Pompeo said USA won't block Pakistan If it seeks IMF bailout.
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Indus Pakistan
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Please take the time to read this fantastic post by Chinese member @Cybernetics which was posted on another thread. He clearly highlights the issue with Pakistan that even PM Imran Khan has no magic to fix until people start paying taxes.
"Most of the pressing economic issues of Pakistan can be mitigated directly and indirectly through greater tax collection. If done well enough these problems can be structurally resolved. Currently "1.2 million of Pakistan’s 208 million people filed income tax returns in the last year, and of them 500,000 paid zero taxes." A tax base of 700,000 people from a nation of 208 million (less than 1% of working age population), if this is correct then it is abysmal. These 700,000 people should be celebrated as the everyday heroes of Pakistan because they are the honorable ones holding up the roof for the nation. I personally respect them for doing what is right and needed when most others take the easy way out (unless circumstance prevents one from paying tax). They exude exemplary character.
https://www.reuters.com/article/pak...-to-broaden-income-revenue-base-idUSL5N1RI49S
To be quite frank, if Pakistan doesn't undergo significant tax reform to increase tax collection as a percentage of GDP, the economic problems we see today will forever occur in a cyclical nature and will worsen over time. This is not how a modern nation should function. There are fundamental issues as to why Pakistan didn't do as well economically compared to the nations you've mentioned, regardless of the conflicts. None of those countries have as small of a taxation base as Pakistan. It is not a country with massive profit generating state owned enterprises to fund the expenditures of the state either.
To be patriotic today is not just about fighting physical wars for your country, chanting patriotic slogans but most important of all, paying your taxes. If people don't pay their taxes slogans are just empty words. The real every day patriots are those who pay taxes, most people are not on the front lines. The rest are freeloading on the infrastructure, security from police/military, education, etc provided by those who pay taxes. Sorry if this sounds harsh but just reality, at least in my view. The tax burden should be spread out to as many people as possible. It is not just about the amount of taxes that you directly pay but also the fact that you pay directly (sales tax and tax from the store that you buy from doesn't count). If a person don't yet directly pay taxes, they do not yet have the complete mindset of an able citizen. I do not understand why people would talk about supporting the army while not paying taxes, unless they have family or in the military themselves (please tell me a reason). They aren't even willing to withhold some personal consumption to pay taxes for those putting their lives on the line?
A modern nation as we know it cannot exist without a significant pooling of resources and that is done through taxation. It is both a fiscal exercise and an exercise to instill unity for the sake of nation building. Nation building is not just done by one heroic generation, it is a continuous process that every generation and every able person must participate in. Pakistan needs to fund a relatively large military budget, develop industries and infrastructure rapidly. All of this requires significant government funding.
It is human nature to excuse oneself from paying taxes and should be corrected, from citing corruption of the government to personal circumstance. None of these are good excuses in reality but due to human nature we must be coerced through law and law enforcement. Paying taxes is not a liberty but a duty of every able person within a society, if you don't even pay as a symbol, that person is not yet an able person that values the nation. Governments no matter how corrupt enables survival of your nation, if you don't like that government then change it but not paying taxes as a sign of passive aggressive protest is no way to live, it only deepens the issues for you and your decedents. Over time this covertly weakens a nation's bond and erodes the legitimacy of a nation's institutions, eventually leading to a crisis during a critical time.
When the numbers of tax payers are low, incentives and better institutions are needed to ease the process. Increase the size of taxed cohort incrementally and have strict enforcement of the law. All of the nations you mentioned take taxation seriously and is a national duty even if it means sacrificing significant personal liberties. Nation above personal interests.
I'm sorry but if someone that is financially able to pay taxes but doesn't pay taxes tells me he/she loves his/her nation, I cannot respect that person for they lack character. If that person is of low income then society should help them become able to pay taxes and not push them to rely on welfare. I do not disrespect low income people, they need genuine assistance. For me helping low income people become able to pay taxes is also a matter of self worth, being able to directly contribute to the funds of your nation is a honor and fulfilling your duty as a citizen.
