Financial expert debunks Dar, Dagha allegations against SBP

[Bouncer]

the way interest rates were jacked up to 13 percent ( all the while PKR was devalued) and t bills sold worth billions, all is very suspicious .

Very simple solution .Mr Hafeez Sheikh , Mr Raza Baqir should voluntarily put there names in ECL as there tenure ends and we will see who was right ,the so called analysts are IMF paid

The answer to questions raised by former secretary and finance minister are in the article. Did you guys even bother to read it before jumping to conclusions based on the headline?

Let me put it in simpler words for you. Debt restructuring happens all the time. Governments all over the world operate in a borrow, return cycle to finance their operations. And this cycle is often supported by debt restructuring adjustments i.e. pay off some part of due debt or spread it over next few fiscal years by borrowing more and returning some. Basically PKR 7 trillion worth was broken up in to three chunks with biggest going in to floating rate PIB. FLOATING RATE; meaning that the whole accusation of Dar/Dagha i.e. Gov did NOT borrow at a fixed rate and then slashed the rate next day. Gov borrowed 5.2 at floating rate and a smaller part of 1.8 trillion on fixed rate.

"However, a financial expert has dismissed these allegations. The expert, who heads a prestigious research institute elaborated that at the end of FY19, the total debt of Rs7.6 trillion owed to SBP in the form of 6-month T-bills was converted into long-term debt consisting of a small proportion of T-bills (Rs 0.6 trillion) maturing during FY20, relatively larger proportion of fixed-rate PIBs (Rs 1.8 trillion) maturing over the next four financial years i.e. FY21 to FY24 and a much larger proportion of floating-rate PIBs (Rs 5.2 trillion) maturing after ten years in FY29. By the end of FY20, GOP will have retired Rs 0.6 trillion to SBP and the outstanding debt from SBP will decrease to Rs 7.0 trillion."

And he didn't know then its really a question mark on his performance. At the time of doing such a massive transaction, all possibilities are generally considered in which possible reduction in interest rate is the most common factor.

Again brother, read the article please. SBP and MOF are supposed to be independent. So its literally NOT his job to know when policy rate will be changed.

These parachute Economists should be put behind the bars along with their handlers. The only thing they are good at is create INFLATION and bring misery to the poor folks.

If we start making professionals like economists, engineers, doctors accountable for POLICY decisions that are out of their control then not a single qualified/capable person will work for the Gov of Pakistan. They may be incompetent but they can't be charged for it.

 

[The Accountant]

Bad managers ruin the economy.

There are hundreds of graphical representations ,dont want to flood my post. All i am saying is put Hafeez Sheikh, Baqir and their sponsors on the ECL as these cronies dont have an illustrious reputation of fixing the economies in the past.

Brother first of all I am not defending Hafeez Sheikh or Baqir Najfi.

I dont know them they may be good or they may be bad.

I am just saying what happening to us was bound to happen due to our performance in external trade during 2016, 2017 and 2018. You put baqir najfi or any other world known Pakistani patriotic economist, he would have done the same. devaluation was unavoidable, however, interest rates hike could have been a little lower but that correction is already done now.

Whatever graphs you are showing are result of two things happending from 2016 onwards:

This is trend of foreign exchange reserves:
View attachment 647771

This is current account deficit:

Had we taken corrective majors in 2016 rather than hiding them the situation would have not got out of control. Even Zardari had better trade statistic than NS, despite having a general character of business friendly person.

I personally feel that after panama case verdict, Dar and NS intentionally took revenge from Pakistan as they could see loosing government so they throw us under the bus to put Pakistan in such a situation that no one can stop the default or harsh economic conditions. However, this is my personal view based on data and I have no evidence of his intentions but numbers are crystal clear. From 2016 onwards we were consuming our reserves and we were sending much more money outside Pakistan then coming in.

Our GDP growth was on face good but in reality it was due to consumption of imported goods (i.e. at the cost of current account deficit) and hence was putting Pakistan on path of financial default.

