Shoigu to the Gulf state.

Saudi asked France, US, UK to prevent Qatar buying missile system but a senior Russian politician has said Moscow still plans to supply an advanced aerial defence system to Qatar despite Saudi Arabia’s reported opposition.

A senior Russian politician has said Moscow still plans to supply an advanced aerial defence system to Qatar despite Saudi Arabia‘s reported opposition.

In comments made to local media, Aleksei Kondratyev, a member of the Russian upper house and the deputy chairman of the committee on Defence and Security, said Russia will pursue its own objectives in determining sales of its S-400 surface-to-air missiles.

“Russia seeks its own interest, supplying S-400 to Qatar and earning money for the state budget. Saudi Arabia’s position has nothing to do with it, Russia’s plans will not change,” Kondratyev was quoted as saying by Sputnik on Saturday.

“It is clear that Riyadh plays a dominant role in the region, but Qatar gets an advantage by enhancing its armed forces due to the acquisition of Russian S-400 systems. Therefore, Saudi Arabia’s tension is understandable.”[/vc_toggle][/vc_column][/vc_row][vc_row][vc_column][vc_facebook][/vc_column][/vc_row][vc_row][vc_column][vc_single_image image=”4988″ img_size=”full” onclick=”custom_link” css_animation=”bounceInUp” link=”https://www.fundmypage.com/postbanner”][/vc_column][/vc_row]

The Iran-Iraq War of 1980-1988

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On 22 September 1980, Iraq invaded Iran triggering a bitter eight-year war which destabilised the region and devastated both countries.

The issues that divided the two countries included nationalistic rivalry as well as immediate disputes over frontiers and navigation rights.

Saddam Hussein felt directly threatened by the Islamic revolution which had brought Ayatollah Khomeini to power in Iran the year before.

Thus, for Saddam Hussein, the war’s purpose was pre-emptive: to overthrow the Khomeini regime before that regime could overthrow him.

In the first month of fighting, Iraq occupied about 10,000 square miles of Iranian territory along a front running 375 miles north to south.

However, Iraqi casualties were higher than anticipated, and the Iranian resistance was much stiffer than expected.

Between November 1981 and May 1982, Iran mounted a series of counter-attacks that drove the Iraqi forces back across the border and placed Iraq on the defensive.

For the next six years, the war was fought mainly on Iraqi soil, and there were moments when it appeared that either the port city of Basra or the capital, Baghdad, would fall to Iran.

But for most of the period from 1982 to 1988, the conflict settled into a dreary war of attrition that resulted in appalling casualties.

In 1984 the war of attrition spread to the shipping lanes of the Persian Gulf when Iraq, in an attempt to reduce Iran’s oil-exporting ability, started to attack tankers bound for Iranian ports.

Due to attacks against ships that traded with Kuwait and Saudi Arabia, Iraq’s major Gulf allies, Iraq was forced to borrow abroad to finance its war effort.

Kuwait and Saudi Arabia were the major lenders, and together they supplied Iraq with between $50 billion and $60 billion worth of assistance during the war.

Throughout the war, the Soviet Union was also Iraq’s major arms supplier. But Western powers also came to Baghdad’s aid.

France, which was deeply involved in several large development projects in Iraq, provided Husayn’s forces with Mirage jets and Super-Etendard war planes equipped with Exocet missiles.

The United States also pressured its allies not to sell weapons to Iran and, in the final year of the war, campaigned for an embargo against Iranian oil.

When Iran stepped up its attacks on Kuwaiti shipping in 1987, the United States allowed Kuwait’s vessels to fly the US flag, thus making an attack on them equivalent to an attack on a US ship.

Washington also reinforced its naval presence in the Gulf, and on several occasions in 1987 and 1988, US gunboats engaged in direct military actions against Iran.

For the United States in the 1980s, the demon of the Middle East was Ayatollah Khomeini, not Saddam Husayn, and Washington was willing to ignore the brutality of Husayn’s regime.

