Pak plans to seek USD 15 bn in new loans to pay external public debt

[Salman876]

Very simplistic solution, what do you want to do with your retired father, old mother, home making spouse and finally your young kids....

Everyone becomes retired, old and kid when it comes to work.

 

[volatile]

I understand your viewpoint. But you are oversimplyfing things. Has this model resulted in GDP to debt ratio reduction in PPP or PLMN term afterwards? Its all about the balance. Has our external deficit situation this dire in his tenure. Solely relying on import expansion without taking into account and strangulating your own local and export industries is a formula for disaster, it only leads to one end.

Bhai Im not defending or propagating any one ,Im just sharing the economic model Pakistan has for the past 20 years which was kind off filling smaller hole withbigger hole concept ,real issue remains the non development spending till the time it will not be controlled we will end up like this .

2nd please take into consideration type of investment or financing taken and its contribution to your economy. Electricity was in no doubt the need of the hour, but it has meet certain merits and be sustainable to our local economy. Was the debt taken really beneficial in Quaid e Azam solar park or Lahore metro train, choosing imported coal instead of thar local?

When i say improve your knowledge it means self studying avoiding Klasra shit .For Electricity all projects are IRR based and on IPP policy again which was done by General Musharaf regime .IRR doesnt bother your loan protfolio but in later you need to buy electricity which was 8 cents at that time & 65% thermal efficiency better than Khusro bhaktiar`s and Razaq Dawood`s thermal power plants but still Govt is issuing them PO and furnace oil .Local Coal has higher sulphur content then imported one and moisture levels are higher as well so feasibility was in question mark .for Metro it is debatable but hey we have BRT as well .

data I shared is for the MUST BE PAID BACK 28 billion! A 2017 article! pmln was still in powa.

what! sukuk with 450 million dollar interest? are you ok? then to put the cherry on the cake a billion in bills!

?? what has this got to do with what is scheduled to be paid back?

are you now just sharing any odd article. what has this got to do with miftah saying that they falsely kept the rupee floated?


another thing to add is that orange train! the LNG deal with qatar!

Cherry picking things which are good for argument is not an ideal way

Dollar is an international currency, I fully support that we should have bilateral currency agreements but we did not. We can negate some of the effects of out import bill by local currency arrangements. Our loans and imports have to be paid back in dollars. Our exports are in dollars. That's why artificially subsidizing dollar has such a huge impact on out local industry and economy.

You need to see where we are buying and what ,we buy 16 Billion US $ worth of items from China ,and China was ok with idea of trade in Yuan.

Regarding your point that the debt to GDP ratio is going up. It is bound to grow, there is no way around it in the short term. It is indicative of the deep imbalances in our economy.
We have to take loan to balance our foreign deficit we are in negative. We are even taking loans to pay interest on our existing loans. Than to pay the principal amount as well. This is a domino effect. The CLASSIC DEBT TRAP. Our current exports and remittances are not able to sustain this load. To reach an equilibrium we need time and serious efforts in our export industry which takes time as it was in recession and reduction in imports which were growing exponentially. There is no short cut.

Can you suggest an alternate solution to our problem. I am all ears and welcome healthy criticism.

Its called Dollar trap i have tried to answer in above post that you need to see what you are importing and in what currency ,India trades in basket of currency so we can also .its self imposing .For exports we need infrastructure investment and it will always dis balance trade balance since this sector has no or little investments till the time whole things will be wramped up we require couple of 100s of billion US$ for industry .e.g cost of one petro chemcial complex (which is absent in Pakistan) is closed to 60 to 70 Billion US$ .a Refinery can cost 10 Billion US$ a fertilizer plant 3/4 Billion US$ .Textile value addition can cause 30/40 billion US$ a manufacturing setup smaller scale can go uppto 500 Mil US$ easily .So understand these investments have to done irrespective of fact and real issue remains the managing of Dollar you cant free float dollar in Pakistan economy

 

[AZ1]

I mean we Peshawaris don't even have BRT so Punjabis are better that they have roads and cheap metro train.

8 years and we only received a matric pass as education minister. Now that's what i call vision that nobody else has.

BRT is like a corruption goldmine for PTI. And the best part is nobody even questions them.

Court is open also judges are free. Why dont take the case in lahore court lol? Get your decision and hang the culprit.

As for cheap travel lahore. Then pay your burden yourself. Why should 22 crore people of pakistan should suffer so that few dozen people can enjoy cheap traveling which has no return rather every year run on subsidy.

 

[wali87]

I completely agree with you bro. I voted for PTI because i ate up everything Imran Khan spoke and used to hate Nawaz Sharif blindly thinking everything he did was wrong. I even believed that Nawaz Sharif should ride on a cycle because Imran Khan told me x country's PM rides on a cycle.

