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Pak teetering on the brink of complete economic breakdown: Finance Minister

Oh well...
The thing is that when Pakistan Hasnt been on the Brink in the last 60 years?

Its always been on the brink.....

THATS NORMAL....NO BIGGY:pakistan::pakistan:


One of the definitions for insanity is doing the same thing over & over again and expecting different results.

The key here is not to try & reinforce failure. Throwing good money after bad is not going to get you anywhere. Zardari/Nawaz Sharif are not the problem; it is the system that is. Pakistan needs to look long & hard about what its interests are & how best are they going to be served. If old demons need to be given a quick burial to be able to move forward, then maybe this is the time to do it.

India had reasonably good people in the government but that still didn't stop the economy from coming near collapse in 1991. It took having to pledge gold with the Bank of England & the accompanying humiliation that the act carried to get some good, brave people to change tack in 1992 in the dispensation where Narasimha Rao was PM & Manmohan Singh was Finance minister. The rest as they say is history. The credit here should go to Narasimha Rao, the PM. Manmohan Singh was the instrument, it took great political courage for the then PM to jettison 45 years of history & move in a completely new & for India an unchartered journey. You guys need your own Narsimha Rao. You will find no shortages of Manmohan Singh's when you finally decide to change your direction.

You need to decide (actually your leaders need to) whether its time for Pakistan to do something similar & bite the bullet. You need a complete & drastic overhaul of your financial system. Tinkering around on the back of some IMF & world Bank money will just bring you back to the same point sooner or later.

I will refrain from passing any comments on the budgetary allocation to defence since it is something that queers the pitch every time. Suffice to say you need to look at everything in your system & decide for yourselves whether certain positions are maintainable over the long term.
 
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i think you missed my point. what i meant is, how can you keep a strong military when the economy is in shambles? the talk of a 'strong military' should only come when there is an economy to back it up.

Prioritise your needs: decide if it would be worth reducing military budget for a few years in order to free up more money to be used in the economy.

There are other means, as pointed out earlier in the thread, to save possibly even more money than drastically cutting the defence budget and compromising on security from internal and external threats.
 
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Agno... perhaps you need to build a guide 'pdf for dummies'
They moment page is turned.....new page start with same questions.
If the poster bother to start reading the thread from beginning he will find answers but i think idea to ask repetitive questions and to get repetitive answers is to spam the forum.
Why don't you delete such questions with advise to read history?
 
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Man.. like Mr Shehzad roy puts so aptly in his song..
"ye mulk 20 saal pehle naazuk waqt se guzar raha tha"

Ive been hearing about Pakistan's collapse since 99.. its been 11 years..
COLLAPSE ALREADY!!
If there is any populace that deserves the description of corrupt,disloyal,barbaric and stupid its us.. and if anyone deserves the description of resilient(read dheet),resourceful(both good and bad).. its us.
 
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Man.. like Mr Shehzad roy puts so aptly in his song..
"ye mulk 20 saal pehle naazuk waqt se guzar raha tha"

Ive been hearing about Pakistan's collapse since 99.. its been 11 years..
COLLAPSE ALREADY!!
If there is any populace that deserves the description of corrupt,disloyal,barbaric and stupid its us.. and if anyone deserves the description of resilient(read dheet),resourceful(both good and bad).. its us.

i agree with you sir , but please remove this zardari fellow from the office he is unfit to be president . pakistani are really resilient people but resilient have a limit. your half the problem is corrupt government
 