In lay man terms you were buying expensive and shiny toy for your kids but not from your income but from taking loan as you know that you are going to leave your kids along with the loan. Now when you are gone kids now have habbit of getting expensive kids and also dont have ability to pay back the loan. So when mom stop buying expensive toys, kids think that father was better than mother.

 

[Syed1.]

Bad managers ruin the economy.

There are hundreds of graphical representations ,dont want to flood my post. All i am saying is put Hafeez Sheikh, Baqir and their sponsors on the ECL as these cronies dont have an illustrious reputation of fixing the economies in the past.

You do realize most of your graphs are from BEFORE PTI took over.... care to point out who was in government before PTI?

 

[ziaulislam]

surprisingly how little knowledge pople have on this forum yet go on critizing things but inreality they are doing nothing but embrassing themselves

 

[The Accountant]

@Bouncer




Again brother, read the article please. SBP and MOF are supposed to be independent. So its literally NOT his job to know when policy rate will be changed.



Even independent MoF knows such major decisions. Anyone dealing in money market has insights or at minimum prediction of policy rates movement. MoF is much better informed then money market dealers.

Growup man.

 

[FOOLS_NIGHTMARE]

You do realize most of your graphs are from BEFORE PTI took over.... care to point out who was in government before PTI?

Brother i dont want to dig my myself into disgusting politics from all sides. I will only suffice with a few graphs and than vanish from this thread for good. I know you love PTI and wish you all the best of luck, INSHALLAH.
GDP:

KSE 100 to GDP

Debt History

The only way forward for Pakistan is COLLECTIVE WISDOM, no single entity can manage this complex country. All Pakistanis should rise above their Egos and work together for our mother land.

 

[Syed1.]

Brother i dont want to dig my myself into disgusting politics from all sides. I will only suffice with a few graphs and than vanish from this thread for good. I know you love PTI and wish you all the best of luck, INSHALLAH.
GDP:

KSE 100 to GDP

Debt History

The only way forward for Pakistan is COLLECTIVE WISDOM, no single entity can manage this complex country. All Pakistanis should rise above their Egos and work together for our mother land.

I can bring fancy graphs as well

https://twitter.com/x/status/1278753594557321216

 

[FOOLS_NIGHTMARE]

Curtailing Current account deficit is the Hallmark of this Govt, i commend them for it. Many Pakistanis love this Govt and i for one respect their opinion, and feel they should complete their full five year term.

 

[Syed1.]

Curtailing Current account deficit is the Hallmark of this Govt, i commend them for it. Many Pakistanis love this Govt and i for one respect their opinion, and feel they should complete their full five year term.

What we need is an economic charter agreed upon by all major parties. A basic four five point guidelines that draws the red line beyond which no government should cross and if they do they can be sent home. Something like this current account deficit, trade deficit, debt cannot be greater than *an agreed upon percentage*.

 

[The Accountant]

We need comprehensive long term financial plan. Atleast 25 years plan.

Dont forget India and China were doing really bad just 25 years ago.

In 92 india was about to bankrupt and china was considered as a very low income country. Both of them work really hard to build local industrial manufacturing base. They took tough decisions but achieved the targets

Chinese 1 child policy
Indian policy of giving local manufactured maruti ambassdor to ministers only are few example the principle decisions they took meanwhile our parliament is more luxurious then US congress.

We need a long term vision.

 

[Syed1.]

We need comprehensive long term financial plan. Atleast 25 years plan.

Dont forget India and China were doing really bad just 25 years ago.

In 92 india was about to bankrupt and china was considered as a very low income country. Both of them work really hard to build local industrial manufacturing base. They took tough decisions but achieved the targets

Chinese 1 child policy
Indian policy of giving local manufactured maruti ambassdor to ministers only are few example the principle decisions they took meanwhile our parliament is more luxurious then US congress.

We need a long term vision.

