Directions(1-8): Read the passage given below and then answer the questions given below the passage.
After more than a month of deliberations, Pakistan’s newly-elected government has decided to seek a bailout package from the International Monetary Fund (IMF).Pakistan’s foreign exchange reserves of around $15 billion are sufficient to cover only two-and-a-half months of imports. Pakistan, like India, is also beset by its own twin deficit problem—government spending outpacing revenues and imports outpacing exports. However, its economy has been in much worse shape compared to others in the region and, therefore, it has decided to approach the IMF for a bailout.
This is not the first time in recent years that Pakistan has turned to the fund for help. The latest bailout, if concluded, will be the thirteenth IMF package for Pakistan since 1988. India, on the other hand, has only availed of two IMF packages in the same period, both during the 1991 balance of payments crisis. Bangladesh and Sri Lanka have also taken less assistance from the IMF than Pakistan.
Pakistan’s perennial dependence on foreign funds has meant that it is dependent on external donors to stabilize its economy. A 2012 research paper by former IMF advisors Ehtisham Ahmad and Azizali Mohammed, says that years of financial assistance by the US and US-aligned multilateral institutions have left no incentive for Pakistan to introduce structural reforms. Instead, the government often seems happy to leverage its geographical importance to secure more money and bailouts. This, the authors say, has created a situation of “Dutch disease”, wherein inflow of foreign currency and overvaluation of the Pakistani rupee has damaged the domestic industry.
China is also stepping into the role of an influential donor for the country. A recent study by the US-based think tank, Centre for Global Development, warned that China’s Belt and Road Initiative (BRI) could raise the risk of a sovereign debt default by relatively small and poor countries. China has already upstaged the US as the main source of external funds for Pakistan, and Pakistan’s dependence on China could rise further in the years to come.
China has also been providing cover to Pakistan in international fora. This has raised fears of a China-Pakistan alliance directed against India, with some commentators arguing that anti-India sentiment is the ultimate glue that holds the China-Pakistan alliance together. China is also investing in other countries around India, which has worried policymakers in India. The example of Sri Lanka’s China’s Hambantota port, which has been handed over to China as debt obligations mounted, only add to such concerns.
Which of the following describes the ‘twin deficit’ problem?Revenues exceeding government expenditure and exports exceeding importsGovernment expenditure exceeding revenues and imports exceeding exportsGovernment expenditure exceeding exports and revenues exceeding importsImports exceeding exports and revenues exceeding government expenditureRevenues exceeding exports and government expenditure exceeding importsOption B
- What has been the Pakistan government’s chosen way of financing deficit?
Bailout packages from the IMFForeign aids from U.S. and ChinaInvestment in countries around IndiaA and BB and COption D
According to the passage, Pakistan’s chosen way of dealing with the deficit has been foreign aids from U.S. and China as well as the IMF bailout packages. But; there is no supporting evidence in the passage for option C; so, it is incorrect.
- Consider the following word from the passage. Choose a word from the options that give its opposite meaning.
- Choose the country from the options that has NEVER opted for a bailout package from the International Monetary Fund.
IndiaPakistanSri LankaBangladeshNone of theseOption E
- Which of the following are the characteristics of the ‘Dutch Disease’?
Large inflow of foreign currencyOvervaluation of the domestic currencyDamaged domestic industry of PakistanA and BA, B and COption C
The passage states that the situation of ‘Dutch Disease’ has been created in Pakistan, which is characterized by inflow of foreign currency while the domestic currency is overvalued.
So, A and B are correct.
The Dutch Disease, as per the passage, has damaged Pakistan’s domestic industry; but it is not a feature of the phenomenon in itself. So, C is incorrect.
- Which of the following are the repercussions of prolonged foreign money flowing into Pakistan?
It has increased its dependence on foreign aid.It has provided no incentives for structural reforms.It has to depend on others to stabilize its economy.It has damaged the domestic industry.All of the aboveOption E
The passage states that the perennial foreign aids flowing into Pakistan have made it increasingly dependent on them to stabilize the economy. It has left no room to introduce structural reforms while also harming the domestic industry.
So, all options are correct.
- According to the passage, which of the following are concerns for India?
Pakistan’s growing dependence on ChinaChinese investment in other countries around IndiaPakistan securing bailout packages from the IMFA and BA, B, COption D
According to the passage, the growing dependence of Pakistan on Chinese funds and China investing in other countries around India are concerns that are troubling the policy makers in India.
So, A and B are correct.
It does not mention the bailout package as a cause of concern for India.
- Consider the following statements. Which of these is correct?
A. China is also stepping into the role of an influential donor for the country.
B. Sri Lanka has invested in a port in China called Hambantota port.
C. The latest bailout will be the fourteenth IMF package for Pakistan.Only BA and COnly AA and BA, B, COption C
The statement A is correct; as it has been directly mentioned in the passage
The Statements B and C, however, are not supported by the passage as correct.
So, only A is correct.
The dance(A) floor was empty(B) by the time Tim and Sarah hall(C) the banquet reached.(D)A-B and C-DD-A and C-BC-BD-CNo RearrangementOption D
- Fear(A) in an scary(B) was very elevator(C) for Meredith because she had a riding(D) of closed spaces.
B-A and C-DD-BD-A and C-BC-ANo RearrangementOption C
Directions(9-10): In each of the questions given below, four words are given in bold. These four words may or may not be in their correct position. The sentence is then followed by options with the correct combination of words that should replace each other in order to make the sentence grammatically and contextually correct. Find the correct combination of words that replace each other. If the sentence is correct as it is, select ‘E’ as your option.