GDP rebasing done with 2015-16 base. GDP growth rate for FY21 is 5.57%. GDP size: 55.5 tr or $346 bn. Per capita $1666. Debt to GDP 72%.

[Wood]

View attachment 810471

This is bad..& unsustainable
Next 4 months will tell if we are moving to another crash landing or not

If CAD run above 1b$ per month we are heading towards a crash

We know oil will drop soon(5-6months) so we can run it abit high for few months but not at ~1.8b/month

Will govt adjust or will it double down and make it worse like PMLN for election purposes

Saudi or UAE can make the short term problem go away easily. Is Pakistan negotiating with them for help? The margin for CAD seems tough to keep up with!

 

[N.Siddiqui]

Saudi or UAE can make the short term problem go away easily. Is Pakistan negotiating with them for help? The margin for CAD seems tough to keep up with!

There are vibes of some magic wand coming from China to help the Iron brother, PM IK is visiting China next month. Heard some news about big investment or loans disguised as investment coming from China, the biggest FDI so far...

I won't blame Zardari. External debt accumulation stabilized by the end of his term. It only became unsustainable during Khota Biryani years. I hope current govt is able to stabilize it once more but it seems unlikely now as we are in an ever growing external debt trap View attachment 810540

Yes, this tells the story, new loans negotiated must be taken at a higher tougher conditions with higher interest rate...so we are taking loans to pay off old loans, worst case scenario.

He informed that the PTI-led government had to return $55 billion in its next two years in debt payment, adding that a sum of $32bn had already been paid under debts in the last three years.

 

[ziaulislam]

Saudi or UAE can make the short term problem go away easily. Is Pakistan negotiating with them for help? The margin for CAD seems tough to keep up with!

Solution is to keep uncle sam happy so that AB WB IDB and international lenders are able to give paksitan the capital it needs

We also need to double our exports ..there is long way to go..

We are at 50% mark of recovery...once we reach 70% we will be start negative role again as my great leader will be back

 

[Norwegian]

Amazing, even all time high remittances , exports are not enough to control CAD. We are back to nightmare of 2018 despite market based exchange rate. Something is seriously wrong with economy and tax collection. Had Pakistan collected Rs8 trillion then CAD will not be like this, Rs6 trillion isnt enough. Need to get money from people hands with direct tax. Problem is 50% of our tax is collected at port.

CAD has nothing to do with taxes. CAD is calculated in dollars. Taxes are collected in Rupees

 

[N.Siddiqui]

CAD has nothing to do with taxes. CAD is calculated in dollars. Taxes are collected in Rupees

There are vibes of some magic wand coming from China to help the Iron brother, PM IK is visiting China next month. Heard some news about big investment or loans disguised as investment coming from China, the biggest FDI so far...

Any news and reports about it??, Sami Ibrahim and Oreo Maqbool Jan reported about it, some more channels.

@ziaulislam

 

[crankthatskunk]

He informed that the PTI-led government had to return $55 billion in its next two years in debt payment, adding that a sum of $32bn had already been paid under debts in the last three years.

"We are paying the price for the legacy left by Asif Ali Zardari and Nawaz Sharif," the minister said, in reference to the last two governments of the PPP and PML-N.

Pakistan's economic position will be 'far better' by August, says Fawad

"We are paying the price for the legacy left by Asif Zardari and Nawaz Sharif," says minister.

www.dawn.com

This is huge, repaying 55 billion plus 32 billion USD is not a small feat, for a country like Pakistan short on forex in just 5 years of PTI.

And why the debt is not decreasing substantially with huge repayment, the Ans. seems to be we are taking new loans with new maturity dates to pay off older loans which has matured.

Still in bad debts, will take some doing.

it is normal to acquire new loans to pay the old ones, if you don't have trade surplus. All should be thankful to overseas Pakistani's remittances otherwise, imagine where Pakistan would be.
To same overseas Pakistanis PMLN and Pakistan's corrupt media belittles.
Even simple things are difficult for the idiotic Pakistanis to follow.
If PTI didn't come to power, i am certain Pakistan would have gone bankrupt.
Dar has sown the seeds of bankruptcy by borrowing heavily on high rates and hiding the borrowing. Pakistan foreign reserves were in negative, when we minus the loans kept in the reserves.
Shame is not many Pakistanis understand what that criminal has done to the country.

 

[ziaulislam]

CAD has nothing to do with taxes. CAD is calculated in dollars. Taxes are collected in Rupees

There is an indirect association
If u dont have any taxes your fiscal deficit balloons that leads to "note printing" or statebank lending
You also have lower investment and lower growth/exports as spending is lower

it is normal to acquire new loans to pay the old ones, if you don't have trade surplus. All should be thankful to overseas Pakistani's remittances otherwise, imagine where Pakistan would be.
To same overseas Pakistanis PMLN and Pakistan's corrupt media belittles.
Even simple things are difficult for the idiotic Pakistanis to follow.
If PTI didn't come to power, i am certain Pakistan would have gone bankrupt.
Dar has sown the seeds of bankruptcy by borrowing heavily on high rates and hiding the borrowing. Pakistan foreign reserves were in negative, when we minus the loans kept in the reserves.
Shame is not many Pakistanis understand what that criminal has done to the country.

Everything is fair in love

 

[hydrabadi_arab]

Solution is to keep uncle sam happy so that AB WB IDB and international lenders are able to give paksitan the capital it needs

We also need to double our exports ..there is long way to go..

We are at 50% mark of recovery...once we reach 70% we will be start negative role again as my great leader will be back

Honestly non of that will matter. Pakistan received $45b in 2018 and CAD was $18b. Now Pakistan will get $70b and CAD again will be $18b despite devaluation. Unless we increase direct tax and take money out of hands from well of people.

