Is Pakistan facing bankruptcy?

[Kumar]

Pakistan facing bankruptcy - Telegraph

Pakistan facing bankruptcy

Pakistan's foreign exchange reserves are so low that the country can only afford one month of imports and faces possible bankruptcy.

Officially, the central bank holds $8.14 billion (£4.65 billion) of foreign currency, but if forward liabilities are included, the real reserves may be only $3 billion - enough to buy about 30 days of imports like oil and food.
Nine months ago, Pakistan had $16 bn in the coffers.
The government is engulfed by crises left behind by Pervez Musharraf, the military ruler who resigned the presidency in August. High oil prices have combined with endemic corruption and mismanagement to inflict huge damage on the economy.
Given the country's standing as a frontline state in the US-led "war on terrorism", the economic crisis has profound consequences. Pakistan already faces worsening security as the army clashes with militants in the lawless Tribal Areas on the north-west frontier with Afghanistan.
The economic crisis has already placed the future of the new government in doubt after the transition to a civilian rule. President Asif Ali Zardari has faced numerous but unproven allegations of corruption dating from the two governments led by his wife, Benazir Bhutto, who was assassinated last December.
The Wall Street Journal said that Pakistan's economic travails were "at least in part, a crisis of confidence in him".
While Mr Musharraf's prime minister, Shaukat Aziz, frequently likened Pakistan to a "Tiger economy", the former government left an economy on the brink of ruin without any durable base.
The Pakistan rupee has lost more than 21 per cent of its value so far this year and inflation now runs at 25 per cent. The rise in world prices has driven up Pakistan's food and oil bill by a third since 2007.
Efforts to defer payment for 100,000 barrels of oil supplied every day by Saudi Arabia have not yet yielded results, while the government has also failed to raise loans on favourable terms from "friendly countries".
Mr Zardari told the Wall Street Journal that Pakistan needed a bail out worth $100 billion from the international community.
"If I can't pay my own oil bill, how am I going to increase my police?" he asked. "The oil companies are asking me to pay $135 [per barrel] of oil and at the same time they want me to keep the world peaceful and Pakistan peaceful."
The ratings agency Standard and Poor's has given Pakistan's sovereign debt a grade of CCC +, which stands only a few notches above the default level.
The agency gave warning that Pakistan may be unable to cover about $3 billion in upcoming debt payments.
Mr Zardari is expected to ask the international community for a rescue package at a meeting in Abu Dhabi next month.
This gathering will determine whether the West is willing to bail out Pakistan.

 

[blain2]

On the pragmatic side, was anyone expecting anything else from a government that has been in the office for over 6 months and has yet to spell out a long term economic strategy (aside from asking for a bail out)?

If the Musharraf government had screwed up so badly and since everyone on the PPP side was saying that the previous government did screw up, then why this unending lag in getting a proper response to this downward slide?

I guess on the positive side, what comes down must go up...I am sure somehow a default will be avoided and Pakistani economy will limp back up. The upside is that the Government has already withdrawn all subsidies (the poor are going to pay for it dearly unfortunately), and has absolutely no other option but to massively expand the tax base (which all populist governments in Pakistan have been loath to doing).

 

[PeaceForAll]

On the pragmatic side, was anyone expecting anything else from a government that has been in the office for over 6 months and has yet to spell out a long term economic strategy (aside from asking for a bail out)?

If the Musharraf government had screwed up so badly and since everyone on the PPP side was saying that the previous government did screw up, then why this unending lag in getting a proper response to this downward slide?

I guess on the positive side, what comes down must go up...I am sure somehow a default will be avoided and Pakistani economy will limp back up. The upside is that the Government has already withdrawn all subsidies (the poor are going to pay for it dearly unfortunately), and has absolutely no other option but to massively expand the tax base (which all populist governments in Pakistan have been loath to doing).

I doubt if that is gng to happen with Mr.Ghadari in power. The moment he is out, the FDI will pour in imho. I do not think anything can stop pakistan's economy other than the leaders themselves! shame on them to make a tiger into a cat.