When a train accident would happen, then a whole army of reporters would rush to Bani gala and Imran Khan would give us lectures on West does this, India did this, minister resigns so inquiry can go on.

When it finally came time of Imran Khan government, i was ecstatic, oh yar now Imran Khan will show what government really is like and he will make Riasat e Medina.

****, he goes on helicopter instead of a car, forget a bicycle lol, that Sheikh Rasheed smokes a cigar everytime there's a train accident, what resignation?

Imran Khan proved to be even worse than any other we had experienced. Allah ki panah, we can't even speak about the wrongs of Imran Khan without being insulted by his cult, at least we could insult Nawaz and Zardari. It's become blasphemy to speak against Imran Khan.

We were too blind in hatred of Nawaz Sharif. Completely blind that we couldn't see his good. Imran Khan used to say PMLN has been ruling Punjab for 10 years, what have they done? Well, Imran Khan has been ruling KPK for 8 years now. What has he given us except make it Mohanjadoro. I still go to Punjab for healthcare, our people still go to Punjab for education, when people get rich they go to Punjab because KPK is a shithole.

These worshippers of Imran Khan, they think IK will make Pakistan something if he is in government for 5/10/15 years. Stupid. Imran Khan has been in government in KPK for 8 years with full majority, still uneducated, still backwards in healthcare, backwards province. What IK will achieve is make the whole Pakistan KPK.

My friend I couldn’t have said that better. That’s exactly the mindset our people had. Blinded by Nawazs hatred and rightly so, because we as a nation are never satisfied by anything. Forget corruption, We start hating the person for why he is rich or why he is at a powerful post all due to HAsad. And in that hatred they start believing every allegation against the other person.

Our people need to stop worshipping personalities and and leaders based on how they look and what they say and judge them on their work. Instead of listening to what the media tells them, they need to look facts and figures and se if things have actually improved or have gotten worse.

 

[Arsalan]

1 . zero compromise on looted money return

IF there is any chance to bring a dime of that looted money back it will take YEARS. And this is a HUGE IF to start with. We will need something to bargain with, some serious diplomacy and relations for the countries holding billions of those dollars to give them back to us. The legal process and complications alone will take up years even if that country agrees to return the money.

2. gold from riko diq . could have been sold in intl market to raise equity

Another long term project. Its not right you need the money so send a few trucks to Riko Diq to bring some gold! The previous contracts signed are already a headache for the state. First we need to get out of that, then start the project. Again, a years long process.

3. creation of a sovereign wealth fund

Agree. This should have been done. How successful it would have been is a different debate.

4. loosen regulations to boost real estate , industry

Absolutely true. Must have been done. Need strong institutions however to ensure the loosening of regulations do not end up costing the state. However that is the job of gov. They should put checks in place and then facilitate the business.

5. loosen taxes

Agreed again, but in an ideal situation. With mounting debts, both external and internal, a huge budget deficit etc either we had to increase taxes or borrow more money OR DO BOTH. But i do agree that the increase taxes are damaging the industry. I agree to this measure only on a short term basis. The government need to start relaxing the loosen the taxes no that the initial crunch have passed. This is already under debate by the way however the COVID19 issue may delay this measure by a year or so.

6. cut down govt spending , loose the govt tit suckers like PIA, SNGPL

YES! Must be done. Do not pay heed to media and people who will cry about it, esp privatizations. Should do what needs to be done.

7. protect the rupee from mkt free fall of the speculators and whales .

Do not artificially support the rupee. That have turned into a disaster already thanks to daronomics!

went running to IMF lenders .......

Necessary evil. With no money at hand, the recovery of looted money or domestic mineral recourse exploitation a years long process (if not decades long) and no one willing to lend money to gov. (local banks denied request, IMF came up with very strict terms for loan as well) the taxes and tariffs were raised IMF door was knocked.



GOING FORWARD, i will want the government to loosen up on taxes in terms of tax percentage and get even more strict on taxes in terms of increasing tax base. Decrease tax percentage, esp as an incentive to the companies and people who have already registered encouraging more business to register to get advantage of next incentive phase. Also keep working on bringing back that looted money AND keep developing the local mineral resources. Government have done an excellent job getting out of that electricity deal with Turkey which was catastrophic. I am not sure but i think something similar have been achieved with the Qatar LNG deal too?? WE should try and wriggle our way out of the Reko Dik deal as well OR at least get them to revise terms and then start working on developing the resource on war footings. Also not give up on oil exploration. The failure of Kekra 1 seem to have take the wind out of governments sail. That should not be the case. We should keep digging and keep developing natural resources as many studies do indicate their presence. For example, remember that Chiniot Iron deposit that previous gov. went crazy about? What happened to that? Should be looked into!! Also government should start infrastructure projects even if it means borrowing money. These will start up the local industry and circulate money, and, should ensure that these projects are corruption free for a change.