If Pakistan is able to resolve its taxation issue, I assure you that many of the problems it faces today would seem like insignificant issues and the business environment would change dramatically. When a people puts national interests above personal interests, that is a sign of strength and strength attracts strength."
https://defence.pk/pdf/threads/chin...more-pakistani-products.575705/#post-10778535 Post#11
"Most of the pressing economic issues of Pakistan can be mitigated directly and indirectly through greater tax collection. If done well enough these problems can be structurally resolved. Currently "1.2 million of Pakistan’s 208 million people filed income tax returns in the last year, and of them 500,000 paid zero taxes." A tax base of 700,000 people from a nation of 208 million (less than 1% of working age population), if this is correct then it is abysmal. These 700,000 people should be celebrated as the everyday heroes of Pakistan because they are the honorable ones holding up the roof for the nation. I personally respect them for doing what is right and needed when most others take the easy way out (unless circumstance prevents one from paying tax). They exude exemplary character.
https://www.reuters.com/article/pak...-to-broaden-income-revenue-base-idUSL5N1RI49S
To be quite frank, if Pakistan doesn't undergo significant tax reform to increase tax collection as a percentage of GDP, the economic problems we see today will forever occur in a cyclical nature and will worsen over time. This is not how a modern nation should function. There are fundamental issues as to why Pakistan didn't do as well economically compared to the nations you've mentioned, regardless of the conflicts. None of those countries have as small of a taxation base as Pakistan. It is not a country with massive profit generating state owned enterprises to fund the expenditures of the state either.
To be patriotic today is not just about fighting physical wars for your country, chanting patriotic slogans but most important of all, paying your taxes. If people don't pay their taxes slogans are just empty words. The real every day patriots are those who pay taxes, most people are not on the front lines. The rest are freeloading on the infrastructure, security from police/military, education, etc provided by those who pay taxes. Sorry if this sounds harsh but just reality, at least in my view. The tax burden should be spread out to as many people as possible. It is not just about the amount of taxes that you directly pay but also the fact that you pay directly (sales tax and tax from the store that you buy from doesn't count). If a person don't yet directly pay taxes, they do not yet have the complete mindset of an able citizen. I do not understand why people would talk about supporting the army while not paying taxes, unless they have family or in the military themselves (please tell me a reason). They aren't even willing to withhold some personal consumption to pay taxes for those putting their lives on the line?
A modern nation as we know it cannot exist without a significant pooling of resources and that is done through taxation. It is both a fiscal exercise and an exercise to instill unity for the sake of nation building. Nation building is not just done by one heroic generation, it is a continuous process that every generation and every able person must participate in. Pakistan needs to fund a relatively large military budget, develop industries and infrastructure rapidly. All of this requires significant government funding.
It is human nature to excuse oneself from paying taxes and should be corrected, from citing corruption of the government to personal circumstance. None of these are good excuses in reality but due to human nature we must be coerced through law and law enforcement. Paying taxes is not a liberty but a duty of every able person within a society, if you don't even pay as a symbol, that person is not yet an able person that values the nation. Governments no matter how corrupt enables survival of your nation, if you don't like that government then change it but not paying taxes as a sign of passive aggressive protest is no way to live, it only deepens the issues for you and your decedents. Over time this covertly weakens a nation's bond and erodes the legitimacy of a nation's institutions, eventually leading to a crisis during a critical time.
When the numbers of tax payers are low, incentives and better institutions are needed to ease the process. Increase the size of taxed cohort incrementally and have strict enforcement of the law. All of the nations you mentioned take taxation seriously and is a national duty even if it means sacrificing significant personal liberties. Nation above personal interests.