 

[maqsad]

This is a direct result of the lunatic policies of bhangeeconomics that Shopper Aziz supervised in Pakistan:


Telecom: He made sure useless junk like cellphones and cellphone support infrastructure was imported at the cost of billions per year in forex paid by the pakistani consumer. On top of that he sold off the pakistani cell and telecom market to foreigners so that even the profits obtained domestically were shipped out eventually. The net result of this "eight year plan" under Shortcut Aziz's watch is that at first it will be financed by itself as foreign investors buy up shares in the market...but after the INCOMING INVESTMENT stops(because everything that isn't nailed down has already been sold off for pennies on the dollar and nothing more can be sold) then the OUTGOING DIVESTMENT starts. This is like on a roller coaster when you go as high as you can go and then the only way to go is down like a fallingggg rockkkkkkk... Shopper Aziz and Agent Mushy got off the roller coaster just before the fall that they orchestrated. And they handed over control to a blackmailable, brain damaged retard that they pulled out of prison whose only financial skills are knowing how to use the percent button on his calculator.

Automobiles:Agent Mushy and Shopper Aziz were confronted with an economy which was a heavy net importer of Automobiles like all underdeveloped nations. Each year billions of dollars in forex were spent to import vehicles and very little was manufactured or assembled in Pakistan. There was a golden opportunity in 1999 to fix the economy by incubating a domestic automobile manufacturing industry. This would have eventually sealed up the forex bleeding in the transportation sector and even turned it to a positive income source by 2009 but no...Shopper Aziz had other plans. He "liberalized" the banking and financed industry and figured out how to import DOUBLE the amount of automobiles by manipulating the system to allow more easy car loans in large cities. So instead of having a decade when the forex bleeding from auto imports was gradually plugged this demonic duo actually sabotaged the economy further by not only exploding the import of automobiles but creating massive consumer debt at the same time! Shabash!

Steel: Shopper Aziz and Agent Mushy were trying to extend the self destructive roller coaster crashride of the pakistani economy as much as possible by bleeding it in every way imaginable and on the surgeon's table was the Pakistan Steel Mills also. I guess the plan was to also sell this off to foreigners for pennies on the dollar to finance the crazy insane consumer-oriented unbalanced economy that Shopper Aziz created--but somehow by some miracle the steel Mills Were saved by Judge Iftekhar Chaudry in one of the few acts of patriotism in pakistan's top leadership. Of course he was punished for putting Pakistan first and acting in it's interests but hey...at least you can give Aziz and Mushy some credit for trying!

Energy: Well what can I say. If Kalabagh damn or Basha damn or both had been built then firstly there would be no brownouts and secondly the insane amount of oil imported for electricity generation would be much lower, helping with forex. But as we have seen even though Mushy had no problem ordering soldiers to shoot civilians or giving the OK to the CIA to bomb random houses, when it came to actually doing something good for the economy Mushy was suddenly "I have to listen to the voice of the people" about it. So in eight years he turned pakistan into an energy surplus economy to a brownout-laden economy. Shabash. Oh and he also tried to sell the second largest coal reserves in the world to some Indian was it? That wasn't allowed to happen but he still managed to stop development of it.


So in case anyone has been fooled into thinking that the economy was strong when it was handed over to the PPP/PML and it is their stupidity that is causing the forex bleeding you should ask yourself, if it was so super strong then how could it start burning up so quickly in just 6 months? The answer is simple....for the last 8 years the economy had been built on lies, selling out to foreigners, consumerism, suppression of industrialization, suppression of indigenous energy development, selling out of financial institutions of foreigners? It was a bunch of ticking economic timebombs set to go off in the roller coaster crash when the "dynamic duo" left their kursis.

 

[cooldude]

I don`t think Pakistan will go bankrupt, but according to me they face bankruptcy because of following reasons:

Last few years Pakistan was growing at a very fast pace but the government (Musharraf) spent very little money in improving the productivity of the country, buying technology, building power plants or educating it`s people. Instead they chose to spend money on defense. It`s arguable that spending so much money on military is good or bad but I need it amazing with 10% GDP compared to India, Pakistan was able to spend so much money on military.

Other problems were they did not think building forex reserves were important. And finally the private sector in Pakistan is not big enough to start buying or developing advanced technology or to make big investments. And thus they become dependent upon FDI to improve the productivity of the country.

