Editor’s note: We will be off tomorrow for Christmas, but the Daily Memo will resume on Wednesday. We wish those celebrating a wonderful Christmas.
Pakistan’s balance of payment crisis continues. Pakistan’s talks with the International Monetary Fund are going poorly, according to Finance Ministry officials who spoke with Dawn, an English-language Pakistani newspaper. The crux of the disagreement is the IMF’s belief that Pakistan has not fulfilled its commitments in prior IMF agreements. The organization is asking for large cuts to current, rather than future, expenditures, including defense spending. Pakistan doesn’t believe this is feasible. The IMF is also requesting that Pakistan raise interest rates, which would make borrowing and servicing debts more expensive for both the government and private sector. The IMF is also pushing the government to float the Pakistani currency, but Pakistani officials claim that the currency market isn’t large enough to make that happen