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Dire economic straits

Dire economic straits

Bad news from Pakistan has become the norm rather than an exception. Just a fortnight ago, a meeting attended by the prime minister, the chief ministers and the service chiefs was informed by the finance minister himself that the country was going bankrupt.
Dr Hafeez Sheikh warned his stunned audience that the national debt had increased to a perilous level. “The country is on the edge of insolvency to the extent that the government will not have the money to pay off salaries in two months,”
he said.
Soon after, the finance minister left for Washington with a 17-member delegation for talks with the IMF for the release of the remaining two tranches amounting to $2.6 billion under the Stand-by Arrangement (SBA). According to media reports, IMF officials chided the economic czar and members of his team for inconsistency in official assessments of the impact of the floods on the economic landscape of the country.
The IMF has put the SBA loan on hold till the November-December review talks. Meanwhile, a blame-game has started among the members of the delegation regarding the failure of the visit.
An insider, who was also quoted in a section of the media, said that even before the delegation arrived in Washington, the principal economic adviser to the finance ministry, Saqib Sherani, had intimated the IMF, the World Bank and the Asian Development Bank through an email that Pakistan was going to experience its worst-ever economic scenario, with zero GDP growth and 25 per cent inflation on a short-term basis.
The same report claims that the finance minister and his team turned up at the IMF head-office asserting there would be a 2.5 per cent GDP growth, 13 per cent inflation and 4.5 per cent deficit, after the impact of the floods on the economy had been taken into consideration.
The prime minister further damaged the credibility of the delegation by stating that the budget deficit would be 6-7 per cent. It is no surprise that the IMF chided the delegation for the conflicting claims about the flood damage.
The delegation stayed in the US for more than ten days, comfortably ensconced in one of the most expensive hotels of the US capital. All it could achieve was for Pakistan to be allowed to avail the $450-million facility reserved for national emergencies. An official quoted in the media has correctly pointed out that Pakistan could have secured the emergency support through a simple letter instead of the expensive junket to Washington.
It is obvious that, notwithstanding the unprecedented damage caused by the floods, the malaise afflicting the country’s economy runs much deeper. As the finance minister informed his august audience last month, the economic situation was precarious even before the sudden onset of the floods. None of the targets agreed with the IMF had been achieved, he informed them.
Even the provinces are making conflicting, and inflated, claims about the damage inflicted by the floods. The political will and consensus among the provinces regarding the imposition of the value-added tax (VAT) by next month, as per the agreement with the IMF, is also lacking. Neither is a plan in the offing for the reduction of the ever-increasing circular debt.
It seems that the IMF is no longer willing to offer a free lunch to Pakistan despite the blandishments of our economic managers. To be fair, the dire economic straits that we are in are not entirely the making of the present government. However, the manner in which the economy is being handled has compounded its problems, with the floods proving to be the last straw that broke the proverbial camel’s back.
The meltdown of the economy will have far-reaching implications for the country, with democracy likely being the first casualty. In spite of this, the federal government and the provinces are simply not willing to improve governance, tighten their belt or to lead by example. They seem to be oblivious to the impending crisis.
At the federal level, a pervasive sense of inertia persists. In a parliamentary system a mid-term reshuffle is the norm, sometimes even for cosmetic political reasons. The coalition government has completed half of its five-year term by fits and starts. But none of the key members of the team have been changed or been shown the door for incompetence or corruption. The only exception is the finance ministry which has seen four ministers come and go.
As a result, a new style of governance (or lack of it) has emerged. On the one hand, our India policy, Kashmir, counter-terrorism and, lately, flood-relief have been partly or fully outsourced to the military. On the other, our economic policy has become the domain of former IMF/World bank mandarins, who have been unable to develop roots in the political milieu. Dr Hafeez Sheikh and his advisors are perceived by their political masters as outsiders, their counsels falling on deaf ears.
Dr Sheikh’s predecessor, Shaukat Tarin, left in disgust when he sensed that politicians are not willing to change their profligate mindset. He successfully pursued a macro-economic stabilisation programme with the assistance of the IMF and was able to bring a modicum of stability in the economy, with a decrease in inflation and a lowering of interest rates.
Pakistan’s economic malaise, however, runs much deeper than the real or perceived incompetence of our rulers and economic mangers. For long we as a nation have lived much beyond our means. The way our economy is structured, the figures simply do not add up. According to former State Bank Governor Dr Ishrat Hussain, who now heads the IBA in Karachi, Pakistan’s government secures only 15 per cent of the national income, leaving 85 percent in the hands of the private sector.
This amount is to be spent on defence, debt-servicing, internal security, development on education health and general administration.
Out of every rupee of income received by a Pakistani on average, the tax paid is only 9 paisas. A meagre tax-to-GDP ratio of 9 per cent and our dismal rate of savings are too low for sustained economic growth.
With the ever-rising budget deficits, inflation is bound to increase. According to Dr Ishrat Hussain, double-digit inflation rates in Pakistan have historically been rare. Hence, the tolerance threshold for inflation beyond 7 and 8 per cent is low. Inflation, expected to rise to 25 per cent as a result of floods, will have far-reaching socio-economic consequences.
With the economy teetering and the social safety net virtually non-existent, coupled with rampant terrorism, poor law and order and the aftermath of devastating floods are a recipe for disaster. Our expenditure on health education and clean water as a per cent of the GDP is dismally low even by Third World standards. With such poor social indicators, sustained economic growth is impossible.
Ironically, Pakistan is a nuclear power and its armed forces rank seventh in the world. Its defence budget is about $5 billion, or 3.5 per cent of the GDP. On the other hand, the country is virtually bankrupt. It is becoming increasingly impossible to match India’s defence capability, which incidentally is now one of the fastest-growing economies in the world.
However, our present security paradigm does not permit us to reduce our defence outlays or the size of our armed forces. A legitimate concern for some is that perhaps the Indians are bleeding us in the same manner as the US bled the former Soviet Union, trying to achieve the same end-result. Nevertheless, economic mismanagement has long-term security implications. The second Benazir Bhutto government was sacked on this basis, with the concurrence of the Army.
The writer is a former newspaper editor. Email: arifn51@hotmail.com
 
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Well then we shall all get ready to embace another speech "mere aziz hum watanoo"

Seriously the army has stepped in always to relive economical crisis created by incompetent democractic governments. That is the history of Pakistan for past 63 years. Yahya came in for same reason, Zia came to fix ZAB's failed socialist economy policy, Mushraff came in to fix economic failures and corruption of Nawaz. We should just let the army run the country for next 20 years and raise a new pool of politicians then gradually turn over to democracy. A lot to be learned from modren Turkey and Mustafa Kemal Ata Turk.

