Exports increase by 8.48pc in 11 months

[Yaseen1]

only producing masks and ppe and reduction in demand of other higher value product will not compensate loss incurred

Add $100 million mask and PPE order recently fir future reference.

 

[AZ1]

only producing masks and ppe and reduction in demand of other higher value product will not compensate loss incurred

yeah but considering the increase of export it's a plus point. biggest problem with Pakistan is that we don't get orders in $billions.

It's always in million even though our quality is much better then others.

 

[Patriot forever]

Your post seems more of anger rather than any thing else ,as you failed to apprehend the idea what is currently wrong so 2 statments for you 2020 data is not being published yet and PTI lead govt even has stopped sharing 2019 data from SBP when you quote SBP its relevant rest is all Sabir Shakkar type data . For second statment we will have 2.2 Trillion rupees budget shortfall this year (with assumption of 800 billion tax increase) this year is going to be worst then ever .In PML N last year the Exports starts to jump up with June 2018 closing at 23 Billion US$ where as in PTI Alhumdulilah after evaluating 50% the net increase is 1/2 percent in dollar term ,Rest of your comments are just words no data

Now we got the figures from SBP, let's get the perspective.
First  let's look at external account deficit. This primary deficit plus principal loan repayments and interest on existing loans. This is the exorbant amount we have to loan every year to run our country or else we will default. This amount gets bigger and bigger every year, a classic debt trap, unsustainable and deadly. The only option we have is to decrease the deficit, as we can not write off the loans already taken or the interest amount payable.
Deficit amount
FY 18- 19.2 Billion (PLMN)
FY 19- 13.4 Billion (PTI)
FY 20- As of April 3.3 Billion, estimated to be 4 Billion by June (PTI)

Now coming to devaluation you said that our GDP shrank in dollar terms. Just a basic to clarify your point, when you subsidize dollar and show higher GDP(dollar wise) you are only fooling yourself, a close to market based value of dollar gives the true picture, rupee actual value was always far less, unless we actually get our deficit in +ve and get a surplus actual value of rupee will not appreciate. E.g. if this gov throws in 4-5 billon dollars in market now rupee will appreciate, GDP (dollar wise) will improve substantially but it will be artificial as we run a net primary deficit.

Now exports as I mentioned earlier in one of post, export value in dollars is mainly concerned with trade deficit, export value in rupee mainly indicates expansion in revenue, capacity and workforce. E.g. export value (dollars) in FY 18 is roughly the same as in FY 19. But due to depretiation the revenue and capacity increased, more people got employed, more goods were were exported. Our exports to GDP ratio increased.
Now moving on to the FY 20 let's see the precovid time frame uptil Jan would be fair.
FY 2019 14.1 Billion
FY 2020 14.4 Billion.

See the disparity between increase in quantity and increase in revenue in dollars. In terms of rupee our export industry is growing. If we were selling 10 shirts now we are selling 14. The main limiting factor is the price of electricity and gas, we need to get them down.

 

[volatile]

Now coming to devaluation you said that our GDP shrank in dollar terms. Just a basic to clarify your point, when you subsidize dollar and show higher GDP(dollar wise) you are only fooling yourself, a close to market based value of dollar gives the true picture, rupee actual value was always far less, unless we actually get our deficit in +ve and get a surplus actual value of rupee will not appreciate. E.g. if this gov throws in 4-5 billon dollars in market now rupee will appreciate, GDP (dollar wise) will improve substantially but it will be artificial as we run a net primary deficit.

There is counter argument to what you said and many countries actually do what is necessary to keep currencies at checked levels ,by the way who says Dollar is base for currency value ? in our region ,Iran and India trades in local currencies ,Russia with china ,China with Iran ,Now turkey and China so our deficit which was coming from China can easily be managed ,do remmember we import machines and equipment for CPEC causing deficit
https://tribune.com.pk/story/2140409/2-sbp-poured-24b-inter-bank-market-two-imf-programmes/
The expensive exercise continued during the tenures of Pakistan Peoples Party (PPP), Pakistan Muslim League-Nawaz (PML-N) and Pakistan Tehreek-e-Insaf (PTI).
That is money market operations and its quite normal ,by the way Shaukat Aziz was the master mind for this policy ,us waqt to koi nahi cheekhein marta tha .

