Pakistan Federal Budget FY 2020-21: Analysis and Discussion Thread

[Norwegian]

you can put as many crow eggs under your chicken,

but the result will be same everytime.............lame chicken

Here is your chicken. Always runaway from the country after messing it up and then return as a hero of democracy

 

[CriticalThought]

So if you are so smart, stop going back to IMF. What is this love affair? You want aid from IMF every 5 years but refuse to follow their demands?


Help the poor? Government or State of Pakistan itself cannot stand on its own feet

Worthless replies of one who has nothing useful to say.

Things that are happening to Pakistan have already happened in other countries. Why should they not be relevant to learn next course of action?

Russian model

I agree with the points you raised. I specifically mentioned in my original post that (apart from the points you mentioned) inflation was largely as a result of shock of devaluation of rupee and yes this inflation was highly disproportional (due to cartelization/monopoly/oligarchy). The factors you mentioned were already in the market but this devaluation sparked the spike. The point I was making was interest rates were increased to balance of the inflation and stop from getting over board, lower interest rate acts as a positive catalyst. At the end of the day the injection in market was balanced out by increase in deposits in banks which reached at a record level. It restrored the balance but it came at a significant cost. I agree with the businesses charging consumers more because of increased interest rates, but at the end of the day there was lower demand aswell. Even property prices fell because investing in bonds or maintaining a saving account seemed more lucrative.
I am against IMF aswell, but we had no other choice given our external account deficit, on the other hand was bankruptcy which is far more painful. I always consider going to IMF as going to a police station, unless you commit a crime they won't bother you. We should try to keep as far away from IMF as possible but for that we need to correct our macroeconomic faults.

The bank deposits came from hot money and do not constitute proof of a rational interest rate. The higher interest rates served a particular class only. And the whole problem we are facing IS that we are trying to artificially influence macroeconomic indicators. Attention needs to be paid to human development and real growth in business, exports, and jobs. You can go to the IMF and negotiate a plan that generates money through this process. But traitorous puppets will never do this. This is what I am trying to tell everyone.

 

[Norwegian]

Russian model

Russian model also ended with hyper inflation:
Russian inflation in 1998 reached 84 percent and welfare costs grew considerably. Many banks, including Inkombank, Oneximbank and Tokobank, closed as a result of the crisis.
https://en.m.wikipedia.org/wiki/1998_Russian_financial_crisis

 

[CriticalThought]

Russian model also ended with hyper inflation:
Russian inflation in 1998 reached 84 percent and welfare costs grew considerably. Many banks, including Inkombank, Oneximbank and Tokobank, closed as a result of the crisis.
https://en.m.wikipedia.org/wiki/1998_Russian_financial_crisis

No pain, no gain.

 

[Norwegian]

And the whole problem we are facing IS that we are trying to artificially influence macroeconomic indicators.

True. Just like we artificially got economic growth rate of 5.8 percent in 2018 on the backs of massive trade and current account deficits.

No pain, no gain.

So you rather want hyper inflation in Pakistan after declaring bankruptcy?

 

[CriticalThought]

True. Just like we artificially got economic growth rate of 5.8 percent in 2018 on the backs of massive trade and current account deficits.
View attachment 641401

100% agree with that.

So you rather want hyper inflation in Pakistan after declaring bankruptcy?

It would need to be well thought out and well planned. If hyper-inflation for a few years can get us out of the mess then good.

 

[Patriot forever]

Worthless replies of one who has nothing useful to say.



Russian model



The bank deposits came from hot money and do not constitute proof of a rational interest rate. The higher interest rates served a particular class only. And the whole problem we are facing IS that we are trying to artificially influence macroeconomic indicators. Attention needs to be paid to human development and real growth in business, exports, and jobs. You can go to the IMF and negotiate a plan that generates money through this process. But traitorous puppets will never do this. This is what I am trying to tell everyone.