I'm sorry but if someone that is financially able to pay taxes but doesn't pay taxes tells me he/she loves his/her nation, I cannot respect that person for they lack character. If that person is of low income then society should help them become able to pay taxes and not push them to rely on welfare. I do not disrespect low income people, they need genuine assistance. For me helping low income people become able to pay taxes is also a matter of self worth, being able to directly contribute to the funds of your nation is a honor and fulfilling your duty as a citizen.
If Pakistan is able to resolve its taxation issue, I assure you that many of the problems it faces today would seem like insignificant issues and the business environment would change dramatically. When a people puts national interests above personal interests, that is a sign of strength and strength attracts strength."
https://defence.pk/pdf/threads/chin...more-pakistani-products.575705/#post-10778535 Post#11
Turingsage
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Both you and that self styled "economic genius" who guaranteed no IMF, are wrong as usual. And as I said several weeks ago September is the earliest that Pakistan can start the IMF discussions.
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THE EXPRESS TRIBUNE > BUSINESS
IMF’s staff-level team to arrive by month-end
By Shahbaz Rana
Published: September 11, 2018
45SHARES
SHARE TWEET EMAIL
Sources said the new government can also avoid the typical IMF prescriptions, which are often in direct conflict with the government’s development agenda. PHOTO: REUTERS
ISLAMABAD: Pakistan has decided to engage with the International Monetary Fund (IMF) as an internal working suggests that benefits of getting a bailout programme outweigh the cost that Islamabad may have to pay, including some compromises on economic sovereignty.
After doing an in-house analysis, spanning over two weeks, Pakistani authorities have decided to invite an IMF staff-level team, said sources in the Ministry of Finance.
They said Finance Minister Asad Umar has contacted IMF’s Director for Middle East and Central Asia Jihad Azour.
The finance minister confirmed to The Express Tribune that the IMF staff-level team would visit Pakistan by the end of this month.
Engagement with the IMF should not be directly linked with any kind of formal programme talks, said Umar, while explaining the purpose of the IMF visit.
The finance minister said in case Pakistan plans on getting the IMF programme in future, the upcoming engagement would save time that is often required for exchange and validation of macroeconomic numbers.
The minister underscored that the IMF staff-level visit did not mean Pakistan has decided to avail a Fund programme.
Sources said the decision to invite the IMF staff-level team was aimed at keeping both options open.
Pakistan needs to achieve rapid investment growth
“The communication is happening all the time on a routine basis at different levels,” said IMF Resident Representative to Islamabad Teresa Daban. She said such contacts are normal between the IMF and its member countries.
According to the sources, the prime minister’s next week visit to Saudi Arabia and follow-up visits by the Saudi monarchy to Islamabad will be a determining factor in taking a decision on whether to avail an IMF programme.
They said that the Chinese were also helping Pakistan for protecting the China-Pakistan Economic Corridor (CPEC) deals from scrutiny by external elements.
In-house analysis
The decision to request IMF to send a staff-level mission was rooted in an in-depth assessment of Pakistan’s gross external financing needs for fiscal year 2018-19 and benefits and cost of availing an IMF programme, the sources said.
The joint assessment was made by the State Bank of Pakistan (SBP) and the finance ministry. They said this assessment was presented to Prime Minister Imran Khan last week and after that the finance ministry decided to invite the IMF team.
The fresh assessment of the external debt repayments showed that Pakistan needed $11.7 billion to service its external debt in current fiscal year 2018-19.
Pakistan’s gross external financing requirements have been assessed at an alarming level of $31 billion by the finance ministry. This is based on the assumption that the current account deficit will touch $18.5 billion.
The administrative and regulatory measures that will be taken may lower the current account deficit by about $4 billion to $14 billion, the sources said.
Against $31-billion financing requirements, the available financing is only $20 billion, which is inclusive of $13.2 billion projected borrowings and rollover of $2.8 billion short-term debt, they said, adding this still leaves the government with a financing gap of $11.1 billion.
Benefits without IMF
Could China replace the IMF?
