IMF agrees to extend the stalled bailout programme by up to one year and increase the loan size to $8 billion

[Wood]

In general if your economy is healthy you import more
I dunno how applicable it is in the case of Pakistan.

He has unknown unknowns in the subject. I understood that from the first statement in his response

 

[Big_bud]

What are the necessary and painful corrections?

Free floating currency which impacted all import businesses. If dollar is cheaper than it should really be, importing a flip flop from China is more easier and profitable than manufacturing the flip flop in Pakistan. Everyone was doing that. Even our shoes were made in china, forget more high tec things. Everyone was just stamping their logos and selling them. Now when the dollar is free floated, suddenly all imports are expensive and profit margins got shrunk or didn't exist anymore. Hence import businesses took a big hit and had to make a switch to local manufacturing/ local suppliers. Pakistan had to make this correction because we should rather be paying off our debt instead of getting loans to support a circular debt funded economy. Debt should be used to revive industry. It should be used to provide cheaper input resources for our industry like gas & electricity. Using debt to fix dollar at a particular rate is stupid and unaffordable by a country like Pakistan.

In general if your economy is healthy you import more
I dunno how applicable it is in the case of Pakistan.

If economy is good you better be exporting more than you import my friend.
You better be earning more in order to spend more. If you don't earn shit. And use debt to import things, you are stupid as F!

 

[mhosein]

IMF agrees to extend the stalled bailout programme by up to one year and increase the loan size to $8 billion

How convenient and excellent timing for IMF to approve to extend bailout and increase the size of the loan to $8 billion.

Only brainwashed, greedy scum would still insist that Shebaz came to power legitimately. And it is those traitor parasite-munafiqs that would praise and glorify IMF/WB. The latter are but organs of extortion and bloodletting of nations under the thumb of the Zionist Western Empire.

I would rather that Pakistan exist in abject poverty or go to war with india than be a SLAVE STATE OF THE WEST. At least in the former two choices, we would be a FREE NATION that does not live as slaves.

A Muslim would rather live one day as a free man, who established Imaan, than live entire life as the slave of KAFIRS.

Oh and guess where that $8 billion will end up? That's right, into investments, properties in London, New York, Paris and other Western cities. The Sharif family will have more wealth while Pakistan will become a SLAVE STATE OF THE ZIONIST WEST.

 

[Wood]

Free floating currency which impacted all import businesses. If dollar is cheaper than it should really be, importing a flip flop from China is more easier and profitable than manufacturing the flip flop in Pakistan. Everyone was doing that. Even our shoes were made in china, forget more high tec things. Everyone was just stamping their logos and selling them. Now when the dollar is free floated, suddenly all imports are expensive and profit margins got shrunk or didn't exist anymore. Hence import businesses took a big hit and had to make a switch to local manufacturing/ local suppliers. Pakistan had to make this correction because we should rather be paying off our debt instead of getting loans to support a circular debt funded economy. Debt should be used to revive industry. It should be used to provide cheaper input resources for our industry like gas & electricity. Using debt to fix dollar at a particular rate is stupid and unaffordable by a country like Pakistan.

Free floating currency is IMF condition for bailout. Imran did not have a choice in the matter. I knew you were going to say that because all PTI supporters here say that is Imran's achievement. I suspected that this is IMF's handiwork because it is their typical advice to countries that ask IMF for a loan. It is an easy way to make the population feel they are poor in a way that reflects the reality of country's economy. 2 minutes of Googling proved my suspicion in this matter.

Even if the infamous Dar was at helm, he would have done the same. What other brave policy moves we can attribute to Imran?

EDIT

Abdul Hafeez Shaikh, Pakistan's de facto finance minister, told the state-run Pakistan Television that he hoped it would be his country's last bailout package from the IMF.

Under the deal, Pakistan would give up central bank control of the currency to adopt a market-based exchange rate and take measures to improve the functioning of loss-making state-owned firms as well as curtail subsidies, among other things.