From a local economic perspective, maybe the big players got a bigger share but middle class also benefitted. A significant portion of our middle class do supplement their earnings via income from saving accounts/deposits. Yes this was hot money but it provided the necessary balance in the market.
Import driven economic model of the previous government was the major reason for critical instability at both micro and macro environment. Our the course of last 6-7 years even the local items sold in our shops from stationeries, tiles, electrical goods, construction finishing fittings to clothes were replaced by foreign merchandise. We were running on 'China say container wala model'. Subsidized dollar facilitating imports and increasing power and gas pricing led to strangulation of our local industries. Even our exports declined. Yes we need to change this model to an industrialization model. This is a pain staking and it will take a lot of time, you cannot jump start industrialization or increase the human capital over a couple of years, it requires necessary suitable environment. This government is moving in the right direction , they devalued the rupee kudos to them, they are working on reducing the cost of electricity in the med to long term.I have seen the IPP contracts as well as government funded projects which are all focused on hydro and thar coal which is completely in contrast to previous government, just one in gawadar is based on imported coal though under cpec. There are are a lot of defiencies and incompetence aswell, trial and hit method. Industrialization is the only solution to our problems given the rapidly growing population.

As I said before the only goal of the IMF is ensure you make your payments on time and don't go default, they don't care of your well being or your suffering, will never agree to it. World bank and ADB are better forums in this regard, but to unlock financiers like them you need IMF in the green. You can add to this, but this is my understanding how international creditors work.

 

[CriticalThought]

As I said before the only goal of the IMF is ensure you make your payments on time and don't go default, they don't care of your well being or your suffering, will never agree to it. World bank and ADB are better forums in this regard, but to unlock financiers like them you need IMF in the green. You can add to this, but this is my understanding how international creditors work.

In order to increase trust, the government needs to reveal the exact set of conditions agreed with IMF. This is our and future generations money they are promising. We have a right to see what has been agreed. Without this, I am going to call them traitors.

And now that you have gone to IMF, where are the development plans to take loans from ADB and World Bank to induce real growth? The idiots in the government don't have a plan. The only plan is the CPEC plan. Here is the harsh reality: you can't expect someone to come from outside and turn you into an economic powerhouse. You need a plan to increase education, increase jobs, increase exports, increase industry and farming, and increase the capability of our state machinery such as police, and bureaucracy. Where are these plans? They are non-existent.

 

[Norwegian]

Export driven economic model of the previous government was the major reason for critical instability at both micro and macro environment.

What export driven economic model? It was import consumption economic model.

As I said before the only goal of the IMF is ensure you make your payments on time and don't go default, they don't care of your well being or your suffering, will never agree to it.

IMF is not your enemy. IMF is your doctor that treats you each time you fall on ventilator after import led over consumption.

 

[Patriot forever]

In order to increase trust, the government needs to reveal the exact set of conditions agreed with IMF. This is our and future generations money they are promising. We have a right to see what has been agreed. Without this, I am going to call them traitors.

And now that you have gone to IMF, where are the development plans to take loans from ADB and World Bank to induce real growth? The idiots in the government don't have a plan. The only plan is the CPEC plan. Here is the harsh reality: you can't expect someone to come from outside and turn you into an economic powerhouse. You need a plan to increase education, increase jobs, increase exports, increase industry and farming, and increase the capability of our state machinery such as police, and bureaucracy. Where are these plans? They are non-existent.

The major terms of IMF are widely known to public, e.g. tax revenue, tax base, deficit targets. Their demand for gas and electricity tariff increase in order to reduce the circular debt, policy reforms etc. Some of them we have failed to achieve and were revised, some we accepted e.g. electricticity and gas tariff but their demand for further increase was rejected in July last year. Some we straight forward rejected e.g. cut in defence spending. I will not disagree that these things have impacted common populace as well as economics, we signed a deal with the devil out of necessity. But it is wrong to give the impression that we didn't negotiate.
ADB is being actively engaged with, they are financing multiple hydro projects as well as extension of swat motorway is also under process. They have given 300 million I guess just recently as well as further 2-3 billion are being negotiated for this year.
Diamer bhasha dam is being financed mostly internally , 30% federal gov 100billion wapda the rest will be generated through bonds. Mohmand dam is already under construction. The role of cpec has been directed more towards long term projects such as ML1 and dams, instead of short term energy projects. Stress is given on BOT model wherever applicable.
Local investment is preferred, thar coal has been actively worked on. My focus is on electricity projects as I see them as the most important aspect. Cheap local electricity is the key to industrial growth, which can't be achieved by just rupee devaluation. Furthermore using local resources will decrease our import bill. This will give an idea

Their performance as far as police or bureaucracy is poor. Halfhearted efforts were made but to little avail. These guys are pure thugs with judicial protection. Only a danda can straighten them up.

