Heavily in debt

[Norwegian]

Bro the concept is right. (Forex in our case does not actually represent income, it's just a measure of difference in inflows and outflows in a given period of time, it's a primary indicator of liquidity in the system)

Basically it's our income vs our expenditure ( imports both in goods and services and a few other factors vs mainly exports both goods and services + remittances) which determines Current account surplus or deficit. The amount needed to keep the country running.
If it's in deficit that means either this amount is financed by forex reserves or external borrowing.
(Their is a cavet, decreasing imports and increasing exports both are interconnected, reducing imports beyond a certain point results in decreased exports. Imports have to carefully regulated to avoid in decrease in exports)

2nd reason for external borrowing is to pay off interest on cumulative debt and to pay off maturing principal amount.

3rd is developmental loans such as funding dams or other such projects, or in some instances local financial support (mostly this is not the case).

4th to subsidize currency. Pakistan was spending 500 million dollars every month, which ultimately we were borrowing. This is no longer he case as now to a great degree currency is market determined. In fact contrary to this we actually have SBP buying dollars from the market ( basically to protect the export orders in view of appreciating currency).


Reducing imports or increasing exports. Both of them will reduce CAD which means less borrowing. If we analyze the net increase in debt in the previous years especially in last 2 years of Plmn majority of it is incurred to finance CAD. This is contrast to this year as positive CAD so far which has resulted in our borrowing requirement limited to interest payment and developmental loans etc. Overall the rate of increase in debt has considerably slowed down this financial year.

https://twitter.com/x/status/1339901810681794560

One more very important point which we need to consider when comparing net increase in debt between 2 time periods is the change in forex reserves, to get the true picture.
For example if we are comparing Plmn last 2 years we need to take into account the considerable drain in forex, in contrast to pti first 2 years where their is a considerable increase in forex.
This is one of the most crucial factors in determining the overall macroeconomic stability as it directly corresponds with the liquidity. The excess to foreign lenders.

If your base variables are unsustainable such as CAD, it directly affects the confidence of foreign lenders citing your ability to pay back. This results in credit crunch, when even your closest friends e.g China can be of little help and is not enough. Which is why you run to IMF again and again as basically it restores confidence of other lenders.

If you don't do that the alternate is default, we all have idea what happens when someone defaults.

This definitely deserves a positive rating @HRK

 

[CriticalThought]

It's not naive. Here is a rough calculation:
Total external income of Pakistan: (exports + remittances + forex) = (20 + 20 + 10) = 50 billion USD
Total external expenses of Pakistan: (imports + debt repayments) = (50 + 10) = 60 billion USD
Difference = (Income - Expense) = (50 - 60) = -10 billion USD
So there you have it. You need 10 billion dollar new debt each year to balance the external account or go bankrupt. So you can either decrease import by 10 billion USD or increase exports by 10 billion USD to balance the external account without taking any new external debt.
@ziaulislam @Patriot forever

Right, go on and decrease imports by $10bn, then show everyone we are not increasing our debt any more, and then come back and discuss. Now get lost.

 

[The Accountant]

I am calling out the self-gloating advertisement of financial success that shows growing state bank reserves based off increased debt and increased exports in a contracting world economy:

The remarkable recovery!

When I hear our media pundits discuss the state of Pakistan’s economy, I am stunned by their ignorance. During the past two years, Pakistan has made a remarkable recovery, but most people seem oblivious of this fact. It’s a simple and shocking story, based purely on numbers and maybe it remains...

defence.pk

These hypocrites want to have their cake and eat it too. Please adopt one single position: either we are in dire straits, or we are doing great.

So as per u there are only 2 states ? Dire and great?

My brother u have a good questioning mind and i respect as mostly u raise logical question. So i will try to answer your query and will expect that u will listen with an open mind and we can debate on facts.

Position of Pakistan needs to be analyzed in current status and the current direction.

In last three decades our direction was consistently negative. Our current account was in huge deficit which is one of the reason of foreign loan. It went to as high as 19 billion during 2017 18. But now since last 5 month it is in positive trajectory with huge efforts on part of government so overall basis it is remarkable achievement to move in surplus from 19 billion deficit.
In terms of external account now direction is set right but impact of previous mismanagement is still there so it will take time to get the current loan situation in control. Probably 5 years.

Second issue is budget deficit. We are in consistent budget deficit and government has to either increase revenue or reduce expenditure. This is a pain taking process and despite knowing the reality opposition is stoping government to take the tough decisions. Government having very thin majority is being blackmailed by opposition.

To reduce budget deficit there is a third option but it is time taking. Third option is to support private sector and help them grow at a very high rate as a result tax revenues will start increasing. Government is focused on this approach primarily and partial expense control.