IMF deal a 'political blow' to PM Imran Khan – DW – 05/13/2019

Pakistan has secured a multibillion-dollar bailout package from the IMF in a desperate attempt to get out of a crippling economic situation. But the road to strengthen the nation's finances is tough.

www.dw.com

 

[Hakikat ve Hikmet]

He who takes loan also takes orders.....

The common folks, used to getting IK subsidies, will now follow him in the long march....

Looks like IK has created tons of booby traps for these Sheyatin....

Well done IK....

 

[Big_bud]

Free floating currency is IMF condition for bailout. Imran did not have a choice in the matter. I knew you were going to say that because all PTI supporters here say that is Imran's achievement. I suspected that this is IMF's handiwork because it is their typical advice to countries that ask IMF for a loan. It is an easy way to make the population feel they are poor in a way that reflects the reality of country's economy. 2 minutes of Googling proved my suspicion in this matter.

Even if the infamous Dar was at helm, he would have done the same. What other brave policy moves we can attribute to Imran?

EDIT

IMF deal a 'political blow' to PM Imran Khan – DW – 05/13/2019

Pakistan has secured a multibillion-dollar bailout package from the IMF in a desperate attempt to get out of a crippling economic situation. But the road to strengthen the nation's finances is tough.

www.dw.com

Nope, they have been asking this since long time, no one made this correction. They don't dare to. Politicians don't agree to such measures because the hit on economy causes them to loose next elections. They would rather have a high influx of money. And create a fake sense of prosperity to the nation. This is what PML-N has been doing historically. Take huge loans, artificially control dollar, invest in metros and flyovers, crate a façade of development (non-money producing expenditures). If Pakistan has an organic, export lead 5-6% growth in GDP we can pay off our loans. If we take loans to sustain 5-6% GDP growth, we are growing but we are also growing in debt and with debt comes interest. And political control. So its a huge loss.

He took a couple of very good initiatives. Starting work on Bhasha dam is one. Fixing power transmission line losses is another issue. These sort of fixes to the system don't produce any immediate result. However benefits the country in the long run. Dam would be completed in 2028. Dam is an extremely expensive project to build. No one build any dams despite extreme power and upcoming water shortage in Pakistan. Because such spending doesn't create illusion of wealth and prosperity. Cash flow doesn't increase in society, in-fact a huge amount of cash is taken out and thrown into a project that some other government in future would inaugurate and take credit of. Putting new high voltage power lines from north to south of Pakistan also, is not visible by publics. The effect on general population is not immediate and no one cares. But he did it because he cared. Our power companies were in circular debt and turning huge losses every year due to line losses and some expensive power contracts done by previous governments. Khan also fixed those contracts, he re-negotiated them to make power production cheaper and pull country out of circular debt traps.

I think now it must be making sense for you when so many people say he was thrown out by a conspiracy. He was doing everything to bring the country out of economic control. This has never been done in decades and decades in Pakistan. A lot of other smaller measures were also taken, but you would have got the point already.


The shared article has no additional value to the discussion. I have answered it in detail already.

 

[ziaulislam]

Good news for Pakistan. This will ensure macro economic stability with $5 billion in near future

Banana republic chained in debt.

Pakistan already took EFF i.e extended finance in 2016..
This is basically just rolloing over the same 8b$ debt..no additional money has came into pakistan

 

[Wood]

Nope, they have been asking this since long time, no one made this correction. They don't dare to. Politicians don't agree to such measures because the hit on economy causes them to loose next elections. They would rather have a high influx of money. And create a fake sense of prosperity to the nation. This is what PML-N has been doing historically. Take huge loans, artificially control dollar, invest in metros and flyovers, crate a façade of development (non-money producing expenditures). If Pakistan has an organic, export lead 5-6% growth in GDP we can pay off our loans. If we take loans to sustain 5-6% GDP growth, we are growing but we are also growing in debt and with debt comes interest. And political control. So its a huge loss.

