Pakistan is at risk of default

[ACE OF HEARTS]

After 8 days of negotiations, and one last day left tomorrow, for the IMF delegation visiting Pakistan, still no staff level agreement in sight with the IMF?

The measures currently being discussed, and yet to be adopted, were drafted and presented by Pakistan, to IMF, in August 2022.

Then, WHY THE DELAY?

Are the current ruling / corrupt elite, fuelling hatred of the masses, towards the national institutions (Who are equally responsible for this mess)?

Delaying the inevitable, is helping the Petrol Mafia, to create artificial shortage of fuel in the country and creating UNREST / AGONY FOR THE MASSES.

The requirement of a SINGLE CURRENCY ACCOUNT of GoP, is yet to be fulfilled, the ONLY HINDERANCE / OBSTACLE are the SERVANTS OF THE PEOPLE, HIDING BEHIND PATRIOTIC INSTITUTION, to continue using UNAUDITED / GREY / BLACK money, for NEFARIOUS PURPOSES.

 

[PakFactor]

I would wager that it will continue to muddle its way by crawling through a messy middle between those two options. By intent.

It'll be the oldest patient on the iron lung.

 

[VCheng]

Cant take any article serious which talks about the Sharifs positively after all the daylight robbing they have done. That last para is meaningless.

The elections and their aftermath are not all that far way. We shall soon be able to judge the meaningfulness, or lack of it, of the last paragraph relatively early.

 

[PakFactor]

After 8 days of negotiations, and one last day left tomorrow, for the IMF delegation visiting Pakistan, still no staff level agreement in sight with the IMF?

The measures currently being discussed, and yet to be adopted, were drafted and presented by Pakistan, to IMF, in August 2022.

Then, WHY THE DELAY?

Are the current ruling / corrupt elite, fuelling hatred of the masses, towards the national institutions (Who are equally responsible for this mess)?

Delaying the inevitable, is helping the Petrol Mafia, to create artificial shortage of fuel in the country and creating UNREST / AGONY FOR THE MASSES.

The requirement of a SINGLE CURRENCY ACCOUNT of GoP, is yet to be fulfilled, the ONLY HINDERANCE / OBSTACLE are the SERVANTS OF THE PEOPLE, HIDING BEHIND PATRIOTIC INSTITUTION, to continue using UNAUDITED / GREY / BLACK money, for NEFARIOUS PURPOSES.

The hints as to why there is a delay are posted in various threads on PDF. When one is about to give his family jewels to someone else, it's difficult to digest and go along with it.

 

[VCheng]

It'll be the oldest patient on the iron lung.

It is a whole wardful of such patients actually: North Korea, Nigeria, Venezuela, Cuba et al etc. etc.

 

[_NOBODY_]

I would wager that it will continue to muddle its way by crawling through a messy middle between those two options. By intent.

The middle option was only possible a few years ago. I don't think Pakistan is in a position to opt for the middle option.

By option do you mean something like this highlighted part down below?

This is exactly why I advocate for neoliberalism. There are two solutions, the first one is that the government should let the private sector do everything and make sure that the market is completely free. The second one is that the government should only support export-oriented industries. Targets should be set for all these industries that are getting the government's support. For this, subsidies should only be given to export-oriented sectors. If any of these businesses fail to meet any of the targets set by the government then they should no longer be given any support, especially not the subsidies.

 

[VCheng]

The middle option was only possible a few years ago. I don't think Pakistan is in a position to opt for the middle option.

By option do you mean something like this highlighted part down below?

Either option you suggest there is impossible, for free markets mean competition, which cannot be allowed for fear of disturbing the favored entrenched monopolies, and government support will continue to be determined by nepotism and corruption, as always, and not by any other measure.

 

[epebble]

After 8 days of negotiations, and one last day left tomorrow, for the IMF delegation visiting Pakistan, still no staff level agreement in sight with the IMF?

The measures currently being discussed, and yet to be adopted, were drafted and presented by Pakistan, to IMF, in August 2022.

Then, WHY THE DELAY?

Are the current ruling / corrupt elite, fuelling hatred of the masses, towards the national institutions (Who are equally responsible for this mess)?

Delaying the inevitable, is helping the Petrol Mafia, to create artificial shortage of fuel in the country and creating UNREST / AGONY FOR THE MASSES.

The requirement of a SINGLE CURRENCY ACCOUNT of GoP, is yet to be fulfilled, the ONLY HINDERANCE / OBSTACLE are the SERVANTS OF THE PEOPLE, HIDING BEHIND PATRIOTIC INSTITUTION, to continue using UNAUDITED / GREY / BLACK money, for NEFARIOUS PURPOSES.

I am sensing that the political costs of agreeing to all the IMF demands at once are too onerous and risky. The government may think it would rather face the unknown devil of default than the known devil of political unrest and chaos, especially IK baying at the sides crying 'imported government'. They will probably default then dissolve the government by calling for elections. Sri Lanka 2.0, but much worse. Lebanon 2.0

 

[Burger_King]

Ah yes the Economist:

https://twitter.com/x/status/1504093879661912071

Meanwhile reality and what could have been. Generals were warned but its hard to resist the allure of might greenback

The remarkable recovery! | The Express Tribune

In August of 2018 Pakistan was in the midst of a full blown economic catastrophe

tribune.com.pk

...
In 2013, when Nawaz Sharif came to power, Pakistan’s imports of goods and services were around $48 billion and its exports of goods and services stood just over $31 billion. Remittances were approximately $13 billion and while the situation was precarious, as foreign exchange reserves were around $6 billion, the situation was manageable.