Some of the right steps for Pakistani economy would be:

1. Land and agriculture reforms so the proceed actually go into government treasury and for better of farmers life. Right now they are being pocketed by handful of landlords and dispatched to their swiss bank accounts. Then they use this money to fund arms for rebellion and terrorism.

2. Rapid action against terrorism to secure peace and stablity. We should take dire measures going to the extent of internal passport controls and sealing of complete northern areas. One the cities are not being rocked by bombs day and night they will attracts investments and jobs.

3. We should look into planning and building economic oppurtunity zones in partnership with forigen countries. Saudi Arabia, Kuwait, UAE, China, Malaysia & USA can lend a helping hand here. The citizen of pariticipating forigen countries will get upto 40 years of tax free investment rights provided they reserve 80% jobs for Pakistani citizens.

4. Exploit our natural resources of gold, iron and copper. Gold is very important to back stablity of our currency.

5. Pass a resolution to completely outlaw borrowings from WB and IMF. These capitalists are playing a game of cat mouse and dog. Incompetent governments need fast hand outs and they are always willing to help driving our national debt higher and higher.

6. We should look into enhancing internal consumption and regional trade. So we are not heavily depedent on exports which takes time to build up. Overseas Pakistanis particulary the business men disporsa in Americas and Europe should be attracted. Many have migrated after giving up on Pakistani fedual politics.

7. Free Karachi from iron claws of MQM and ANP and turn it into a true international business hub modelled after Beijing and Dubai. To control internal migrations locals should be banned from buying any further property and the exisiting slum dwellers should be re-settled somewhere else.

8. Similarly Lahore, Quetta and Peshawar should be developed as model international economic hubs.

8. Electricity is key to industry atleast the industrial sector should not face load shedding during production hours.

9. Restructure Pakistani shipping industry to sail internationaly on wider scale and buy / lease new ships.
 
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Well then we shall all get ready to embace another speech "mere aziz hum watanoo"

Seriously the army has stepped in always to relive economical crisis created by incompetent democractic governments. That is the history of Pakistan for past 63 years. Yahya came in for same reason, Zia came to fix ZAB's failed socialist economy policy, Mushraff came in to fix economic failures and corruption of Nawaz. We should just let the army run the country for next 20 years and raise a new pool of politicians then gradually turn over to democracy. A lot to be learned from modren Turkey and Mustafa Kemal Ata Turk.

We have no problem with army running the country provided they don't mess with Supreme Court ... Throw the present parliament into the dustbin of history and use its building , PM's house and President's house as a university (so that these do atleast some service to the country). I might be oversimplifying but with Free media and Judiciary Army can rule for as long as they want only no parliament this time . All the laws are already in place they just need implementation.
 
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I don't think Pakistan's defense budget is excessive. Most of the problems are caused by low taxation(which should be addressed immediately) and by the war on terror(Pakistan should be more suitably compensated for this).
 
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We have no problem with army running the country provided they don't mess with Supreme Court ... Throw the present parliament into the dustbin of history and use its building , PM's house and President's house as a university (so that these do atleast some service to the country). I might be oversimplifying but with Free media and Judiciary Army can rule for as long as they want only no parliament this time . All the laws are already in place they just need implementation.

Army rule and free media/judiciary are contradition in terms. a strong media and judiciary is a result of a working democracy and can not flourish under dictatorship.
 
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Army rule and free media/judiciary are contradition in terms. a strong media and judiciary is a result of a working democracy and can not flourish under dictatorship.

Chinese, Koreans flourished under a non democratic environment. Queen Victoria ruled half the world without a democracy. USSR was a superpower without a democracy. So if dictatorship suits Pakistan then so be it instead of trying this system for sometime and that system for system for sometime.. Its hurting Pakistan most.
 
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Chinese, Koreans flourished under a non democratic environment. Queen Victoria ruled half the world without a democracy. USSR was a superpower without a democracy. So if dictatorship suits Pakistan then so be it instead of trying this system for sometime and that system for system for sometime.. Its hurting Pakistan most.

Not saying whether a country can flourish or not under dictatorship but replying to a conditional statement above where Tayyab is ok with military rule as long as Judiciary and media stays free

We have no problem with army running the country provided they don't mess with Supreme Court ... Throw the present parliament into the dustbin of history and use its building , PM's house and President's house as a university (so that these do atleast some service to the country). I might be oversimplifying but with Free media and Judiciary Army can rule for as long as they want only no parliament this time . All the laws are already in place they just need implementation.
 
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In the meantime i think Pakistan should call for a early election next January.. whats your bet on it?
 
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Chinese, Koreans flourished under a non democratic environment. Queen Victoria ruled half the world without a democracy. USSR was a superpower without a democracy. So if dictatorship suits Pakistan then so be it instead of trying this system for sometime and that system for system for sometime.. Its hurting Pakistan most.

You are right when you say that development can take place even in absence of democracy.But you will be wrong if you assume that dictatorship suits Pakistan.There has been four military coup in Pakistan so far.Each one has done considerable damage to the state and gave rise to rampant corruption.
 
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Actually the Musharraf government and Ayub Khan governments were probably better than any democratic governments we've had.
 
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