As far as the FDI were concerned Benazir Bhutto`s assassination scared them away and with or without Zardari it will take Pakistan a lot of effort to get them back, not to mention that they are busy fighting the financial fires in their own backyard.

I support disinvestment of public enterprise but it wasn`t done enough to start seeing the benefits of disinvestment. Opening of financial sector could have also helped but even that wasn`t pursued.

 

[AgNoStiC MuSliM]

^^^ Actually its for pretty much the obvious reasons. Military spending has increased in proportion to the increase in the size of the economy, and when needed, military purchases have been scaled back - the block52 F-16 cuts, P-3b's, AEW&C's - several acquisitions cut or delayed.

I would argue that the major setbacks have been due to a loss in investor confidence due to the political instability and terrorism that has plagued Pakistan for the last year and a half, compounded by skyrocketing global food and commodities inflation, and a global economic slowdown.

It is however also true, as Blain argued, that the writing was on the wall, in terms of the economic challenges facing Pakistan, when the government came into power, and it wasted a large part of its first few months in power haggling over the judiciary restoration and Musharraf (we see now that it was really only about Musharraf).

It therefore further exacerbated the loss in investor confidence by creating a political climate that had everyone on tenterhooks - will the military back Musharraf, will the legislature be dismissed, will another military coup happen etc. etc.

Unfortunately, as bad as this government is, I do not see any way to restore investor confidence short term, and I do not see a way out of this 'confidence crisis' in a democratic government unless we let this government complete its tenure. Pakistan has to set a precedent for continuity at some point, and we need continuity of institutions along with continuity of policy.

 

[blain2]

This is a direct result of the lunatic policies of bhangeeconomics that Shopper Aziz supervised in Pakistan:


Telecom: He made sure useless junk like cellphones and cellphone support infrastructure was imported at the cost of billions per year in forex paid by the pakistani consumer. On top of that he sold off the pakistani cell and telecom market to foreigners so that even the profits obtained domestically were shipped out eventually. The net result of this "eight year plan" under Shortcut Aziz's watch is that at first it will be financed by itself as foreign investors buy up shares in the market...but after the INCOMING INVESTMENT stops(because everything that isn't nailed down has already been sold off for pennies on the dollar and nothing more can be sold) then the OUTGOING DIVESTMENT starts. This is like on a roller coaster when you go as high as you can go and then the only way to go is down like a fallingggg rockkkkkkk... Shopper Aziz and Agent Mushy got off the roller coaster just before the fall that they orchestrated. And they handed over control to a blackmailable, brain damaged retard that they pulled out of prison whose only financial skills are knowing how to use the percent button on his calculator.

Automobiles:Agent Mushy and Shopper Aziz were confronted with an economy which was a heavy net importer of Automobiles like all underdeveloped nations. Each year billions of dollars in forex were spent to import vehicles and very little was manufactured or assembled in Pakistan. There was a golden opportunity in 1999 to fix the economy by incubating a domestic automobile manufacturing industry. This would have eventually sealed up the forex bleeding in the transportation sector and even turned it to a positive income source by 2009 but no...Shopper Aziz had other plans. He "liberalized" the banking and financed industry and figured out how to import DOUBLE the amount of automobiles by manipulating the system to allow more easy car loans in large cities. So instead of having a decade when the forex bleeding from auto imports was gradually plugged this demonic duo actually sabotaged the economy further by not only exploding the import of automobiles but creating massive consumer debt at the same time! Shabash!

Steel: Shopper Aziz and Agent Mushy were trying to extend the self destructive roller coaster crashride of the pakistani economy as much as possible by bleeding it in every way imaginable and on the surgeon's table was the Pakistan Steel Mills also. I guess the plan was to also sell this off to foreigners for pennies on the dollar to finance the crazy insane consumer-oriented unbalanced economy that Shopper Aziz created--but somehow by some miracle the steel Mills Were saved by Judge Iftekhar Chaudry in one of the few acts of patriotism in pakistan's top leadership. Of course he was punished for putting Pakistan first and acting in it's interests but hey...at least you can give Aziz and Mushy some credit for trying!