As per your own graph and figures shared the net exports remain at 2015/2016 level so there isnt any improvement reason being we have very little avenues to export unless we developed new avenues we will remain b/w 20 to 26 billion US$ its called capacity .

Now exports as I mentioned earlier in one of post, export value in dollars is mainly concerned with trade deficit, export value in rupee mainly indicates expansion in revenue, capacity and workforce. E.g. export value (dollars) in FY 18 is roughly the same as in FY 19. But due to depretiation the revenue and capacity increased, more people got employed, more goods were were exported. Our exports to GDP ratio increased.
Now moving on to the FY 20 let's see the precovid time frame uptil Jan would be fair.

Oh bhai Khuda ka khoof karo you are exporting based on Raw material which is imported in $ terms ,Your utility cost is $ and lastly your CPI is again controlled by $ .So if you are selling more and getting less US$ you are killing your resources ,the theory is only viable for some times when you have 100% local RM .
Lastly for debt trap you are right but lets discuss why we have debt trap bcas we choose to spend on non development areas like Defense spending ,pensions and other enterprise losses .A sorry tale

Now even current budget is 2.2 trillion rupees deficit with assumption of 4.8 Trillion in tax collection which will not happen unless new taxes are applied so forget about the trap ,Pakistan GDP growth is not artifical it was based on PSDP as Govt spending 1 Rs generates 70 Rs Economics 101 ,where as debt financing and other avenues contributes 0 to any new sector.

At the end of the day PTI has done nothing to change the system infact they screwed up what ever system was there (not perfect) but still it was lucrative to run things

 

[Patriot forever]

this govt is good only at announcing policies but no progress made on ground,india has started manufacturing electric vehicles but are not making any progress except announcing of policies,similar is case with mobile phones,
most deficit decrease is due to decline in imports and not due to massive rise in exports,with current progress and setup there is no much hope of any better results and after 5yrs we will only remain limited to announcement of policies without any progress

Bro to be honest it takes around 5-10 years of dedicated investment and research by gov and private sector to develop what you are asking for. It is not a months or couple of years game. Previous gov never ever cared for such stuff before, at least this government is thinking about such stuff and formulating policies.

 

[volatile]

Bro to be honest it takes around 5-10 years of dedicated investment and research by gov and private sector to develop what you are asking for. It is not a months or couple of years game. Previous gov never ever cared for such stuff before, at least this government is thinking about such stuff and formulating policies.

From where as by 2013 we had 18 hrs plus shortage of electricity , law and order situation with bombs on daily basis ,we didnt have roads and infrastructure .Till the time we dont improve our structure no one will export

 

[AZ1]

Is this true?

 

[volatile]

Is this true?

wrong analysis Dam is worth 1800 Billion Rupees and according to this logic baba rehmta collected 10 Billion

 

[Syed1.]

wrong analysis Dam is worth 1800 Billion Rupees and according to this logic baba rehmta collected 10 Billion

Dam fund was only meant to create awareness and not fund the entire dam. We don't have Nawaz Sharif government who will cut ribbon of the project every year yet not a brick gets laid. We have Imran Khan's government and the result is dam construction has started.

 

[AZ1]

wrong analysis Dam is worth 1800 Billion Rupees and according to this logic baba rehmta collected 10 Billion

Okay and what about this and whose fault is this that after warning what previous parties done for this?

 

[Patriot forever]

There is counter argument to what you said and many countries actually do what is necessary to keep currencies at checked levels ,by the way who says Dollar is base for currency value ? in our region ,Iran and India trades in local currencies ,Russia with china ,China with Iran ,Now turkey and China so our deficit which was coming from China can easily be managed ,do remmember we import machines and equipment for CPEC causing deficit
https://tribune.com.pk/story/2140409/2-sbp-poured-24b-inter-bank-market-two-imf-programmes/
The expensive exercise continued during the tenures of Pakistan Peoples Party (PPP), Pakistan Muslim League-Nawaz (PML-N) and Pakistan Tehreek-e-Insaf (PTI).
That is money market operations and its quite normal ,by the way Shaukat Aziz was the master mind for this policy ,us waqt to koi nahi cheekhein marta tha .