He took a couple of very good initiatives. Starting work on Bhasha dam is one. Fixing power transmission line losses is another issue. These sort of fixes to the system don't produce any immediate result. However benefits the country in the long run. Dam would be completed in 2028. dam is extremely expensive to build. No one build dams despite extreme power and upcoming water shortage in Pakistan. Because such spending don't create illusion of wealth and prosperity. Cash flow doesn't increase, in-fact a huge amount of cash is taken and thrown into a project that some other government in future would inaugurate and take credit of. Putting new high voltage power lines from north to south of Pakistan also, is not visible by publics. The effect on general population is not immediate and no one cares. But he did it because he cared. Our power companies were in circular debt and turning huge losses every year due to line losses and some expensive power contracts done by previous governments. Khan also fixed those contracts, he re-negotiated them to make power production cheaper and pull country out of circular debt traps.

I think now it must be making sense for you when so many people say he was thrown out by a conspiracy. He was doing everything to bring the country out of economic control. This has never been done in decades and decades in Pakistan. A lot of other smaller measures were also taken, but you would have got the point alraedy.

If you make an argument that anyone else in Imran's desperate situation at that time would have managed to convince IMF to accept a plan that does not involve currency devaluation, then I cannot argue against the hypothetical argument.

Imran's efforts to build a dam and fix electricity leakage issues are impressive indeed. But those are civil infrastructure related, not economic measures that I was hoping to hear. I do not know about political achievements of his predecessors to say this is significantly better than them. I see that you are clearly impressed, so that is cool.

Let me give you an example of what I hope to hear. GOI taxes petrol at 100% and pumps this money into PLI scheme to promote identified export sectors. I'm personally not a fan of this scheme, but have to admit that this is a bold political move that shows conviction behind their economic policy. Time will tell if it fails or succeeds. This is the type of measure that I've been hoping to hear from PTI supporters here to directly correlate exports with exclusive policy from Imran.

 

[Big_bud]

If you make an argument that anyone else in Imran's desperate situation at that time would have managed to convince IMF to accept a plan that does not involve currency devaluation, then I cannot argue against the hypothetical argument.

Imran's efforts to build a dam and fix electricity leakage issues are impressive indeed. But those are civil infrastructure related, not economic measures that I was hoping to hear. I do not know about political achievements of his predecessors to say this is significantly better than them. I see that you are clearly impressed, so that is cool.

Let me give you an example of what I hope to hear. GOI taxes petrol at 100% and pumps this money into PLI scheme to promote identified export sectors. I'm personally not a fan of this scheme, but have to admit that this is a bold political move that shows conviction behind their economic policy. Time will tell if it fails or succeeds. This is the type of measure the I've been hoping to hear from PTI supporters here.

Governments agree but they don't always fully deliver to the plan, that's normal and keep happening. You have to understand this, what IMF says is not wrong. It is absolutely correct. What IMF dictates is not wrong. They simply ask you to tax your people more in order to pay back their debt. Fair enough. However, IMF is a political tool i.e. often used to push around countries that need financial support, that bit is objectionable, nothing else. Also, IMF would never give you real things to fix. IMF would never say fix your electricity line losses, improve your collections. IMF would simply say, increase rate of electricity to pay us back more. (Counter productive as it kills economy) Hence fixing loss causing issues of state owned institutions is a big thing not small. If electricity is cheap, in future economy would boost because of it.

Another financial achievement of PTI, record tax collection.


Pakistan has lower per capita income than India. Although I'd say both sides have a lot of gap between rich and poor. The lower class of India won't be any better than Pakistan's lower class. However, measures like taxing fuel 100% hurt everyone and poor would be affected more than the rich although it is a great way to raise some money. Government should rather work on incremental tax system. Khan also talked about incremental taxation a lot. Tax rich more and spend on poor for an equitable growth of society. However in today's society and financial system, its easier said than done. Wealth is held in the hands of a few. This is a capitalistic economic system. If you try to tax them, they are able to punish governments in pain staking ways. Wealthy elites have their influence on stock market, market associations, media etc, everywhere. You try to get money out of them, they turn against you. Eg. if Modi tries to tax Ambani, Ambani would pack up his factories and take them to Nepal/Bangladesh or anywhere else where he would have to pay lower taxes and make more profits. For any politician doing the right thing is very difficult.