Energy: Well what can I say. If Kalabagh damn or Basha damn or both had been built then firstly there would be no brownouts and secondly the insane amount of oil imported for electricity generation would be much lower, helping with forex. But as we have seen even though Mushy had no problem ordering soldiers to shoot civilians or giving the OK to the CIA to bomb random houses, when it came to actually doing something good for the economy Mushy was suddenly "I have to listen to the voice of the people" about it. So in eight years he turned pakistan into an energy surplus economy to a brownout-laden economy. Shabash. Oh and he also tried to sell the second largest coal reserves in the world to some Indian was it? That wasn't allowed to happen but he still managed to stop development of it.


So in case anyone has been fooled into thinking that the economy was strong when it was handed over to the PPP/PML and it is their stupidity that is causing the forex bleeding you should ask yourself, if it was so super strong then how could it start burning up so quickly in just 6 months? The answer is simple....for the last 8 years the economy had been built on lies, selling out to foreigners, consumerism, suppression of industrialization, suppression of indigenous energy development, selling out of financial institutions of foreigners? It was a bunch of ticking economic timebombs set to go off in the roller coaster crash when the "dynamic duo" left their kursis.

Yar get over your heartburn about Musharraf and Shaukat Aziz and their policies. You start with structural reforms immediately if you think things are that bad. In the case of Musharraf, he started doing that in 2000, immediately after taking over. Your current leadership seems addicted to "bhang" and incapable of taking a direction. Your President was a sure shot for failure as he inspires very little confidence amongst the investor community. On things that he needs to be bold about, he is totally missing the boat. So while you can spend next 8 years talking ill about the economy of Pakistan in the times of Musharraf/Shaukat (funny that when Musharraf was around, this immensely objective critique was entirely missing) it won't do you any good as all those that the present government is expecting to get help from are not buying this argument that everything is the fault of the previous government.

Most of the foreign investors actually pulled out of Pakistan being pissed off about the idiotic and vindictive politics being played out in Pakistan by this current team of incompetent assholes all the way from Zardari and that idiot of a PM to the the rest of the PPP team (PML-N is also party to this). Investors from the Middle East pulled out since they really were pissed off at the way the whole game was played out. The KSA leadership has been balking at providing oil lending facilities because they are sick and tired of the immaturity of Pakistani politicians and how they let the economy go rudderless for all this time since taking over from the previous government. There is a donor fatigue in the true sense of the term with regards to Pakistan.

The mood is to let Pakistan default so these idiots in government feel the pain and get off their ***** and do something. Bail out will again allow these idiots to waste the funding and take it easy. Most of the Friends of Pakistan are of the opinion that the policies of the past were actually not that bad. What Pakistan needed was consistency and since this democracy genie was riding everyone nuts in Pakistan, these friends of Pakistan are of the opinion to let things take their natural course and have Pakistanis sort this out on their own....thus you hear the desperate claims by Zardari linking Pakistan's economic failure to the failure in the GWOT and what not. Asking for $100 Billion is a pipe dream. He neither inspires the confidence in others to lend, nor is he capable of handling this money in a transparent way. Add to this the fiscal contraction being experienced everywhere and you start getting an idea that this desperate request for the bail out will go nowhere. Pakistan will be given a bare lifeline to limp around by these friends (if not allowed to totally default, but beyond that, most wont do anything). Pakistan has to fix this on her own this time around.

 

[Neo]

Economists say Pakistan not going to default​

KARACHI (October 08 2008): Economists have rejected the impression that Pakistan is going to default, saying that it has the ability to lure huge foreign inflows and pay off its debts. They said that despite the declining trend in the country's foreign reserves, it is expected that country has ability to bring huge foreign inflows from some international financial institutions to meet its requirements.

"Now-a-days rumours of Pakistan's default is on rise due to the balance of payment and liquidity difficulties, many questions have been raised over Pakistan's ability and willingness to honour its upcoming 500 million dollars, Euro bond debt obligation," they said.

They, however, made it clear that there is not a single chance of default and we believed that country is still in a position to fulfil its commitments with the foreign institutions.

On October 6, 2008 Standard & Poors has revised down Pakistan's credit rating from B to CCC+, the second downward revision since January 2008. Rising external vulnerability on the back of a thin liquidity cushion is the primary cause of the rating adjustment.

