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Pakistan and IMF start talks, equities set for further falls

The head of the IMF, Christine Legarde this week set the tone for what are likely to be tough negotiations with Pakistan when she said the Fund would require Pakistan to be “absolutely transparent” about its debts. As the price for any deal, the IMF is likely to demand a sharp tightening in fiscal and monetary policy as well as structural reforms. Meanwhile, although stock markets in Asia rebounded on Friday, most are still down heavily for the week as a whole. We expect Asian equity markets to fall by between 15-20% by the end of next year.

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