This is time taking process. It took india almost 2 decades and similar was rhe case of china. So we need to be patient. Keeping government in check is good thing but questioning everything is counter productive.

So admire good things be critical of bad things this is the right approach.

Admire good people in government like asad umar, imran jhan arif alvi shafqat mehmood, murad saeed.

Keep a check on shiekh rasheed and fawad chaudhry type people and critisize azam swati, firdous ashiq awan and other like them.

Critisizsing everyone and everything is not going to take us anywhere.

Remember our politics and bureaucracy is in ruins since last 5 decades so it cant be corrected in 2 years.

 

[CriticalThought]

So as per u there are only 2 states ? Dire and great?

My brother u have a good questioning mind and i respect as mostly u raise logical question. So i will try to answer your query and will expect that u will listen with an open mind and we can debate on facts.

Position of Pakistan needs to be analyzed in current status and the current direction.

In last three decades our direction was consistently negative. Our current account was in huge deficit which is one of the reason of foreign loan. It went to as high as 19 billion during 2017 18. But now since last 5 month it is in positive trajectory with huge efforts on part of government so overall basis it is remarkable achievement to move in surplus from 19 billion deficit.
In terms of external account now direction is set right but impact of previous mismanagement is still there so it will take time to get the current loan situation in control. Probably 5 years.

Second issue is budget deficit. We are in consistent budget deficit and government has to either increase revenue or reduce expenditure. This is a pain taking process and despite knowing the reality opposition is stoping government to take the tough decisions. Government having very thin majority is being blackmailed by opposition.

To reduce budget deficit there is a third option but it is time taking. Third option is to support private sector and help them grow at a very high rate as a result tax revenues will start increasing. Government is focused on this approach primarily and partial expense control.

This is time taking process. It took india almost 2 decades and similar was rhe case of china. So we need to be patient. Keeping government in check is good thing but questioning everything is counter productive.

So admire good things be critical of bad things this is the right approach.

Admire good people in government like asad umar, imran jhan arif alvi shafqat mehmood, murad saeed.

Keep a check on shiekh rasheed and fawad chaudhry type people and critisize azam swati, firdous ashiq awan and other like them.

Critisizsing everyone and everything is not going to take us anywhere.

Remember our politics and bureaucracy is in ruins since last 5 decades so it cant be corrected in 2 years.

Me and you are mostly on the same page. I simply add Imran Khan to the list of traitors. Otherwise I respect Asad Umar, as an example. If it was my choice, then Asad Omar would be Prime Minister. And isn't Arif Alvi responsible for forwarding the reference against Supreme Court judge? I do not admire incompetent figureheads. Not very familiar with the role of Shafqat Mahmood. Murad Saeed is promising young blood.

The progress we have made on the economic front has been enabled initially by Asad Omar. Then the bureaucracy is to be lauded for enabling positive growth. And as much as I am loathe to do so, Bajwa should be lauded for holding meetings with top businessmen and encouraging them. I am not sure who is the genius behind the progress in the textile sector. During Zardari and Nawaz times, this sector didn't even get a proper electricity supply. Whomever has solved this problem deserves credit. There are good things happening. But this cannot be attributed to PTI and Imran Khan. The Prime Minister is a low intellect, clueless, slave of Western powers. His vision is to be a dog at the feet of his Western masters. His upbringing, his education, his environment has taught him as much. And while he is at the top, I fear for Pakistan. I fear for our economic recovery. I fear the fact that an IMF agent has wide ranging authority in managing the finances of the country.

@The Accountant one more point. A blanket reduction in imports isn't something to be lauded. Yes, import of lavish consumer items is the need of the day. But importing raw materials, machinery, etc. is also a big need. The IMF prescribed import reduction will NOT consider the lost development opportunities. It takes a creative, bold, intelligent leadership who know what they are doing to negotiate the right terms. Otherwise, the reduction in imports is exactly the double-edged, poisoned knife that our enemies want to embed into our backs. And that makes my blood boil when PTI morons come online and talk about reducing $10bn imports to pay off $10bn debt.

 

[PatrioticPaki]

Not sure how come people were thinking that PTI would come into power and would repay $98 billion debt from their own pockets when reserves were mere $11-12 billion and not enough funds left to run the country with huge account deficit and artificially afloat economy.

 

[The Accountant]

Me and you are mostly on the same page. I simply add Imran Khan to the list of traitors. Otherwise I respect Asad Umar, as an example. If it was my choice, then Asad Omar would be Prime Minister. And isn't Arif Alvi responsible for forwarding the reference against Supreme Court judge? I do not admire incompetent figureheads. Not very familiar with the role of Shafqat Mahmood. Murad Saeed is promising young blood.