On August 20, 1988, a UN-sponsored cease-fire took effect, and the long war finally ended. Nothing, it seemed, had changed.

The costs of achieving so little were staggering. Iran’s war dead were estimated at 262,000, Iraq’s at 105,000.

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Top 5 Facts About the 4 million stripped of citizenship in India

[vc_row][vc_column][vc_column_text]An estimated 4 million people living in a border area of India have been left off a controversial citizenship list designed to stem the illegal flood of immigrants from neighbouring Bangladesh, the majority of them Muslim.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_toggle title=”Fact 1: Most of the citizens are from the north-eastern state of Assam”]Hundreds of thousands of people fled to India during Bangladesh’s war of independence from Pakistan in the early 1970s. Most of them settled in Assam, which has a near-165-mile (270km) border with Bangladesh.

The largely agrarian state of 33 million that shares a border with Muslim-majority Bangladesh and Bhutan and that has wrestled with a tide of illegal immigration for decades. Since 2015, Assam has been undergoing a Supreme Court-monitored update of its citizen rolls.

[/vc_toggle][vc_toggle title=”Fact 2: The process of verifying the identity of the citizens began in 2015″]The mammoth three-year-long exercise to prove the identities of 33 million people across the hills, valleys and plains of this verdant state began in 2015. Indian authorities have now published the final draft of their National Register of Citizens for Assam.

The list aims to identify every resident who can demonstrate roots in the state before March 1971. two years ago. It has been overseen by the supreme court. There have been longstanding social and communal tensions in the state, with locals campaigning against illegal immigrants. Critics see the citizenship test as a measure – supported by Narendra Modi’s Hindu nationalist-led government – aimed at driving out minority Muslims.

[/vc_toggle][vc_toggle title=”Fact 3: Assam’s Muslim population grew faster than the national average”]Assam’s Muslim population grew faster than the national average — from about 31 to 34 percent between 2001 and 2011, compared with 13.4 to 14.2 percent nationally during that period, according to census figures.

Assam Citizens, India

Assam CitizensAssam Citizens, India

[/vc_toggle][vc_toggle title=”Fact 4: Bangladesh’s information minister said it’s India’s problem”]Bangladesh, on its part, has maintained that NRC is India’s internal matter — not a bilateral issue.

On July 31, Sahidul Hasan Khokan – a journalist- spoke to the Bangladesh information minister Hasanul Haq Inu MP regarding the issue. He reported the following;

Inu claims that there are no Bangladeshi migrants in Assam, the state’s illegal immigrants are India’s internal problem and the problem has to be resolved by the Indian government.

He also said that those creating problems in Assam are India’s own citizens.

He also said that Bangladesh is not in favour of people entering any country illegally. Bangladesh is trying to send illegal Rohingyas back to Myanmar.

Inu claimed that India shouldn’t declare the people excluded from the NRC list as Bangladeshi nationals.

Professor Roksana Kibria of Dhaka University’s International Relations Department, said, “Even though Bangladesh has called NRC India’s internal issue the matter could become Dhaka’s own issue for the time being.”

Bangladesh Information Minister Hasanul Haq Inu

Bangladesh Information Minister Hasanul Haq Inu

[/vc_toggle][vc_toggle title=”Fact 5: The United Nations High Commissioner for Refugees has asked India not to deport them”]“Assam has long sought to preserve its ethnic identity, but rendering millions of people stateless is not the answer,” said Meenakshi Ganguly, South Asia director of New York-based Human Rights Watch.

“Indian authorities need to move swiftly to ensure the rights of Muslims and other vulnerable communities in Assam are protected from statelessness,” she said in a statement.

William Spindler, a spokesman for the United Nations High Commissioner for Refugees (UNHCR), said the agency was concerned about the registration process and monitoring it closely.

The UNHCR also appealed to the Indian government not to deport those who fail to qualify for citizenship, even after claims and appeals are exhausted.

Bangladesh has not had any communication from New Delhi on the issue, said Jyotirmay Dutta, a senior official of its interior ministry.

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