Over the next few years, under the PML-N) government, our imports skyrocketed to almost $68 billion — an increase of over 40%, while our exports stagnated and fell to $30 billion — a decline of 3%. Remittances increased to about $19 billion. For a country with extremely limited foreign exchange, this was suicide on steroids. The massive and growing imbalance between our exports and imports, should have forced the rupee to depreciate, but in a dangerous political move, the PML-N artificially maintained the rupee-dollar exchange rate between 100-110, bleeding the reserves of the State Bank of Pakistan (SBP). In the final two years of the PML-N government, the SBP reserves fell by more than half to around $9 billion, when Imran Khan became the Prime Minister.

In August of 2018, Pakistan was in the midst of a full blown economic catastrophe. A massive current account deficit, which when combined with our long-term financial debt obligations, created a hole of $25-30 billion, while the SBP had foreign exchange reserves of less than $10 billion. This impending financial disaster, resulted in Imran Khan’s infamous tours around the world to beg for financial help due to the criminal mismanagement of the economy by PML-N.

I am astonished that none of our anchors have ever bothered to question the financial geniuses belonging to PML-N about these numbers. How could they justify the increase in imports or the bleeding of the forex reserves by artificially maintaining an unsustainable exchange rate? What was their plan?

Anyway, when you need $20-30 billion and have less than $10 billion, what do you do? You beg, borrow and... And then you fix the mess, created by your predecessor. Reduce imports, increase exports, stop the bleeding of SBP reserves by artificially maintaining an overvalued exchange rate and pray for continued growth of remittances.

In two years, the government of Imran Khan achieved an unbelievable turnaround. Pakistan’s imports went down to $50 billion, a decline of $18 billion. Exports declined by $2 billion, to about $28 billion. Remittances crossed $23 billion, an increase of over $3 billion and SBP forex reserves have just crossed $12 billion. The PML-N left Pakistan with a current account deficit of almost $20 billion, while the PTI government is now expected to post a current account deficit of around $1-2 billion, in the current fiscal year. No one predicted such a quick turnaround, not even the IMF.

 

[_NOBODY_]

Either option you suggest there is impossible, for free markets mean competition, which cannot be allowed for fear of disturbing the favored entrenched monopolies, and government support will continue to be determined by nepotism and corruption, as always, and not by any other measure.

Given the current situation, Pakistan is no longer in a position to support any of these monopolies and rent-seekers as Pakistan can't afford to give them subsidies. In addition, IMF won't let the government do this anymore and no government will be able to survive without the IMF for at least 4 years. This is why the current environment can lead to the adoption of neoliberalism. Now, do you see why I am optimistic about Pakistan adopting neoliberalism?

If you disagree with me then please give me a proper counter to the highlighted part.

 

[truthseeker2010]

It is a whole wardful of such patients actually: North Korea, Nigeria, Venezuela, Cuba et al etc. etc.

North Korea and Cuba have communist roots, they have lived humbly forever.
Nigeria and Venez has oil.

Pak is a patient who cannot treat its abuse of meagre resources.

 

[VCheng]

Given the current situation, Pakistan is no longer in a position to support any of these monopolies and rent-seekers as Pakistan can't afford to give them subsidies. In addition, IMF won't let the government do this anymore and no government will be able to survive without the IMF for at least 4 years. This is why the current environment can lead to the adoption of neoliberalism. Now, do you see why I am optimistic about Pakistan adopting neoliberalism?

If you disagree with me then please give me a proper counter to the highlighted part.

But that is not a robust premise highlighted. There is nothing in the current environment or situation that would cause the existing system to consider any substantive changes. Just give it some time and we all will be able to see what I say now.

North Korea and Cuba have communist roots, they have lived humbly forever.
Nigeria and Venez has oil.

Pak is a patient who cannot treat its abuse of meagre resources.

Why not? This is a nation proud to eat grass. By choice.

 

[maithil]

Risk of having immediate elections is that people will expect relief from hardships post new government formation. Whoever forms the next government, should be ready to see political capital vanish within months.

 

[epebble]

Given the current situation, Pakistan is no longer in a position to support any of these monopolies and rent-seekers as Pakistan can't afford to give them subsidies. In addition, IMF won't let the government do this anymore and no government will be able to survive without the IMF for at least 4 years. This is why the current environment can lead to the adoption of neoliberalism. Now, do you see why I am optimistic about Pakistan adopting neoliberalism?

If you disagree with me then please give me a proper counter to the highlighted part.

Actually, your own argument is the perfect proof why IMF terms and conditions are not likely acceptable to the present weak government which has to look at the citizenry with pitchforks in the front and also IK and his supporters with pitchforks in its back. They may prefer to default and take the path of least resistance by dissolving the government and announcing elections.

 

[_NOBODY_]

But that is not a robust premise highlighted. There is nothing in the current environment or situation that would cause the existing system to consider any substantive changes. Just give it some time and we all will be able to see what I say now.

I will respectfully disagree, I don't think that the rent-seekers will be able to survive without subsidies. This will lead to the collapse of these rent-seekers or at the very least it will collapse the way these rent-seeking corporations are run and force them to innovate for their survival. Considering this, I fail to understand how you can say that the current environment will not cause the current system to undergo substantive changes.