The progress we have made on the economic front has been enabled initially by Asad Omar. Then the bureaucracy is to be lauded for enabling positive growth. And as much as I am loathe to do so, Bajwa should be lauded for holding meetings with top businessmen and encouraging them. I am not sure who is the genius behind the progress in the textile sector. During Zardari and Nawaz times, this sector didn't even get a proper electricity supply. Whomever has solved this problem deserves credit. There are good things happening. But this cannot be attributed to PTI and Imran Khan. The Prime Minister is a low intellect, clueless, slave of Western powers. His vision is to be a dog at the feet of his Western masters. His upbringing, his education, his environment has taught him as much. And while he is at the top, I fear for Pakistan. I fear for our economic recovery. I fear the fact that an IMF agent has wide ranging authority in managing the finances of the country.

@The Accountant one more point. A blanket reduction in imports isn't something to be lauded. Yes, import of lavish consumer items is the need of the day. But importing raw materials, machinery, etc. is also a big need. The IMF prescribed import reduction will NOT consider the lost development opportunities. It takes a creative, bold, intelligent leadership who know what they are doing to negotiate the right terms. Otherwise, the reduction in imports is exactly the double-edged, poisoned knife that our enemies want to embed into our backs. And that makes my blood boil when PTI morons come online and talk about reducing $10bn imports to pay off $10bn debt.

Brother most of your statement represents your opinion or emotions. Can we discuss facts ?

Fact is contrary to what u r stating here. Without going into details the TERF financing facility offerred by government is unprecendent in history.

Investment done just by my company worth 2 billion rupees in last 6 months and that is my sector only the group has done other investments as well.

So quote me facts if u have any.

From your statements u r saying that all the good things are attributed to the team members but bad things are from the leader which is also illogical.

 

[Norwegian]

I am not sure who is the genius behind the progress in the textile sector.

It's Imran Khan, Patwari

And that makes my blood boil when PTI morons come online and talk about reducing $10bn imports to pay off $10bn debt.

PTI already reduced imports by 10 billion dollars. It was 60 billion dollars in 2018. 50 billion dollars in 2019

From your statements u r saying that all the good things are attributed to the team members but bad things are from the leader which is also illogical.

He has Bughaz Imran like every Patwari

 

[AZ1]

Brother most of your statement represents your opinion or emotions. Can we discuss facts ?

Fact is contrary to what u r stating here. Without going into details the TERF financing facility offerred by government is unprecendent in history.

Investment done just by my company worth 2 billion rupees in last 6 months and that is my sector only the group has done other investments as well.

So quote me facts if u have any.

From your statements u r saying that all the good things are attributed to the team members but bad things are from the leader which is also illogical.

Why he would see the fact, he is not in Pakistan,neither care about Pakistan. When money flows in one fail to see the facts and when that money stops one go insane in hate.
If ppl see and follow the facts we were not in $92 billion of debt in 2018 when PTI didnt even come into power.

 

[CriticalThought]

Brother most of your statement represents your opinion or emotions. Can we discuss facts ?

Fact is contrary to what u r stating here. Without going into details the TERF financing facility offerred by government is unprecendent in history.

Investment done just by my company worth 2 billion rupees in last 6 months and that is my sector only the group has done other investments as well.

So quote me facts if u have any.

From your statements u r saying that all the good things are attributed to the team members but bad things are from the leader which is also illogical.

It's a bit rich asking for 'facts' when your government is hiding details of the IMF deal behind 'national security concerns'. If that doesn't smell of deceit, then you are just too enamored with Imran Khan's charms.

Here is a fact for you. I do not trust a government that is not transparent. How about you actually go into the details of this 'TERF financing facility'. But wait a minute. You have 2 billion rupees at stake here. You have personal interest due to which you are ready to sing Imran Khan's praises. At least you have been honest about where your leanings are. You don't care about Pakistan, you care about your money.

There is nothing illogical in the fact that Imran Khan is a clueless man who is being led by those around him. Some of them are honest to Pakistan. Their achievements are being used by self-serving traitors to forward their own agenda. This isn't hard to understand if you don't have 2 billion rupees at stake.

It's Imran Khan, Patwari

PTI already reduced imports by 10 billion dollars. It was 60 billion dollars in 2018. 50 billion dollars in 2019
View attachment 698134

He has Bughaz Imran like every Patwari

Go on and reduce it by a further $10bn then come back to talk.