@Flight of falcon @Path-Finder @araz your thoughts?

 

[Path-Finder]

Cherry picking things which are good for argument is not an ideal way

if there is no logic or substance then why other peoples time? or your own!

 

[Syed1.]

Cherry picking things which are good for argument is not an ideal way

Lol height of irony that you are saying this.


You cherry pick the growth rate during PML-N era while ignoring the exports actually dropping between 2013 to 2018, trade deficit of nearly 40b, current account deficit 20b, fiscal deficit, severe depletion in foreign exchange reserves, massive increase in debt to GDP etc etc etc

 

[AZ1]

I completely agree with you bro. I voted for PTI because i ate up everything Imran Khan spoke and used to hate Nawaz Sharif blindly thinking everything he did was wrong. I even believed that Nawaz Sharif should ride on a cycle because Imran Khan told me x country's PM rides on a cycle.

When a train accident would happen, then a whole army of reporters would rush to Bani gala and Imran Khan would give us lectures on West does this, India did this, minister resigns so inquiry can go on.

When it finally came time of Imran Khan government, i was ecstatic, oh yar now Imran Khan will show what government really is like and he will make Riasat e Medina.

****, he goes on helicopter instead of a car, forget a bicycle lol, that Sheikh Rasheed smokes a cigar everytime there's a train accident, what resignation?

Imran Khan proved to be even worse than any other we had experienced. Allah ki panah, we can't even speak about the wrongs of Imran Khan without being insulted by his cult, at least we could insult Nawaz and Zardari. It's become blasphemy to speak against Imran Khan.

We were too blind in hatred of Nawaz Sharif. Completely blind that we couldn't see his good. Imran Khan used to say PMLN has been ruling Punjab for 10 years, what have they done? Well, Imran Khan has been ruling KPK for 8 years now. What has he given us except make it Mohanjadoro. I still go to Punjab for healthcare, our people still go to Punjab for education, when people get rich they go to Punjab because KPK is a shithole.

These worshippers of Imran Khan, they think IK will make Pakistan something if he is in government for 5/10/15 years. Stupid. Imran Khan has been in government in KPK for 8 years with full majority, still uneducated, still backwards in healthcare, backwards province. What IK will achieve is make the whole Pakistan KPK.

Just recent who started worked on dams so that you can have enough water to drink and washed.

Dont cry and take a tour of orange trai mn to ease your pain.

 

[Syed1.]

You are entitled to what ever you believe in .... no matter how bizarre or untrue....but this actually made me laugh ....

“Don't also forget that many people are on payroll of PTI in other countries and that's why you see them be so vicious. “

payroll??? So I am on their payroll buddy we sitting outside working hard and sending money home make it possible for people like you to come and type on the computer .... last I checked out remittances help you pay your bills.....since people like you have never paid taxes and most likely never paid electricity bills either.
Just for the records yes I do donate to PTI and many other noble causes :...

I don't want to brag but since this person thinks we are on PTI payroll I'll have to bring it up. In last 6 months alone I have sent back $10k to support family and for donation/Zakat. It's not much, may Allah give me more strength and ability to send back more but for losers on here to come sh-t on Pakistanis living abroad on the back of which the country is still standing is quite disappointing. The around 5 million Pakistanis abroad send remittances of $20b while the 220million Pakistanis in Pakistan have an export earnings of just $22-25b. Pakistan's books won't balance if we remove these remittances. May Allah give aqal to my fellow Pakistanis.

 

[AZ1]

You are entitled to what ever you believe in .... no matter how bizarre or untrue....but this actually made me laugh ....

“Don't also forget that many people are on payroll of PTI in other countries and that's why you see them be so vicious. “

payroll??? So I am on their payroll buddy we sitting outside working hard and sending money home make it possible for people like you to come and type on the computer .... last I checked out remittances help you pay your bills.....since people like you have never paid taxes and most likely never paid electricity bills either.
Just for the records yes I do donate to PTI and many other noble causes :...

he must have electricity kunda or running from paying income taxes otherwise anyone could see who made this country defaulter almost in 2017

 

[Patriot forever]

... our loan policy. translated from Deutsche

we will keep begging IMF-
till IMF is bank-rupt

Bhai Im not defending or propagating any one ,Im just sharing the economic model Pakistan has for the past 20 years which was kind off filling smaller hole withbigger hole concept ,real issue remains the non development spending till the time it will not be controlled we will end up like this .