According to the sources, the PM was informed that Pakistan could retain its economic sovereignty and ensure secrecy of the Chinese financing deals under the CPEC by avoiding the IMF programme. They said that the government can also fulfill its commitments of reforms as per its own aspirations.
The premier was informed that at this political juncture it will be difficult to sell the IMF programme to the people, they said and added the new government can also avoid the typical IMF prescriptions, which are often in direct conflict with the government’s development agenda.
IMF benefits
However, the cost of not availing the IMF programme is also significant, the sources said. The country will have to pay higher pricing on its international borrowings and the credibility of the reforms will be low. Pakistan can avoid surge in the short-term debt by availing long-term IMF lending, they said.
An IMF programme could immediately avert the balance of payments crisis. This will also open cheap financing lines from the World Bank and the Asian Development Bank (ADB), the sources said, adding, the programme will increase the country’s credibility in the eyes of international creditors.
However, in both cases, the stabilisation measures require a further devaluation of 9% in the value of rupee against the US dollar, they said.
“This means in the next nine months the rupee could see its value going down to Rs136 to a dollar.”
The SBP’s key policy rate may surge by 2% to 9.5% to handle the external sector problems. In this scenario, the annual economic growth rate will slow down to 4.7% and the inflation will inch up to 6.4%.
The government’s internal assessment showed that the current level of foreign exchange reserve of $9.9 billion was sufficient for only 1.8 months of import cover. These reserves are inclusive of $6.6 billion of forward swaps.
In October 2016, Pakistan had $18.9 billion reserves that were enough to provide import cover for four and a half months. But those reserves had been built by contracting expensive foreign loans.
Published in The Express Tribune, September 11th, 2018.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.
https://tribune.com.pk/story/1800012/2-imfs-staff-level-team-arrive-month-end/
Custom Search
THE EXPRESS TRIBUNE > BUSINESS
IMF’s staff-level team to arrive by month-end
By Shahbaz Rana
Published: September 11, 2018
45SHARES
SHARE TWEET EMAIL
Sources said the new government can also avoid the typical IMF prescriptions, which are often in direct conflict with the government’s development agenda. PHOTO: REUTERS
ISLAMABAD: Pakistan has decided to engage with the International Monetary Fund (IMF) as an internal working suggests that benefits of getting a bailout programme outweigh the cost that Islamabad may have to pay, including some compromises on economic sovereignty.
After doing an in-house analysis, spanning over two weeks, Pakistani authorities have decided to invite an IMF staff-level team, said sources in the Ministry of Finance.
They said Finance Minister Asad Umar has contacted IMF’s Director for Middle East and Central Asia Jihad Azour.
The finance minister confirmed to The Express Tribune that the IMF staff-level team would visit Pakistan by the end of this month.
Engagement with the IMF should not be directly linked with any kind of formal programme talks, said Umar, while explaining the purpose of the IMF visit.
The finance minister said in case Pakistan plans on getting the IMF programme in future, the upcoming engagement would save time that is often required for exchange and validation of macroeconomic numbers.
The minister underscored that the IMF staff-level visit did not mean Pakistan has decided to avail a Fund programme.
Sources said the decision to invite the IMF staff-level team was aimed at keeping both options open.
Pakistan needs to achieve rapid investment growth
“The communication is happening all the time on a routine basis at different levels,” said IMF Resident Representative to Islamabad Teresa Daban. She said such contacts are normal between the IMF and its member countries.
According to the sources, the prime minister’s next week visit to Saudi Arabia and follow-up visits by the Saudi monarchy to Islamabad will be a determining factor in taking a decision on whether to avail an IMF programme.
They said that the Chinese were also helping Pakistan for protecting the China-Pakistan Economic Corridor (CPEC) deals from scrutiny by external elements.
In-house analysis
The decision to request IMF to send a staff-level mission was rooted in an in-depth assessment of Pakistan’s gross external financing needs for fiscal year 2018-19 and benefits and cost of availing an IMF programme, the sources said.