Pakistan needs to fix loss making institutions. Gas, water, electricity - 3 inputs for any industry. These institutions should be self sustained, non-loss making. And per unit price of their production should be low for publics to pay. Pakistan needs to industrialise and grow its exports. Pakistan needs to recover income tax and GST on all sales. Pakistan's collections are very low. Despite the fact Khan collected record tax. It is said that some less than 1% people pay income tax in Pakistan. Controlling corruption is also very very important. Pulling money out of real estate and investing it in industry is also very important. Khan needed majority government for a lot of this. He was handicapped to begin with.

 

[Wood]

Governments agree but they don't always fully deliver to the plan, that's normal and keep happening. You have to understand this, what IMF says is not wrong. It is absolutely correct. What IMF dictates is not wrong. They simply ask you to tax your people more in order to pay back their debt. Fair enough. However, IMF is a political tool i.e. often used to push around countries that need financial support, that bit is objectionable, nothing else. Also, IMF would never give you real things to fix. IMF would never say fix your electricity line losses, improve your collections. IMF would simply say, increase rate of electricity to pay us back more. (Counter productive as it kills economy) Hence fixing loss causing issues of state owned institutions is a big thing not small. If electricity is cheap, in future economy would boost because of it.

Another financial achievement of PTI, record tax collection.


Pakistan has lower per capita income than India. Although I'd say both sides have a lot of gap between rich and poor. The lower class of India won't be any better than Pakistan's lower class. However, measures like taxing fuel 100% hurt everyone and poor would be affected more than the rich although it is a great way to raise some money. Government should rather work on incremental tax system. Khan also talked about incremental taxation a lot. Tax rich more and spend on poor for an equitable growth of society. However in today's society and financial system, its easier said than done. Wealth is held in the hands of a few. This is a capitalistic economic system. If you try to tax them, they are able to punish governments in pain staking ways. Wealthy elites have their influence on stock market, market associations, media etc, everywhere. You try to get money out of them, they turn against you. Eg. if Modi tries to tax Ambani, Ambani would pack up his factories and take them to Nepal/Bangladesh or anywhere else where he would have to pay lower taxes and make more profits. For any politician doing the right thing is very difficult.

Pakistan needs to fix loss making institutions. Gas, water, electricity - 3 inputs for any industry. These institutions should be self sustained, non-loss making. And per unit price of their production should be low for publics to pay. Pakistan needs to industrialise and grow its exports. Pakistan needs to recover income tax and GST on all sales. Pakistan's collections are very low. Despite the fact Khan collected record tax. It is said that some less than 1% people pay income tax in Pakistan. Controlling corruption is also very very important. Pulling money out of real estate and investing it in industry is also very important. Khan needed majority government for a lot of this. He was handicapped to begin with.

For the last twenty years or so, it is the debtor countries who propose plans to IMF. IMF will approve or reject plans and suggest ways for countries to make an agreeable plan for pay back. The idea that IMF is a political tool is overblown. It can only be so when uncle Sam explicitly tries to give special concession for friendly states.

Discussion about direct vs indirect taxation is a different topic. After GDP re-basing, I expect tax to GDP ratio to have gone down. Regardless, that is an administrative issue.

Managing a minority government is a required competence for politician. I can give an Indian example again. In 90s, India went to IMF. India was ruled by a minority government at that time. There were severe opposition to economic reforms from the left who were crucial for coalition. Yet, India opened its economy to reverse the trend. This economic reform directly changed India. If Imran has some kind of structural reform like this to show for, then I'll agree that he was good for your economy. Simple deregulation of currency is not that impressive in my opinion. I think the current government will continue with that because they also do not have a choice in the matter.