When i say improve your knowledge it means self studying avoiding Klasra shit .For Electricity all projects are IRR based and on IPP policy again which was done by General Musharaf regime .IRR doesnt bother your loan protfolio but in later you need to buy electricity which was 8 cents at that time & 65% thermal efficiency better than Khusro bhaktiar`s and Razaq Dawood`s thermal power plants but still Govt is issuing them PO and furnace oil .Local Coal has higher sulphur content then imported one and moisture levels are higher as well so feasibility was in question mark .for Metro it is debatable but hey we have BRT as well .


Cherry picking things which are good for argument is not an ideal way


You need to see where we are buying and what ,we buy 16 Billion US $ worth of items from China ,and China was ok with idea of trade in Yuan.

Its called Dollar trap i have tried to answer in above post that you need to see what you are importing and in what currency ,India trades in basket of currency so we can also .its self imposing .For exports we need infrastructure investment and it will always dis balance trade balance since this sector has no or little investments till the time whole things will be wramped up we require couple of 100s of billion US$ for industry .e.g cost of one petro chemcial complex (which is absent in Pakistan) is closed to 60 to 70 Billion US$ .a Refinery can cost 10 Billion US$ a fertilizer plant 3/4 Billion US$ .Textile value addition can cause 30/40 billion US$ a manufacturing setup smaller scale can go uppto 500 Mil US$ easily .So understand these investments have to done irrespective of fact and real issue remains the managing of Dollar you cant free float dollar in Pakistan economy

I completely agree with 'filling smaller holes with bigger holes' argument. But if we look more broadly we will see that majority of projects had no long term economic viability in mind rather political benefits in the short term, we ended up creating one sink hole after an another. It was mostly a political show for the gullible instead of long term planning.

Regarding Ipp's Dr Samar Mubarak interview is the best regarding Thar coal. It was intentionally ignored and funding was withdrawn, more kickbacks for imported coal ones.
Now the recent projects in pipeline according to wapda website which were approved and will come online in the coming years are mainly much cheaper thar coal based and many hydro, only 1 or 2 are imported coal and in gawadar. And yes I might be wrong but PPP tenure was the one in which policy was revised or made, plmn continued with the same policy? .
The major concern is the agreements which were signed in plmn term with payment in dollars/cents instead of rupees. High return on investment, guaranteed profits for up to 25 years. Revising these contracts is a legal battle which might end up just like kakray or reko dek. The same goes for dawood razak or khusro bhaktiar they are skinning this nation and they also hinted for a legal course of action if their contracts were terminated.

Regarding trading in yuan, yes we should be doing all we can to limit our dependence on dollar. But one thing to keep in mind is we run a huge trade deficit with China, and to fund this deficit we need to borrow yuan, and only China is source instead of international creditors. We might actually end up paying more interest on Chinese commercial loans, unless gov of China grants concessionary funds. Again there are more informed people who can comment, my understanding is basic and insufficient.

 

[Gorgin Khan]

Bro, ignore people like these. These are Munafiqeen of the highest order.

They are sitting in foreign countries or have someone in family abroad abusing the currency exchange rates and wishing PKR devalues even further so they can exploit it. If Pakistan gets destroyed, they couldn't care less as Pakistan is just a vacation resort for them.

You can see his language how much he really cares. Calling me dumb and stupid for believing in IK and blaming me. I guess he doesn't know what Islam thinks, if i am the stupid one or Imran Khan is when he will have to answer for his promises.

I have stopped giving any importance to these people. They're akin to me be very rude to some Nigerian insulting him calling him names meanwhile i am sitting in Pakistan without a care that there's an ebola outbreak happening there.

Don't also forget that many people are on payroll of PTI in other countries and that's why you see them be so vicious. In real life, you will not see anyone resort to such vile and rude behaviour because someone speaks bad against Hakim e waqt. Because they are normal people not media cell workers.

O Bhai! many people are sitting in foreign countries! The real things is they are selling us what they are doing for themselves as they are doing it for country. Believe me the conditions in which most of them are working and living is pathetic in europe and US. Nobody gives a shit who you are , Idhar a kay cotton ka jora pehn kar phannay khan ban jatain hain............ They will work in field and clean bathrooms , But they wont do it in their country So much for patriotism and counting dollars here ....

Jub kameenay Urooj patain hain, Apni awqaat bhool jatain hain
Kitnay kam zarf hay ye ghobaray , chand phoonkon say phool jatain hain

 

[Nilgiri]

Surely all that was missing from this thread was a highly educated quality comment such as above. Vielen dank fur deinen beitrag.