 

[Maula Jatt]

Honestly non of that will matter. Pakistan received $45b in 2018 and CAD was $18b. Now Pakistan will get $70b and CAD again will be $18b despite devaluation. Unless we increase direct tax and take money out of hands from well of people.

Yep many critical em accounts are predicting 2018 repeat

 

[hydrabadi_arab]

Yep many critical em accounts are predicting 2018 repeat

But with one difference, this time Govt/Tareen was forced to come back to reality by IMF. Exchange is still market based. IMF now have forced Rs350b GST taxes and will again force another Rs350b tax exemptions removal in next budget. So maybe PTI hands will be tied till the very end unlike N league.

Its probably because of Asad umar stupidity who delayed IMF program by a year, it may cost PTI elections but will save Pakistan from bankruptcy.

 

[maithil]

18 Billion CAD means a return to IMF program on completion of current one. This also means Consumption of Rich is not going down despite high tariff. Maybe a ban on non-essential imports should be looked into.

 

[Norwegian]

it is normal to acquire new loans to pay the old ones

No, it's not. It would be branded a ponzi scheme or debt trap immediately

Dar has sown the seeds of bankruptcy by borrowing heavily on high rates and hiding the borrowing. Pakistan foreign reserves were in negative, when we minus the loans kept in the reserves.
Shame is not many Pakistanis understand what that criminal has done to the country.

People need not to understand the extent of economic damage by PMLN. Only those relevant such as establishment need to understand it though

There is an indirect association
If u dont have any taxes your fiscal deficit balloons that leads to "note printing" or statebank lending
You also have lower investment and lower growth/exports as spending is lower

Yes, there is some connection but at the end of the day, taxes collected in rupees can never return Pakistan's ever growing external debt

Honestly non of that will matter. Pakistan received $45b in 2018 and CAD was $18b. Now Pakistan will get $70b and CAD again will be $18b despite devaluation. Unless we increase direct tax and take money out of hands from well of people.

Again, external debt can never be paid by taxes collected in Pakistani Rupees

 

[Norwegian]

Its probably because of Asad umar stupidity who delayed IMF program by a year, it may cost PTI elections but will save Pakistan from bankruptcy.

PM Imran Khan promised no IMF. Hence the delay

 

[Patriot forever]

Yep many critical em accounts are predicting 2018 repeat

Honestly non of that will matter. Pakistan received $45b in 2018 and CAD was $18b. Now Pakistan will get $70b and CAD again will be $18b despite devaluation. Unless we increase direct tax and take money out of hands from well of people.

Bro let me take on of what you said from a slightly different perspective so we can get to the bottom.

What situation would we be if the exports and remittances would have performed similar as they performed from 2013-18 ?

What would the impact of this CAD be if our exchange rate was not flexible?

The CAD we are seeing has a temporary component to it, vaccines imports make up around $2b +there is a broad based ( not just crude but everything) inflationary commodity cycle.

I will summarize, the reason we are in this mess is because there was a gap in both export and remittance growth and that gap comes up everytime we enter a growth trajectory. What 70b should have been 90b if not for that period.

The crux of the problem is lack of SBP autonomy, when SBP falls in the wrong hands sever damage happens like we saw from 2013-18. Both currency manipulation and money printing to a tune of 7t.

 

[ghazi52]

Updating the economy​

Editorial
January 22, 2022

THE long-overdue rebasing of our GDP has boosted the economy’s size through improvements in the coverage area of economic activities. The calculation of national accounts to FY16 from FY06 has increased the economy’s size by almost 16.5pc to $347bn and jacked up the FY2021 growth rate from 3.9pc to a 14-year-high of 5.6pc. Even at the old base year, the GDP growth rate was revised up to 5.4pc owing to incorporation of the final data on industry, agriculture and services.

The updated accounts incorporate changes in prices, trade and industrial production indices over time. The economy’s revised value shows that its real size was underestimated by 11.3pc on prices of the previous base year of 2006. Gross national income has also increased to Rs59.3tr, with per capita income rising from $1,543 to $1,666. So what are the advantages and implications of this exercise for the government and public?

The rebasing of the GDP resulting in a higher growth rate and the economy’s expansion has spawned speculations that the government has fudged national accounts to paint a rosy picture and draw political capital. Such assumptions are uncalled for.

GDP rebasing is a process of replacing an old base year with a more recent one — usually every five years — to keep pace with price evolution and changes in the economy’s structure over time to capture current economic conditions.

Thus the new GDP series reflects a more accurate picture of the size and structure of the economy, and incorporates new activities and technologies that had previously not been captured by national accounts. It will allow policymakers to use a new set of economic information, which is more reflective of the current structure than those based on the 2006 base year, and help them make evidence-based decisions.

The impact of rebasing is felt primarily in changes in the major macroeconomic indicators. Indeed, the reduction in public debt from 84pc of GDP to 72pc and external debt from 29pc to 25pc after the economy’s expansion will enhance the government’s bargaining power and create space to borrow more at home and from abroad to meet fiscal and external account needs.

Likewise, the 1pc reduction in fiscal deficit as a ratio of GDP will provide greater room for fresh sovereign guarantees pegged on the economy’s size. At the same time, a higher GDP indicates a significant drop in the tax-to-GDP ratio from 11.1pc to 9.5pc and exports-to-GDP ratio from 8.6pc to 7.4pc, underscoring that most of our economic troubles are rooted in poor fiscal efforts and low productivity.

Meanwhile, if anyone thought they can use the improved numbers to show that fewer people slept on empty stomachs or the number of unemployed had decreased because of rebasing GDP, they are mistaken. Rebasing doesn’t make countries or people richer; it is just about updated data for policymakers to take informed public investment and taxation decisions.

Published in Dawn, January 22nd, 2022