As per your own graph and figures shared the net exports remain at 2015/2016 level so there isnt any improvement reason being we have very little avenues to export unless we developed new avenues we will remain b/w 20 to 26 billion US$ its called capacity .

Oh bhai Khuda ka khoof karo you are exporting based on Raw material which is imported in $ terms ,Your utility cost is $ and lastly your CPI is again controlled by $ .So if you are selling more and getting less US$ you are killing your resources ,the theory is only viable for some times when you have 100% local RM .
Lastly for debt trap you are right but lets discuss why we have debt trap bcas we choose to spend on non development areas like Defense spending ,pensions and other enterprise losses .A sorry tale

Now even current budget is 2.2 trillion rupees deficit with assumption of 4.8 Trillion in tax collection which will not happen unless new taxes are applied so forget about the trap ,Pakistan GDP growth is not artifical it was based on PSDP as Govt spending 1 Rs generates 70 Rs Economics 101 ,where as debt financing and other avenues contributes 0 to any new sector.

At the end of the day PTI has done nothing to change the system infact they screwed up what ever system was there (not perfect) but still it was lucrative to run things

Let's discuss point by point.
First you mentioned alternate currency.

'The bank’s executive, however, said China has no intention to replace dollars in foreign trade transactions in Pakistan, but it provides an alternative currency through its banking channel to the traders.'
Quoted from the article above. When you go for local currencies it works when it's mutual, not when there is an 18billion dollar deficit. Where will you generate this sum in yuan to fund the deficit. China understands this and knows ultimately you will run to Chinese commercial banks or gov to fund this deficit.

2nd point is about SBP intervention. You completely neglected the dimension of cannibalizing your industries by flooding the market with cheap imported goods due to subsidized dollar. Let's keep that for some other discussion.
From the article you mentioned. Out of 24 billion dollars 4 were by governments before plmn. Out of 20 only 4.5 billion is by PTI right?
'But decision-makers are of the view that these market interventions were critical for an “orderly” transfer from a managed exchange rate regime to the one determined by market forces. “Had the central bank not used foreign exchange reserves during the time when there was shortage of dollars, it would have serious consequences for the rupee-dollar parity,” said Umar.

You were burning dollars, this adds to your deficit. This is what Mufta Ismail said he partially devalued but didn't have the guts to do it all the way. Plmn burned 15.5 billion dollars.
No other country does that to such an extent, furthermore only countries who have a +ve trade surplus can actually afford to do so. China keeps it's currency undervalued.

3rd point, you mentioned raw materials. Tell me how many of the Pakistan major exports are raw materials, list is given below. I can only see rice, fish, meat, fruits though technically not raw materials but as can be seen they are not sold cheaply.

Furthermore you are saying that there is no more room for exports in these categories. Just to quote an example Bangladesh garment export is 35billion. The reason industry was not growing is because it can not compete, our rupee was over valued and our utility prices were higher.

I was talking about external debt trap. Defence spending has little impact on external account deficit, their weapons procurement is barely 1-2 billion dollars per annum.

Internal deficit is a vast topic with many factors, I will reply to the points you mentioned in a short time. Thank you for bearing with me.

 

[Yaseen1]

we are not too illiterate nation ,there are many medium technology items which we can start producing immediately within few years and can earn billions of dollars,we need committed govt for this purpose,today there is a thread that egypt has started manufacturing bulldozers why we not start manufacturing such equipment,few weeks ago here a member was saying that it requires few months for factories to relocate from china to vietnam and india and start production there so 5 years is much greater time and we can start producing good profit earning items more quickly if put effort in proper channel

Bro to be honest it takes around 5-10 years of dedicated investment and research by gov and private sector to develop what you are asking for. It is not a months or couple of years game. Previous gov never ever cared for such stuff before, at least this government is thinking about such stuff and formulating policies.

 

[volatile]

Furthermore you are saying that there is no more room for exports in these categories. Just to quote an example Bangladesh garment export is 35billion. The reason industry was not growing is because it can not compete, our rupee was over valued and our utility prices were higher.