"We believe the recent 500 million dollars disbursement from ADB, encouraging statements from the World Bank, and the formation of the Friends of Pakistan consortium led by G-7, China and Middle-Eastern countries will at least help Pakistan to honour upcoming debt obligations and the balance of payment financing crisis," said Muzamil Aslam, an economist.

He said that still the IMF also has not closed its doors on Pakistan for financial assistance and a risk to this exceptional financing is Pakistan's relationship with the US, which has been under some strain recently. A rating downgrade reduces a country's ability to tap money through remittance securitization bonds, slowing down the rate of foreign investment and privatisation, Muzamil said. He said that S&P step could further raise concerns over external liability and prompt dollarization and speculation in the forex market.

 

[cooldude]

Economists say Pakistan not going to default​

KARACHI (October 08 2008): Economists have rejected the impression that Pakistan is going to default, saying that it has the ability to lure huge foreign inflows and pay off its debts. They said that despite the declining trend in the country's foreign reserves, it is expected that country has ability to bring huge foreign inflows from some international financial institutions to meet its requirements.

"Now-a-days rumours of Pakistan's default is on rise due to the balance of payment and liquidity difficulties, many questions have been raised over Pakistan's ability and willingness to honour its upcoming 500 million dollars, Euro bond debt obligation," they said.

They, however, made it clear that there is not a single chance of default and we believed that country is still in a position to fulfil its commitments with the foreign institutions.

On October 6, 2008 Standard & Poors has revised down Pakistan's credit rating from B to CCC+, the second downward revision since January 2008. Rising external vulnerability on the back of a thin liquidity cushion is the primary cause of the rating adjustment.

"We believe the recent 500 million dollars disbursement from ADB, encouraging statements from the World Bank, and the formation of the Friends of Pakistan consortium led by G-7, China and Middle-Eastern countries will at least help Pakistan to honour upcoming debt obligations and the balance of payment financing crisis," said Muzamil Aslam, an economist.

He said that still the IMF also has not closed its doors on Pakistan for financial assistance and a risk to this exceptional financing is Pakistan's relationship with the US, which has been under some strain recently. A rating downgrade reduces a country's ability to tap money through remittance securitization bonds, slowing down the rate of foreign investment and privatisation, Muzamil said. He said that S&P step could further raise concerns over external liability and prompt dollarization and speculation in the forex market.

Economist also said Lehman can never go bankrupt.

 

[AgNoStiC MuSliM]

Economist also said Lehman can never go bankrupt.

Yeah and it is some economists who are saying that Pakistan will default.

Why believe one set over the other?

My guess is economists don't always agree, since they interpret and weigh economic and political indicators differently.

Its an opinion counter to the pessimistic opinion at the beginning of the thread, thats all.

 

[Spring Onion]

Actualy we had never thought of putting our economy on track to self-sustained growth.

We had been and still we go all dancing over the temporary bubbling of our economy.
The temporary bubble is the cause of such kind of balance of payment crisis.

I would not call it bankcruptcy but balance of payment crisis.
I remember once i was talking to my Indian friend and we were discussing the same crisis which had gripped India in 1991 when it had only 30 billion dollars left with.
But then India had taken some strong and solid measures which had helped her.

But alas i am sad to think that our current government of Zardari is still looking for the same shortsighted policy to overcome this crisis.

(i am not well versed with economy things so if i am wrong in above post my appology for that )

 

[asaad-ul-islam]

This is a direct result of the lunatic policies of bhangeeconomics that Shopper Aziz supervised in Pakistan:

are you done being stupid? okay because if you are, I'll be able to go over this with you.