Clearly you have some financial knowledge but your attitude is very unpleasant. I'm currently working from home, I'm taking a break, am logged into bloomberg terminal remotely. Let me know what you which rate you're looking at, I'll have realtime market data.



LIBOR is lower on previous months, as are rates in general. Sure, but markets were troubled initially on the back of risk sentiment. Yields are low because of QE and central bank intervention in markets. APP's are continuing in Europe, Fed has stepped in US markets, PEPP is a new programme from the ECB. This is the reason yields are low, there are wider macroeconomic trends that have lowered it historically, but nothing unique from the perspective that you're using here.

Also, why are you quoting LIBOR? We don't borrow anywhere near LIBOR, EURIBOR, etc. Our sovereign debt is still expensive, latest Iss price I see is 92.8863, with yield at 7.68%, don't mislead people by suggesting we're borrowing anywhere near a lowered LIBOR rate, PAKTB 2 years ago was being priced around the same. In fact, just having looked at some Q2 2018 zero cpn 6M PAKTB, issue yield then was 6.35% whereas the latest issuance has 7.845% yield. So what exactly are you claiming here? Borrowing is cheaper for us? It's clearly not, and where it is relative to another time period, it's for a whole host of reasons, none of which contribute to this argument.

I think you are trying to put a positive spin on this when in fact, it's just a case of IK doing what exactly other Pakistani government has done since time immemorial; borrow to finance when in need is pressing. It has nothing to do with false perceptions of ability to borrow really cheaply. Also, your quote of raw yields, are you a finance guy? If you are, I'm guessing you aren't in fixed income. Cheap and expensive is not in terms of raw yield, it's usually spread vs xyz, measure, whether that's mid-swaps, LIBOR/EURIBOR etc, or comparable sovereigns. Our debt is not cheap, and this borrowing has nothing much at all to do with low yields that have resulted from CB intervention in Europe and elsewhere. @Nilgiri

Last of all, I'd ask you to tone down this sort of rhetoric:



Knowing something that others might not is not license to make such disparaging remarks. I have responded to your post without belittling you I hope, and keeping it respectful. Pls let's keep that for all members. Thanks.

Good post.

I will be having minimal presence in this forum henceforth, but you my friend can tag me and if I have anything to add or respond (nothing in this case), I will when I get to it.

 

[Jungibaaz]

Brother, in simple English can you explain the debt situation, and the new govt's response, and where does it leave the common man?

In simple terms, this new round of financing (taking loans) is not that important. What's important is that every few years or so, or at least 1-2 times per election cycle, Pakistan goes to the IMF, other multilateral lenders, or friendly countries for a bailouts. Nothing new here with IK's government.

Back in 2016 and before, I remember seeing reports from the IMF saying PKR is overvalued, trade/import balance is concerning (what we call balance of payments). Basically, Pakistan needs to dollars in order to trade, in order to buy goods (imports), and in order to earn dollars, you need to sell goods in dollars abroad (exports). You can also earn dollars in the form of investments, remittances etc. Pakistan has many times faced a crisis of too much imports and ever weakening exports. That's the crux of our problem, and unfortunately IK can't, and shouldn't be expected to change it overnight. We need long term changes and correct conditions, short term the government is doing what it has to.

You ask what this means for the common man, unfortunately, I have no good news. It means a less growth, less employment prospects, higher prices, and much higher taxes, this cycle will continue for a while. But like I said, this government has no choice, upcoming budget will be a really tough one. Awam has been hit recently with much higher taxes, record inflation and weak growth/employment. IMF is going to demand more tax increases, federal government will have to find savings (less expenditure) all while meanwhile the military is asking for more money for necessary national defence, all while covid is putting downward pressure on tax receipts.

In simple terms, if we had lots of bad credit card debt and other loans, imagine a situation where creditors are at the door demanding more money, our income has just reduced majorly, we've already spent a whole year reducing our spending, and our expenses are about to go up too. I don't envy IK's position here. My only criticism of him is his rhetoric pre-election and misleading people about what the first few years post-2018 would be like. I'm a nobody sitting at my desk and I saw this coming a mile away, he has teams of supposedly competent people, either they didn't inform us properly or they couldn't see the obvious.

Good post.

I will be having minimal presence in this forum henceforth, but you my friend can tag me and if I have anything to add or respond (nothing in this case), I will when I get to it.

Much obliged, your input is most welcome.

 

[Pakistan Space Agency]

That is fine. Atleast people have Metro Train of $4 billion and roads ka jaal.

View attachment 637544

Peshawar bus project cost goes up to Rs70.7 billion