I was talking about external debt trap. Defence spending has little impact on external account deficit, their weapons procurement is barely 1-2 billion dollars per annum.

Internal deficit is a vast topic with many factors, I will reply to the points you mentioned in a short time. Thank you for bearing with me.

Oh my comparing your self with BD and India in Textile ,By the way we import Cotton ,Electricity comes from imported fuel ,All plastic resins used in making fabrics is imported ,Diesel used to transport goods is imported ,local cotton grow using pesticides which are local ,our seeds are imported ,you have no clue where this chain leads to and you talk about RM ? i can go on and on with all exports we do but due to time one example is enough .Defence budget % in our national expenditure 1.3+0.5+0.2 equals approx 2 Trillion and our whole income will be 4.8+1.6=6.4 i.e in raw terms 33% and if you add debt financing of 3.5 Trillion you have no budget left so shall we put 220 Million Pakistanis in a ship and sink them ? is this country not deserve spending on them?

'The bank’s executive, however, said China has no intention to replace dollars in foreign trade transactions in Pakistan, but it provides an alternative currency through its banking channel to the traders.'
Quoted from the article above. When you go for local currencies it works when it's mutual, not when there is an 18billion dollar deficit. Where will you generate this sum in yuan to fund the deficit. China understands this and knows ultimately you will run to Chinese commercial banks or gov to fund this deficit.

2nd point is about SBP intervention. You completely neglected the dimension of cannibalizing your industries by flooding the market with cheap imported goods due to subsidized dollar. Let's keep that for some other discussion.
From the article you mentioned. Out of 24 billion dollars 4 were by governments before plmn. Out of 20 only 4.5 billion is by PTI right?
'But decision-makers are of the view that these market interventions were critical for an “orderly” transfer from a managed exchange rate regime to the one determined by market forces. “Had the central bank not used foreign exchange reserves during the time when there was shortage of dollars, it would have serious consequences for the rupee-dollar parity,” said Umar.

Oh bhai Its not Chinese issue its Pakistan bureaucracy which is groomed in USA and will follow central bank direction
https://blogs.wsj.com/cfo/2016/10/27/more-countries-using-yuan-for-trade-with-china-and-hong-kong/

https://www.economist.com/special-r...nts-to-make-the-yuan-a-central-bank-favourite

Please dont reinvent the wheel by saying such things as it is almost annoying to say such words ,billateral trade is not a new phenomena may be for Pakistanis it can be

Dam fund was only meant to create awareness and not fund the entire dam. We don't have Nawaz Sharif government who will cut ribbon of the project every year yet not a brick gets laid. We have Imran Khan's government and the result is dam construction has started.

Ho gaya awareness it was a political stunt and dam fund is under T Bills now .

 

[Patriot forever]

Oh my comparing your self with BD and India in Textile ,By the way we import Cotton ,Electricity comes from imported fuel ,All plastic resins used in making fabrics is imported ,Diesel used to transport goods is imported ,local cotton grow using pesticides which are local ,our seeds are imported ,you have no clue where this chain leads to and you talk about RM ? i can go on and on with all exports we do but due to time one example is enough .Defence budget % in our national expenditure 1.3+0.5+0.2 equals approx 2 Trillion and our whole income will be 4.8+1.6=6.4 i.e in raw terms 33% and if you add debt financing of 3.5 Trillion you have no budget left so shall we put 220 Million Pakistanis in a ship and sink them ? is this country not deserve spending on them?

Oh bhai Its not Chinese issue its Pakistan bureaucracy which is groomed in USA and will follow central bank direction
https://blogs.wsj.com/cfo/2016/10/27/more-countries-using-yuan-for-trade-with-china-and-hong-kong/

https://www.economist.com/special-r...nts-to-make-the-yuan-a-central-bank-favourite

Please dont reinvent the wheel by saying such things as it is almost annoying to say such words ,billateral trade is not a new phenomena may be for Pakistanis it can be


Ho gaya awareness it was a political stunt and dam fund is under T Bills now .