Telecom: He made sure useless junk like cellphones and cellphone support infrastructure was imported at the cost of billions per year in forex paid by the pakistani consumer. On top of that he sold off the pakistani cell and telecom market to foreigners so that even the profits obtained domestically were shipped out eventually. The net result of this "eight year plan" under Shortcut Aziz's watch is that at first it will be financed by itself as foreign investors buy up shares in the market...but after the INCOMING INVESTMENT stops(because everything that isn't nailed down has already been sold off for pennies on the dollar and nothing more can be sold) then the OUTGOING DIVESTMENT starts. This is like on a roller coaster when you go as high as you can go and then the only way to go is down like a fallingggg rockkkkkkk... Shopper Aziz and Agent Mushy got off the roller coaster just before the fall that they orchestrated. And they handed over control to a blackmailable, brain damaged retard that they pulled out of prison whose only financial skills are knowing how to use the percent button on his calculator.

the govt. is SUPPOSED to pay for its imports, in case you did not notice. that's why we are loosing valuable exchange, because we are paying for imports that outstrip our own total production and exports. why is that? it's because of the flight of capital in the recent six months due to political instability. Privatization of cell and telemarketing companies has nothing to do with the economy.

this is the same retarded excuse on the PPP-manifesto, "Musharraf made Pakistan into consumer economy and not cared for exports". I intentionally wrote that way in a language you can understand, jiyala language.

Automobiles:Agent Mushy and Shopper Aziz were confronted with an economy which was a heavy net importer of Automobiles like all underdeveloped nations. Each year billions of dollars in forex were spent to import vehicles and very little was manufactured or assembled in Pakistan. There was a golden opportunity in 1999 to fix the economy by incubating a domestic automobile manufacturing industry. This would have eventually sealed up the forex bleeding in the transportation sector and even turned it to a positive income source by 2009 but no...Shopper Aziz had other plans. He "liberalized" the banking and financed industry and figured out how to import DOUBLE the amount of automobiles by manipulating the system to allow more easy car loans in large cities. So instead of having a decade when the forex bleeding from auto imports was gradually plugged this demonic duo actually sabotaged the economy further by not only exploding the import of automobiles but creating massive consumer debt at the same time! Shabash!

my goodness, you are so ignorant. most cars are produced in Pakistan, toyota, suzuki, and other Japanese car companies have their own production plants inside Pakistan. as a matter of fact, due to Shaukat Aziz's import substitution policy, we have more production plants in Pakistan than in the past. We also have some of our own indigenously-developed cars (bar the engine), Mehran, and others I don't know of.

the only cars imported were either european cars of high quality, such as mercedes, or new Japanese cars such as the new Toyota Corolla. The cars can be afforded by the upper class with good credit. keep in mind, imports of expensive cars are always at a minimum.

Steel: Shopper Aziz and Agent Mushy were trying to extend the self destructive roller coaster crashride of the pakistani economy as much as possible by bleeding it in every way imaginable and on the surgeon's table was the Pakistan Steel Mills also. I guess the plan was to also sell this off to foreigners for pennies on the dollar to finance the crazy insane consumer-oriented unbalanced economy that Shopper Aziz created--but somehow by some miracle the steel Mills Were saved by Judge Iftekhar Chaudry in one of the few acts of patriotism in pakistan's top leadership. Of course he was punished for putting Pakistan first and acting in it's interests but hey...at least you can give Aziz and Mushy some credit for trying!

is this some sort of joke? "consumer-oriented unbalanced economy", wtf? what does the privatization of Pakistan Steel Mills have to do with the economy? You are reading everything exactly off the PPP manifesto! Every economy is a consumer economy, every country has consumers! besides, where is your hero Chief Justice?!

Energy: Well what can I say. If Kalabagh damn or Basha damn or both had been built then firstly there would be no brownouts and secondly the insane amount of oil imported for electricity generation would be much lower, helping with forex. But as we have seen even though Mushy had no problem ordering soldiers to shoot civilians or giving the OK to the CIA to bomb random houses, when it came to actually doing something good for the economy Mushy was suddenly "I have to listen to the voice of the people" about it. So in eight years he turned pakistan into an energy surplus economy to a brownout-laden economy. Shabash. Oh and he also tried to sell the second largest coal reserves in the world to some Indian was it? That wasn't allowed to happen but he still managed to stop development of it.

Musharraf "had no problem ordering around soldiers to shoot civilians", wtf? so you think suicide acts of terror against innocents, throwing a grenade into a masjid for taraweeh during Ramadan, blowing up girl schools, or training child suicide bombers under the guise of memorizing the Qur'an is justified? slaughter these terrorists with chainsaws and drills for all I care, it won't even phase me. that's how cold-hearted I get because of my hatred for these beasts.

for energy, Kalabagh dam would have been built if we can get over ethnic greed! tell me, what has happened with the Kalabagh issue since the new govt. took over? all of these nuclear power , solar power, and wind power agreements were inked during Musharraf's time, prove me otherwise!

