International Monetary Fund lowers South Africa’s economic growth forecasts, urges reforms

Finance Minister Asad Minister briefed Prime Minister Imran Khan on the potential bailout package

Around 32,000 members of the global financial elite are on the Indonesian holiday island for a week of discussions that have been clouded by US President Donald Trump's America First trade policy.

The Deputy Director at IMF's Fiscal Affairs Department, Paolo Mauro, said while a crucial priority for the country was increasing non-oil revenue, the ratio of interest payments on debts continued to rise out of proportion. "Overall, market participants appear complacent about the risk of a sharp tightening in financial conditions".

Short-term risks to global financial stability have increased "modestly", the Washington-based lender said.

China's growth is still expected to be more than 6% next year, but the IMF's chief economist Maurice Obstfeld warned Beijing to concentrate on quality and sustainability of growth, not quantity of growth.

Further threats to global economy include "unsettled" politics and the escalating trade tensions between the USA and China. And, according to the International Monetary Fund, housing prices appear frothy in several advanced economies, including Australia and Canada as well as Nordic nations. Still, investors have thus far differentiated among emerging markets, rather than fleeing wholesale.

But markets have been on edge of late.

It also predicted that unemployment here will fall to 5.3% by the end of this year and 5.1% next year.

Central banks are starting to withdraw the stimulus that was put in place at the time of the financial crisis. The rupee was trading at 124.3 at close of business on October 8, before the announcement was made. The situation is getting more and more serious as a result of the US$2 billion secret loans from Credit Suisse and Russian lender VTB for the purchase of naval equipment and a fishing fleet that were backed by Mozambique's financial minister without parliamentary approval.

She said, "A combination of factors has basically affected emerging market since then".

Pakistan's government had previously said seeking help from the International Monetary Fund was the last option and would prefer succour from friendly nations, widely interpreted as a reference to traditional allies China and Saudi Arabia. "In adverse scenarios, that can be an abrupt reversal of flows".

He said Pakistan is burdened due to debts incurred by the previous government and his government is constrained to borrow more money to pay back those debts.

The IMF notes that the market impact of escalating trade disputes has been limited to specific sectors.

As the United Kingdom and European Union gears up for a packed schedule of Brexit talks ahead of a pivotal summit on 17 October, the International Monetary Fund (IMF) warned that a disorderly departure from the bloc is one of the biggest risks for global financial stability.



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