 

[CriticalThought]

The major terms of IMF are widely known to public, e.g. tax revenue, tax base, deficit targets. Their demand for gas and electricity tariff increase in order to reduce the circular debt, policy reforms etc. Some of them we have failed to achieve and were revised, some we accepted e.g. electricticity and gas tariff but their demand for further increase was rejected in July last year. Some we straight forward rejected e.g. cut in defence spending. I will not disagree that these things have impacted common populace as well as economics, we signed a deal with the devil out of necessity. But it is wrong to give the impression that we didn't negotiate.
ADB is being actively engaged with, they are financing multiple hydro projects as well as extension of swat motorway is also under process. They have given 300 million I guess just recently as well as further 2-3 billion are being negotiated for this year.
Diamer bhasha dam is being financed mostly internally , 30% federal gov 100billion wapda the rest will be generated through bonds. Mohmand dam is already under construction. The role of cpec has been directed more towards long term projects such as ML1 and dams, instead of short term energy projects. Stress is given on BOT model wherever applicable.
Local investment is preferred, thar coal has been actively worked on. My focus is on electricity projects as I see them as the most important aspect. Cheap local electricity is the key to industrial growth, which can't be achieved by just rupee devaluation. Furthermore using local resources will decrease our import bill. This will give an ideaView attachment 641429 View attachment 641431Their performance as far as police or bureaucracy is poor. Halfhearted efforts were made but to little avail. These guys are pure thugs with judicial protection. Only a danda can straighten them up.

Thank you for this. A lot of efforts towards infrastructure. Dams for water and food security are unquestioned. But tell me, after you make all that electricity available, who will utilize it? And how will that create national power for you? If you bring FDI, where will investors find educated and skilled personnel? And FDI is capricious. The companies can wrap up shop and go whenever they want, and your local knowledge base does not increase. Just like Toyota and Honda brought FDI with no increase in national power. You need patriotic, educated, creative, intelligent Pakistanis setting up businesses within Pakistan. But more importantly, you need people who actually trust the system.

Look this is going to sound sectarian, but this is the reality. Communities such as Bohra, Ismaili, and Qadiani are financing the education of their children to such an extent, these people represent a very respectable percentage in your best universities. Respectable enough that they influence the culture and mindset. And I can tell you, none of them are patriotic. They have no loyalty for the Islamic Republic of Pakistan. Similarly for Hindus from interior Sindh. The patriotic Pakistani who loves both Islam and Pakistan does not have the opportunities of education available, what to say about higher education. What are your plans to change this situation? How are you going to bring education to the masses? What are you plans for a single national curriculum. No more Agha Khan Board, Cambridge board, Sindh Board, Federal Board etc. Only one education all the way to 10th grade. What are you doing for this?

 

[Patriot forever]

What export driven economic model? It was import consumption economic model.
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IMF is not your enemy. IMF is your doctor that treats you each time you fall on ventilator after import led over consumption.

Sorry my bad, I meant import just mixed it up while typing. You can get the theme from the rest of my post.

Yes but steroids recommended by IMF can have detrimental side effects but can save your life. Necessary evil, a punishment of our own wrong doings. For long term infrastructure projects financing ADB or World Bank are better options.

 

[Norwegian]

And I can tell you, none of them are patriotic.

Are you serious? Only majority has right to become patriotic? Minorities can't be patriots?

 

[CriticalThought]

Are you serious? Only majority has right to become patriotic? Minorities can't be patriots?

In the sense that they have no interest or vision towards increasing Pakistan's power and prestige in the world. Most of them proceed to foreign universities then get residence and nationality, or get employed by MNCs where they serve to ensnare Pakistanis into consumerism without any contribution towards exports or R&D towards creating new technologies. They have no wish to see Kashmir liberated, or Pakistan creating its own stealth fighter. They move about the campus in their own groups. Talk to them on these topics and they will laugh you out of the room. From that point onwards you will become their target of derision and contempt. This is certainly not patriotism.

 

[Norwegian]

In the sense that they have no interest or vision towards increasing Pakistan's power and prestige in the world.

What about Qadiani generals?