So in case anyone has been fooled into thinking that the economy was strong when it was handed over to the PPP/PML and it is their stupidity that is causing the forex bleeding you should ask yourself, if it was so super strong then how could it start burning up so quickly in just 6 months? The answer is simple....for the last 8 years the economy had been built on lies, selling out to foreigners, consumerism, suppression of industrialization, suppression of indigenous energy development, selling out of financial institutions of foreigners? It was a bunch of ticking economic timebombs set to go off in the roller coaster crash when the "dynamic duo" left their kursis.

what the hell are you talking about? so reports from independent financial institutions, foreign investments from abroad, the incredible growth and resilience of the economy during the past 7 years was a scam! Ya Allah, I had no idea such ignorance and stupidity existed amongst the masses! did Shaukat Aziz make a secret agreement with independent financial institutions to make up numbers about Pakistan's growth! or was Pakistan's economy ailing for the past 7 years and Shaukat Aziz just made it look like it was growing!

how did the economy just rapidly die during the past six months, I'll show you!

Basic comparison of 1999 and 2007


Pak Economy in 1999 was: $ 75 billion
Pak Economy in 2007 is: $ 160 billion


GDP Purchasing Power Parity (PPP) in 1999: $ 270 billion
GDP Purchasing Power Parity (PPP) in 2007: $ 475.5 billion


GDP per Capita in 1999: $ 2,000
GDP per Capita in 2007: $ 3,004


Pak revenue collection 1999: Rs. 305 billion
Pak revenue collection 2007: Rs. 708 billion


Pak Foreign reserves in 1999: $ 700 million
Pak Foreign reserves in 2007: $ 17 billion


Pak Exports in 1999: $ 7.5 billion
Pak Exports in 2007: $ 18.5 billion


Textile Exports in 1999: $ 5.5 billion
Textile Exports in 2007: $ 11.2 billion


KHI stock exchange 1999: $ 5 billion at 700 points
KHI stock exchange 2007: $ 70 billion at 14,000 points


Foreign Direct Investment in 1999: $ 1 billion
Foreign Direct Investment in 2007: $ 8 billion


Debt servicing 1999: 65% of GDP
Debt servicing 2007: 26% of GDP


Poverty level in 1999: 34%
Poverty level in 2007: 24%


Literacy rate in 1999: 45%
Literacy rate in 2007: 53%


Pak Development programs 1999: Rs. 80 billion
Pak Development programs 2007: Rs. 520 billion
________________________________________
a friend of mine made this prediction, it's about our reserves.

16-Nov $16.49
15-Jan $15.50
20-Mar $13.80
31-Mar $13.30
3-May $12.26
10-May $12.20
22-May $11.89
2-Jun $11.18
7-Jun $10.95
12-Jul $10.83
17-Jul $10.72
7-Aug $10.16
15-Aug $9.92
21-Aug $9.57
15-Sep $9.07
15-Oct $8.57
15-Nov $8.07
15-Dec $7.57

it's only a matter of time! so which general will take over? I don't think Kiyani is a good choice, I hate his posture! I'd still opt for Musharraf, but he's retired now.

Maybe he can still come in if the army takes over and holds new elections! I heard the army is seriously cosidering the Bangalesh model, where the army runs things under civilian cover, smart idea!

 

[Spring Onion]

great post. Now im only wondering that if we are in balance of payment crisis what we are going to do ??

Go for borrowing of Gold pledg ????

 

[keeninterest]

What most miss here is that the pakistani rupee has depreciated by a good 30%, since the time the present set up took over, and if one was to do some simple calculations it would show that $15B foreign exchange inherited by the present setup would look like $10.5B at 78 rupees to a dollar, that means that a good $4.5B have in fact not left the shores of Pakistan as pretended to be by most, this further shows that the investor confidence has not been lost to the extent as all the world media likes us to believe.