Oh my comparing your self with BD and India in Textile ,By the way we import Cotton ,Electricity comes from imported fuel ,All plastic resins used in making fabrics is imported ,Diesel used to transport goods is imported ,local cotton grow using pesticides which are local ,our seeds are imported ,you have no clue where this chain leads to and you talk about RM ? i can go on and on with all exports we do but due to time one example is enough .Defence budget % in our national expenditure 1.3+0.5+0.2 equals approx 2 Trillion and our whole income will be 4.8+1.6=6.4 i.e in raw terms 33% and if you add debt financing of 3.5 Trillion you have no budget left so shall we put 220 Million Pakistanis in a ship and sink them ? is this country not deserve spending on them?

Oh bhai Its not Chinese issue its Pakistan bureaucracy which is groomed in USA and will follow central bank direction
https://blogs.wsj.com/cfo/2016/10/27/more-countries-using-yuan-for-trade-with-china-and-hong-kong/

https://www.economist.com/special-r...nts-to-make-the-yuan-a-central-bank-favourite

Please dont reinvent the wheel by saying such things as it is almost annoying to say such words ,billateral trade is not a new phenomena may be for Pakistanis it can be


Ho gaya awareness it was a political stunt and dam fund is under T Bills now .

Please get your facts right. Bangladesh imports 98% of it's cotton. Fuel prices in Bangladesh are higher than Pakistan. Only advantage Bangladesh has is electricity prices. Thanks to plmn again for high electricity production costs, on imported fuels. They shut down thar coal development and withdraw funding in favor of imported coal. They even setup imported coal plants all the way up in sahiwal due to kickbacks offered, just imagine the logistics even by train.

I don't know why you are bringing fiscal deficit into a discussion involving foreign account deficit. Army doesn't contribute much to balance of payment, their foreign procurement is not more than 1-2 billion.
Regarding currency swap agreement, China doubled the limit to 3.5 billion dollars for yuan swap after negotiations last year. They are not willing to extend it further than that limit because of the deficit we run with them. In short currency swap is basically your exports get paid in yuan and you pay for your imports in yuan. If their is a disparity they know you will run to Chinese banks or gov. We don't have dispora that sends remittances from China. The 3.5 billion limit is in accordance with our 2 billion dollar exports to China. There are many trade deals negotiated this year to increase the exports to China. If I missed any dimention please feel free to contribute, I will learn as well.

 

[volatile]

Please get your facts right. Bangladesh imports 98% of it's cotton. Fuel prices in Bangladesh are higher than Pakistan. Only advantage Bangladesh has is electricity prices. Thanks to plmn again for high electricity production costs, on imported fuels. They shut down thar coal development and withdraw funding in favor of imported coal. They even setup imported coal plants all the way up in sahiwal due to kickbacks offered, just imagine the logistics even by train.

lol thanks to PML N where they brought light yes true they brought high effficent power plants with thermal efficiecny of 62% by the way LNG Saved 2 Billion US$ in crude oil but Saudi didnt like any one playing against furnace oil

I don't know why you are bringing fiscal deficit into a discussion involving foreign account deficit. Army doesn't contribute much to balance of payment, their foreign procurement is not more than 1-2 billion.
Regarding currency swap agreement, China doubled the limit to 3.5 billion dollars for yuan swap after negotiations last year. They are not willing to extend it further than that limit because of the deficit we run with them. In short currency swap is basically your exports get paid in yuan and you pay for your imports in yuan. If their is a disparity they know you will run to Chinese banks or gov. We don't have dispora that sends remittances from China. The 3.5 billion limit is in accordance with our 2 billion dollar exports to China. There are many trade deals negotiated this year to increase the exports to China. If I missed any dimention please feel free to contribute, I will learn as well.

Im not bringing Army im saying non development spendings contribute nothing against GDP development also by your logic Ishaq Dar policy of buying dollars locally and keeping stable currency now makes more sense then ever as per your logic local deficits dont contribute to any deficit ,In reality you take loan and you borrow dollars to keep the balance or one way or another it supplements and compliiments each other .China and Pakistan have done many paper agreement still this is going on i remmember in Mushy era it was signed for 15 years or so we have trade of 20 Billion $ and we have 2 Billion in Yuan does it make sense ?