 

[nahtanbob]

He who takes loan also takes orders.....

The common folks, used to getting IK subsidies, will now follow him in the long march....

Looks like IK has created tons of booby traps for these Sheyatin....

Well done IK....

all Imran Khan has done is to habituate the lazy bums with cheap drugs. you will have fun weaning folks off drugs.

 

[Ssan]

For the last twenty years or so, it is the debtor countries who propose plans to IMF. IMF will approve or reject plans and suggest ways for countries to make an agreeable plan for pay back. The idea that IMF is a political tool is overblown. It can only be so when uncle Sam explicitly tries to give special concession for friendly states.

Discussion about direct vs indirect taxation is a different topic. After GDP re-basing, I expect tax to GDP ratio to have gone down. Regardless, that is an administrative issue.

Managing a minority government is a required competence for politician. I can give an Indian example again. In 90s, India went to IMF. India was ruled by a minority government at that time. There were severe opposition to economic reforms from the left who were crucial for coalition. Yet, India opened its economy to reverse the trend. This economic reform directly changed India. If Imran has some kind of structural reform like this to show for, then I'll agree that he was good for your economy. Simple deregulation of currency is not that impressive in my opinion. I think the current government will continue with that because they also do not have a choice in the matter.

I think indias political economy is differently from Pakistans and has been for a long time. For one thing, india has greater wealth disparity- this is affected in its power corridor too. India has had fewer poverty reducing initiatives than Pakistan and generally prices of everything across the board are more expensive in India too. This is a good thing btw - means it’s a more competitive economy that is closer to the prices on global markets.

 

[Wood]

I think indias political economy is differently from Pakistans and has been for a long time. For one thing, india has greater wealth disparity- this is affected in its power corridor too. India has had fewer poverty reducing initiatives than Pakistan and generally prices of everything across the board are more expensive in India too. This is a good thing btw - means it’s a more competitive economy that is closer to the prices on global markets.

My intent here is to not compare India's economy with that of Pakistan. That would just derail the thread. I only brought an example for type of policy moves that can be credited for directly influencing economic development. The higher growth rate in 2021 is mostly due to pent up demand. This is true for both India and Pakistan

 

[hydrabadi_arab]

Even if the infamous Dar was at helm, he would have done the same. What other brave policy moves we can attribute to Imran?

Imran Khan PTI didn't even have simple majority and even in that case all opposition needed was buying dozen MNA to throw him out. You cannot do hard painful reform in such situation.

Under N league Pakistan debt to GDP ratio have always increased manifold. See here, they inherit Pakistan with lower debt to GDP ratio and leave it with much higher for next govt to bring it down. They repeat this cycle to fund useless projects that doesn't give any return. This is why N league is known for big ticket fancy development projects in Pakistan.

another example, suddenly PTI had to pay 2-3 times more per year.

 

[Big_bud]

For the last twenty years or so, it is the debtor countries who propose plans to IMF. IMF will approve or reject plans and suggest ways for countries to make an agreeable plan for pay back. The idea that IMF is a political tool is overblown. It can only be so when uncle Sam explicitly tries to give special concession for friendly states.

Discussion about direct vs indirect taxation is a different topic. After GDP re-basing, I expect tax to GDP ratio to have gone down. Regardless, that is an administrative issue.

Managing a minority government is a required competence for politician. I can give an Indian example again. In 90s, India went to IMF. India was ruled by a minority government at that time. There were severe opposition to economic reforms from the left who were crucial for coalition. Yet, India opened its economy to reverse the trend. This economic reform directly changed India. If Imran has some kind of structural reform like this to show for, then I'll agree that he was good for your economy. Simple deregulation of currency is not that impressive in my opinion. I think the current government will continue with that because they also do not have a choice in the matter.

Read Confessions of an economic hitman by John Perkins. Its available as an audio book on YouTube as well. Your perception of things might change.