Well said.... for starters we need our own car brand that has top notch quality but since it is locally sourced it would be considerably cheaper. Honestly auto industry is one industry that can kick start rapid industrialization in any country specially in a country like Pakistan that has a large population and per capita ratio for cars is quite limited.


Look at this image. Chinese president in a Chinese made car that looks majestic and stylish. Wouldn't we want Pakistani PM/President driving around in a Pakistani car rather than an imported German?

 

[Bouncer]

Even independent MoF knows such major decisions. Anyone dealing in money market has insights or at minimum prediction of policy rates movement. MoF is much better informed then money market dealers.

Growup man.

You seem to have taken offence, which was not my intention

Central banks are supposed to be independent and SBP has been fairly independent over the decades except for brief episodes of political interference, you do agree with that right?

Insights or predictions do not equal firm knowledge. You can make an educated guess based on economic situation or statements from relevant people or historic trends. This COVID19 pandemic is a good example; people were expecting SBP to cut interest rates in Pakistan but nobody knew how much. First change was widely denounced as too little. If anyone dealing in money market markets has firm knowledge of changes in rate they'd stand to make a lot of money.

 

[Norwegian]

All i am saying is put Hafeez Sheikh, Baqir and their sponsors on the ECL as these cronies dont have an illustrious reputation of fixing the economies in the past.

That's why your ingenious Ishaq Dollar is on the run in UK?

I will only suffice with a few graphs and than vanish from this thread for good.

Here you go:

Now vanish...

All Pakistanis should rise above their Egos

And return the looted money back to Pakistan instead of hiding in UK with fake illnesses.

Curtailing Current account deficit is the Hallmark of this Govt, i commend them for it. Many Pakistanis love this Govt and i for one respect their opinion, and feel they should complete their full five year term.

Then stop complaining about very low GDP growth in this govt compared with your fav PMLN govt. Current account deficit is directly connected with GDP growth. As govt increases this deficit, GDP increases too. So high gdp growth in your fav PMLN was due to this economic wizardry. Not by improving economic fundamentals.

What we need is an economic charter agreed upon by all major parties. A basic four five point guidelines that draws the red line beyond which no government should cross and if they do they can be sent home. Something like this current account deficit, trade deficit, debt cannot be greater than *an agreed upon percentage*.

No need for that. Musharraf govt already passed the law that debt to GDP should not increase past 60 percent yet PMLN govt took it all the way to more than 74 percent.

 

[volatile]

"However, a financial expert has dismissed these allegations. The expert, who heads a prestigious research institute elaborated that at the end of FY19, the total debt of Rs7.6 trillion owed to SBP in the form of 6-month T-bills was converted into long-term debt consisting of a small proportion of T-bills (Rs 0.6 trillion) maturing during FY20, relatively larger proportion of fixed-rate PIBs (Rs 1.8 trillion) maturing over the next four financial years i.e. FY21 to FY24 and a much larger proportion of floating-rate PIBs (Rs 5.2 trillion) maturing after ten years in FY29. By the end of FY20, GOP will have retired Rs 0.6 trillion to SBP and the outstanding debt from SBP will decrease to Rs 7.0 trillion."

who are experts and by the way debt bond issued one day earlier at 8.5% next day interest rate at 7%

 

[The Accountant]

You seem to have taken offence, which was not my intention

Central banks are supposed to be independent and SBP has been fairly independent over the decades except for brief episodes of political interference, you do agree with that right?

Insights or predictions do not equal firm knowledge. You can make an educated guess based on economic situation or statements from relevant people or historic trends. This COVID19 pandemic is a good example; people were expecting SBP to cut interest rates in Pakistan but nobody knew how much. First change was widely denounced as too little. If anyone dealing in money market markets has firm knowledge of changes in rate they'd stand to make a lot of money.

I agree that they show but independent but 7 trillion is a huge transaction and SBP and MoF are not that far a part that they cant even discuss a possibility of interest rate considerations if not change itself.

Even if not corruption it is poor handling at minimum.