Ok, now even if $8.1B was to be converted to the older exchange rate (rs60/dollar) then that would mean the present forex stands at 10.5B or if we do it the other way round and calculate that 15B at the present exchange rate then that would stand at 11.5B, so its certainly not as if the forex of Pakistan in Pakistani rupee terms has left the shores, the actual hit is some thing like 30% or there about, not 50% as most r saying.

No one for a minute doubts that the mess that Pakistan is in, has a lot to do with the political upheaval that was caused post the present set up came to existence but it would be wrong to suggest that all the wrong doing was done by the present setup. Assassination of benazir was a big set back and the fall out of violence post the assassination and the government unable/unwillingness to handle the situation complicated the matters which logically should not have been allowed to happen, one would wonder, was that situation allowed to prevail by the previous setup so as to gain some precious brownie points in the political backdrop, this part will always remain unanswered. Post the formation of this setup, the only agenda of chuck out mushy and the lawyers agitation worked as fuel to fire and then there is the global angle of economic crisis and also the price of crude which at one point in time was at a record high of $147 to a barrel, sadly for Pakistan the timing of all this was not right, probably if all these situations had featured one by one after a gap of some time from one another, then for sure no one would have been talking about bankruptcy, its just the timing which has gone wrong.

Though the good thing that has come out of this crisis is the tightening of subsidies, which in other circumstances would have not happened, this will help Pakistani government on the long terms basis once this crisis is over, but just in case the country was to default then well there is a big-big issue at hand.

 

[batmannow]

Banks capable of absorbing market shocks, says SBP
DAWN.COM
October 08, 2008 Wednesday Shawwal 08, 1429
By Our Staff Reporter

KARACHI, Oct 7: The resilience of Pakistan’s banking sector will enable it to absorb market shocks and adverse macro-economic conditions, says State Bank Governor Dr Shamshad Akhtar.

In a press statement issued by the central bank on Tuesday, Dr Akhtar said the capability had been achieved through a continuous financial reform process pursued over the past few years. “There should not be any cause for concern about the stability of the banking system in the coming days,” she said.

The statement comes at a time when the developed world is in the grip of a financial turmoil and even large banks are facing a serious liquidity crunch, causing stocks exchanges the world over to nosedive.

The SBP governor said that Pakistan’s banking system was showing a “strong performance and holds a promising outlook”.

Dr Akhtar said that investor’s confidence in the banking system remained unshaken and they had injected an additional capital of about $500 million since 2006 that coupled with retained earnings improved the banks’ capital base.

The banking sector, she said, had strong capital adequacy, well above the minimum requirement. “The capital adequacy ratio is 12.1 per cent as of June 2008 which is well above the international benchmark.

“The non-performing loans ratio and the ratio of non-performing loans to capital are also quite low and within acceptable ranges.

“The (net) infection ratio in June 2008 has improved to 1.1 per cent from 1.6 per cent in December 2006, signifying that the banks have set aside more reserves out of their earnings to cover the increase in non-performing loans. Accordingly, the non-performing loan coverage and capital impairment ratios have also improved,” the SBP governor said.

Pakistani banks, Dr Akhtar said, largely focussed on conventional lending and remained unexposed to sub-prime credit instruments in the international market. The lending and investments of banks were subject to stringent prudential SBP regulations which prohibited the banks from clean lending and investment in low-quality assets.

She said banks were required to recognise loan losses and provide for these losses in line with the established best practices.

According to the SBP governor, the State Bank’s on-site inspection and off-site supervision wings kept a close watch on the state of each bank and the banking system, to avert any risk to the banking system’s stability.

In 2007, she said, SBP made loan provisioning requirements more stringent to create adequate cushions, enabling the banking system to withstand any potential credit adversity. An analysis of the system suggested that it could withstand any number of shocks without losing its solvency, Dr Akhtar said.

Referring to some recent pressures on money market rates, she said that these mainly pertained to the “seasonal factor of cash withdrawal for Eid”. In order to meet their requirements for Eid preparations, depositors tended to withdraw large sums from the banking system, creating a liquidity crunch for a few days after Eid. This situation, however, reverses in due course of time as the funds ultimately return to the banking system.

“Public at large should cooperate and should help in channelling liquidity within the formal system.” The SBP governor also urged banks to launch aggressive deposit mobilisation efforts.