The joint assessment was made by the State Bank of Pakistan (SBP) and the finance ministry. They said this assessment was presented to Prime Minister Imran Khan last week and after that the finance ministry decided to invite the IMF team.
The fresh assessment of the external debt repayments showed that Pakistan needed $11.7 billion to service its external debt in current fiscal year 2018-19.
Pakistan’s gross external financing requirements have been assessed at an alarming level of $31 billion by the finance ministry. This is based on the assumption that the current account deficit will touch $18.5 billion.
The administrative and regulatory measures that will be taken may lower the current account deficit by about $4 billion to $14 billion, the sources said.
Against $31-billion financing requirements, the available financing is only $20 billion, which is inclusive of $13.2 billion projected borrowings and rollover of $2.8 billion short-term debt, they said, adding this still leaves the government with a financing gap of $11.1 billion.
Benefits without IMF
Could China replace the IMF?
According to the sources, the PM was informed that Pakistan could retain its economic sovereignty and ensure secrecy of the Chinese financing deals under the CPEC by avoiding the IMF programme. They said that the government can also fulfill its commitments of reforms as per its own aspirations.
The premier was informed that at this political juncture it will be difficult to sell the IMF programme to the people, they said and added the new government can also avoid the typical IMF prescriptions, which are often in direct conflict with the government’s development agenda.
IMF benefits
However, the cost of not availing the IMF programme is also significant, the sources said. The country will have to pay higher pricing on its international borrowings and the credibility of the reforms will be low. Pakistan can avoid surge in the short-term debt by availing long-term IMF lending, they said.
An IMF programme could immediately avert the balance of payments crisis. This will also open cheap financing lines from the World Bank and the Asian Development Bank (ADB), the sources said, adding, the programme will increase the country’s credibility in the eyes of international creditors.
However, in both cases, the stabilisation measures require a further devaluation of 9% in the value of rupee against the US dollar, they said.
“This means in the next nine months the rupee could see its value going down to Rs136 to a dollar.”
The SBP’s key policy rate may surge by 2% to 9.5% to handle the external sector problems. In this scenario, the annual economic growth rate will slow down to 4.7% and the inflation will inch up to 6.4%.
The government’s internal assessment showed that the current level of foreign exchange reserve of $9.9 billion was sufficient for only 1.8 months of import cover. These reserves are inclusive of $6.6 billion of forward swaps.
In October 2016, Pakistan had $18.9 billion reserves that were enough to provide import cover for four and a half months. But those reserves had been built by contracting expensive foreign loans.
Published in The Express Tribune, September 11th, 2018.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.
https://tribune.com.pk/story/1800012/2-imfs-staff-level-team-arrive-month-end/
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Indus Pakistan
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So 200 million Pakistani need to ask are they "holding the roof of the nation" by paying taxes. Right now less then one million are paying taxes. And people wonder why Pakistan needs loans?
As of right now less then 1 million Pakistanis pay tax. If by next week 10 million more begin paying tax. Bye bye IMF. In fact "fcuk you IMF". Until then wait for some magic or IMF. Asad Umar is not a magician, last time I checked.
BHarwana
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Under the current economic situation Pakistan don't need to go to IMF.
Pak reserves enough to pay back foreign loan: Moody’s
https://www.thenews.com.pk/print/358927-pak-reserves-enough-to-pay-back-foreign-loan-moody-s
To conclude every thing. Economic situation of Pakistan is good and we don't need IMF bailout for our govt to function.
I will give this credit to Imran Khan austerity measures. USA now knows Pakistan don't needs bailout so USA is opening the door for Pakistan. The will of PTI to fight has made USA rethink its policy.
Pak reserves enough to pay back foreign loan: Moody’s
https://www.thenews.com.pk/print/358927-pak-reserves-enough-to-pay-back-foreign-loan-moody-s
To conclude every thing. Economic situation of Pakistan is good and we don't need IMF bailout for our govt to function.