 

[AZ1]

It's Imran Khan, Patwari

PTI already reduced imports by 10 billion dollars. It was 60 billion dollars in 2018. 50 billion dollars in 2019
View attachment 698134

He has Bughaz Imran like every Patwari

He doesnt know anything just like every patwari. Patwaris always think himself am economist becuause he lives on corrupt money. Now that money is gone and they cant do corruption, just.like him.

 

[CriticalThought]

He doesnt know anything just like every patwari. Patwaris always think himself am economist becuause he lives on corrupt money. Now that money is gone and they cant do corruption, just.like him.

So, you are alleging that I am involved in corruption. So how about get a reference filed against me. Wait, but your leader Imran Khan is sending all the corrupt people outside the country on one way tickets. May be that's why I am sitting in Sydney calling out his treason. What a joke! You, your leader, you are all total clowns, wasting resources of this nation. Before barking about corruption, have some decency and actually do something to take corrupt people to task.

 

[Norwegian]

So, you are alleging that I am involved in corruption. So how about get a reference filed against me. Wait, but your leader Imran Khan is sending all the corrupt people outside the country on one way tickets. May be that's why I am sitting in Sydney calling out his treason. What a joke! You, your leader, you are all total clowns, wasting resources of this nation. Before barking about corruption, have some decency and actually do something to take corrupt people to task.

When you blame this govt for stuff it hasn't done, it means you are obviously corrupt

 

[ziaulislam]

I blame everyone. I blame Musharraf, I blame Zardari, I blame Nawaz, I blame Bajwa, and I blame Imran Khan. All of them are traitors.

Except for maryum nawaz

Bro the concept is right. (Forex in our case does not actually represent income, it's just a measure of difference in inflows and outflows in a given period of time, it's a primary indicator of liquidity in the system)

Basically it's our income vs our expenditure ( imports both in goods and services and a few other factors vs mainly exports both goods and services + remittances) which determines Current account surplus or deficit. The amount needed to keep the country running.
If it's in deficit that means either this amount is financed by forex reserves or external borrowing.
(Their is a cavet, decreasing imports and increasing exports both are interconnected, reducing imports beyond a certain point results in decreased exports. Imports have to carefully regulated to avoid in decrease in exports)

2nd reason for external borrowing is to pay off interest on cumulative debt and to pay off maturing principal amount.

3rd is developmental loans such as funding dams or other such projects, or in some instances local financial support (mostly this is not the case).

4th to subsidize currency. Pakistan was spending 500 million dollars every month, which ultimately we were borrowing. This is no longer he case as now to a great degree currency is market determined. In fact contrary to this we actually have SBP buying dollars from the market ( basically to protect the export orders in view of appreciating currency).


Reducing imports or increasing exports. Both of them will reduce CAD which means less borrowing. If we analyze the net increase in debt in the previous years especially in last 2 years of Plmn majority of it is incurred to finance CAD. This is contrast to this year as positive CAD so far which has resulted in our borrowing requirement limited to interest payment and developmental loans etc. Overall the rate of increase in debt has considerably slowed down this financial year.

https://twitter.com/x/status/1339901810681794560

One more very important point which we need to consider when comparing net increase in debt between 2 time periods is the change in forex reserves, to get the true picture.
For example if we are comparing Plmn last 2 years we need to take into account the considerable drain in forex, in contrast to pti first 2 years where their is a considerable increase in forex.
This is one of the most crucial factors in determining the overall macroeconomic stability as it directly corresponds with the liquidity. The access to foreign lenders.

If your base variables are unsustainable such as CAD, it directly affects the confidence of foreign lenders citing your ability to pay back. This results in credit crunch, when even your closest friends e.g China can be of little help and is not enough. Which is why you run to IMF again and again as basically it restores confidence of other lenders.

If you don't do that the alternate is default, we all have idea what happens when someone defaults.

Technically you dont need foreign debt for development project but it is usually kept in project to account for imports that will go up with the project(thus called foreign component like turbines etc)

For example even though bengaldesh exports are 4 times thatof pakistan per capita its other markers are almost the same

We need to understand that exports are good but its not the only part of your economy

You need to maintain a slight negative CAD you should be good

Sometimes a purely export base economy can be worse as what will happen if exports dry out..shock will be hard

Pakistan problem wasnt just high imports..problem started with govt printing notes and droping interest rates to create a trillion rupees out of thin air to fuel spending (which works in a crisis) but can create crisis if you are doing okay.

This money causes inflation and higher imports and shocked the economy to halt..

But it is popular people love this..so PMLN govt did 4 times and people love them more

When you blame this govt for stuff it hasn't done, it means you are obviously corrupt

Its about love for maryum nawaz

 

[ziaulislam]

He is in LOVE
Everything is fair in love and war

 

[Norwegian]

Its about love for maryum nawaz

Or love for Khota Biryani