I need your comments on recent financial crisis. I will suggest give two hours to read what financial crisis is all about and then give your input on this group.
The term Financial crises is broadly used for many things means if there is great loss happen than its called financial crisis but its mainly related to banking panics. Other situations in which we often use this term is in stock market crashes, foreign debts, fiscal deficit, policy response (monetary policy, trade policy, and fiscal policy).
Broadly speaking: Financial crises in Pakistan include: • fiscal deficit especially due to security situation • depreciation of Pak Rupee • loss in productivity due to severe electricity and gas shortages • adjustment in utility prices (food inflation)& so on.....
Impact of the Global Crisis: There are no doubts that 2007-08 global financial crisis the failures of large financial institutions has not affected Pakistan’s stock markets, On 26 December 2007, Karachi stock exchange, as represented by the KSE-100 index closed at 14814 points, its highest close ever but global slowdown have been transmitted through the trade balance; with a slowdown in global demand and fall in commodity prices having varying effects, the capital account; with a significant reduction in private inflows to Pakistan.
Monetary policy: Of the Rs308 billion expansion in reserve money up till 19th November 2010 during the current fiscal year, Rs266 billion is due to government borrowing from the SBP, which has been on an increasing trend since January 2010. Such borrowing has stoked expectations of increasing inflation, resulting in high interest rates. The nature of this fiscal expansion is the fundamental source of high inflation in Pakistan over the last year.
Financial Sector: Government of Pakistan is unable to billions of rupees to oil marketing companies (OMCs) and independent power producers (IPPs). The long hour power failures have not only affected the common people, but also shut down many businesses. Pakistan International Airlines (PIA), a state-owned company, received around PKR 1 billion (USD 11.8 million1) from the government for mark-up reimbursement during 2008-09.
External Debt Policy: Pakistan developed a stabilization programmed, which was Supported by the International Monetary Fund (IMF). In 2007-08, the Sharp rise in international oil and food (specifically wheat) prices had led To rapidly expanding macroeconomic imbalances in Pakistan.
Challenges going forward: Pakistan faces a plethora of challenges that stem from both the domestic environment as well as the negative outlook of the global economy. In order to achieve an increase in production and the desired level of growth, efforts must be concentrated on increasing capacity of industry. While the targets set by fiscal and monetary policies are a considerable step towards this, implementation and coordination going forward will be key factors.
world economy is likely to contract by 1.3% in 2009 with almost all developed countries are to post negative growth.. Pakistan seems to be one of the hardest hit with this global crisis. Its economy is already in crises.. three essential components: food, fuel and financebeen facing both economic and political crisis which predate the global financial crisis... Inflation, trade deficit, balance of payment, foreign exchange reserves, circular debt, poor performance of banking sector and Karachi stock exchange political instability have remained the key indicators of Pakistan economic crisis. Political and economic stability complement each other. Pakistan is an interesting case since both are in crisis. The war on terror has become a hanging sword overhead the rate of suicide bombing is increasing day by day. IMF aided with $ 7.6 billion and with the first tranche of $ 3.1 billion Pakistan foreign reserve rose from $ 6 billion to $ 9 billion.
The term Financial crises is broadly used for many things means if there is great loss happen than its called financial crisis but its mainly related to banking panics. Other situations in which we often use this term is in stock market crashes, foreign debts, fiscal deficit, policy response (monetary policy, trade policy, and fiscal policy).
ReplyDeleteBroadly speaking: Financial crises in Pakistan include:
• fiscal deficit especially due to security situation
• depreciation of Pak Rupee
• loss in productivity due to severe electricity and gas shortages
• adjustment in utility prices (food inflation)& so on.....
Impact of the Global Crisis:
There are no doubts that 2007-08 global financial crisis the failures of large
financial institutions has not affected Pakistan’s stock markets, On 26 December 2007, Karachi stock exchange, as represented by the KSE-100 index closed at 14814 points, its highest close ever but global slowdown have been transmitted through the trade balance; with a slowdown in global demand and fall in commodity prices having varying effects, the capital account; with a significant reduction in private inflows to Pakistan.
Monetary policy:
Of the Rs308 billion expansion in reserve money up till 19th November 2010 during the current fiscal year, Rs266 billion is due to government borrowing from the SBP, which has been on an increasing trend since January 2010. Such borrowing has stoked expectations of increasing inflation, resulting in high interest rates. The nature of this fiscal expansion is the fundamental source of high inflation in Pakistan over the last year.
Financial Sector:
Government of Pakistan is unable to billions of rupees to oil marketing companies (OMCs) and independent power producers (IPPs). The long hour power failures have not only affected the common people, but also shut down many businesses.
Pakistan International Airlines (PIA), a state-owned company, received around PKR 1 billion (USD 11.8 million1) from the government for mark-up reimbursement during 2008-09.
External Debt Policy:
Pakistan developed a stabilization programmed, which was
Supported by the International Monetary Fund (IMF). In 2007-08, the
Sharp rise in international oil and food (specifically wheat) prices had led
To rapidly expanding macroeconomic imbalances in Pakistan.
Challenges going forward:
Pakistan faces a plethora of challenges that stem from both the domestic environment as well as the negative outlook of the global economy. In order to achieve an increase in production and the desired level of growth, efforts must be concentrated on increasing capacity of industry. While the targets set by fiscal and monetary policies are a considerable step towards this, implementation and coordination going forward will be key factors.
world economy is likely to contract by 1.3% in 2009 with almost all developed countries are to post negative growth..
ReplyDeletePakistan seems to be one of the hardest hit with this global crisis. Its economy is already in crises.. three essential components: food, fuel and financebeen facing both economic and political crisis which predate the global financial crisis... Inflation, trade deficit, balance of payment, foreign exchange reserves, circular debt, poor performance of banking sector and Karachi stock exchange political instability have remained the key indicators of Pakistan economic crisis. Political and economic stability complement each other. Pakistan is an interesting case since both are in crisis. The war on terror has become a hanging sword overhead the rate of suicide bombing is increasing day by day. IMF aided with $ 7.6 billion and with the first tranche of $ 3.1 billion Pakistan foreign reserve rose from $ 6 billion to $ 9 billion.