I will give this credit to Imran Khan austerity measures. USA now knows Pakistan don't needs bailout so USA is opening the door for Pakistan. The will of PTI to fight has made USA rethink its policy.
Rollno21
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Everything is not as it seems . If you go to the IMF they will have more hold on your country .
If you are referring to Afghanistan by desperation ,Pakistan help.you are mistaken US dsnt want peace in Afghanistan 100% ,which will give them no reason to stay in afAfghanist which they can sell to the American public.
You must be believing when Trump says or when Obama said that they want to pull out lol. Look at the strategic location of Afghanist for America ,it has china, Russia,Iran Pakistan as it's neighbors ,think will US wants to give it's hold on Afghanistan
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American Pakistani
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No loans from IMF, China or KSA. Just no to loans, it is almost 100 Billion already, which roughly translates into 5 times worth of exports.
Nilgiri
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Yes, loans are the easy route, but like all easy routes come with long term problems.
Genuine economic reform should be the way to go (labour, financial, cutting bureaucracy, better rule of law and standards enforcement)...it is tougher to do but like all tougher (bitter medicine) routes, come with long term benefits.
Imran Khan must show he is not the same old same ole, but actually use the political mandate invested into him to do something fundamentally revolutionary. More loans would be disappointing, especially with bureaucratic core and structure left largely intact and same as it always was (given that would be what loans are sensitive to w.r.t digging yourself out of the hole).
That is a drastic increase, do you think it will happen?
Taimoor Khan
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Indians won't like this but Pakistan was, is and will remain the fulcrum of geopolitics.
Dark-Destroyer
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Its not rocket science pay taxes avoid loans and debts that’s the problem people don’t want to pay taxes but wanna complain about everything else
Indus Pakistan
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It is better to nurse hope then dwell in despair.
Vortex
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Imran khan and government should explain very clearly and in very simple words the consequences each option will have, but also a roadmap of their plan and the benefits awam will get at individual level. They need to build a hope that speak to each citizen at individual level. And hey should have explain the sacrifices needed. The fight against corruption should not be the only one focus.... Maybe if awam understand it, they will accept. We should also create an image of "traitor" in order to put shame on whoever refuse the roadmap for a better future of not only Pakistan but for their own....
pzfz
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Pak has to, and will. Not to the tune of $12 billion, but it will go to the IMF. There's nothing wrong in that. Just have to be firm in your interests and how the IMF can help and the will to implement those tough but much needed measures that are to be proscribed.
khansaheeb
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$15 Billion to China is peanuts, we should borrow of them or the Islamic banks if necessary. IMF is a weapon to subjugate poor countries drown them with ridiculous haram interest rates. We don't need it.
IceCold
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I think the statement shows US is in damage control mode. They were not expecting something as evident from the steps US did right before making a tour to another country. I mean who does that? Visits are suppose to be on Good will but based on past US Pakistan relationship, US was of the opinion that they could barge their way through Pakistan by threats and arm twisting.
I think the reality is now drawn on the US that it is loosing cards fast when it comes to Pakistan and its only a matter of time before Pakistan becomes openly hostile to US in the region. Can the US afford that? Thats the question they must be mulling upon and hence this statement which by the way is of no real significance because A) Pakistan is mulling towards other options and IMF is the last on the list and B) IMF itself rejected US dictation and said we will look at any country's request based on our rules and regulations.
All in all US played its cards rather terribly and they know it.
I think the reality is now drawn on the US that it is loosing cards fast when it comes to Pakistan and its only a matter of time before Pakistan becomes openly hostile to US in the region. Can the US afford that? Thats the question they must be mulling upon and hence this statement which by the way is of no real significance because A) Pakistan is mulling towards other options and IMF is the last on the list and B) IMF itself rejected US dictation and said we will look at any country's request based on our rules and regulations.
All in all US played its cards rather terribly and they know it.
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