Mav3rick
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What are you smoking? PMLN govt was never taken down. It completed its full term from 2013 to 2018.
We can either be honest and candid or we can do what you are doing. However, in the later, you would win with experiance so please try to be honest and candid instead.
The elected PML PM was taken down over a visa when no financial wrong doing could be proved against him. Now trust me when I say this that it is an entirely different argument whether NS is corrupt or not and my opinion, based on my witnessing of their lifestyle, is that they are all corrupt to the core and that financial corruption could still be proven with independent forensic financial auditors and not NAB or FIA.
But, the strongest point in my entire post was the fact that a PM was removed in a controversial manner which kick-started the downward spiral and thereby my blame on the Architect and his Tool.
How is FDI connected to PM? It is connected to govt policies. Even with PM removed, govt policies remain the same.
FDI is dependent not only on the Government policies but also the overall situation of the country; the way an elected PM was being dragged, along with many of his closest associates and family members, the unrest it had already created and the expected unrest and uncertainty played the part. And this is the reason that I disagree with the way NS was removed and PML subsequently cheated of its mandate in 2018 elections, the entire situation could have been avoided with proper planning by the Architect instead of rushing into things headfirst. The transition of power should have been gradual, casual and stable.
Lol. So if removing NS was a such a bad move due to instability it causes, how come removing IK is such a great move to fix Pakistans economy? Won't there be instability in Pak now if IK is removed just to fix economy?
Where did I ever say that IK should now be removed? He should never have been entrusted with the responsibility and the dignity of the PM office. However, now that he is the PM, he should serve out his period. However, the Architect needs to ensure that he places those people in the economic team who can steer the ship out of the storm, again very gracefully and with stability. The incumbent Finance Minister, of the infamous PPP era, is evidently unable to handle the problems and IMF imposed Governor and Deputy Governor of the Central Bank aren't helping either. In my opinion, Dr. Ishrat Hussain is a much better choice.
You cannot set fix price for PKR. It needs to determined by market forces. All the problems country had with its external account was due to PKR being set at some predetermined price by state bank or finance ministers.
You did NOT answer my question.
Lol. Investment means a country, company or institution from outside brings money to the country in hope of generating profits. Investments are shown as growing forex reserves in external account.
Whereas import means a country buys something from outside by selling its forex reserves. Imports are shown as diminishing forex reserves in external account.
In shot investments mean dollars coming in the country. While imports mean dollars going out.
Now explain how massive CPEC related imports are "investments"?
Are you deliberately being childish?
Is it considered investment only if the finance comes from outside the country? A country cannot invest its own money on projects which are expected to generate income???? Is CPEC NOT supposed to generate a LOT of revenue, both in terms of USD and PKR for Pakistan? USD through transit fee, Ship docking/undocking fee, storing and forwarding fee and other duties; and PKR through increased business along the entire route from the Ships coming in and going out to all the freight trains and trucks etc.
Lol. Trade deficit is part of current account. Any huge deficit in trade will reflect in huge current account deficit.
I can understand you are having a very hard time trying to understand certain things and I am trying as patiently as I can and made it as simple as I could with the following:
"Trade Deficit is of no consequence because we can always plug the gap with Remittances, which has always been the case; CAD is a concern because Remittances can only do so much and so if Remittances + Export = CAD then there is NO problem even if there is Trade Deficit......get it?"
I wonder what is so hard to understand in the above as I had not disputed the fact that deficit is a part of CAD but merely explained that Trade Deficit is inconsequential if we can plug the gap some other way. Let me explain again:
Let us say that our Import Bill is 'I' Billions and out Export Invoice is 'E' Billion and because our imports are more than exports so the CAD is:
CAD = I - E {Total Bill of Exports - Total Invoice of Imports; which is unbalanced}
Now, assuming that imports cannot be reduced (for explanation of the case here), what are the ways to plug the CAD? In this case CAD can be plugged with other sources (if available) and/or with Loans. In our case we do actually have another source which is the remittances (R) that our overseas Pakistanis send to Pakistan and so using that the CAD becomes:
CAD = X - (Y + R) {which is still unbalanced}
In our case, generally, is 'R' enough to plug the gap entirely? No it is not because without a solid export oriented base, we are still importing more and so CAD is ultimately settled with debt/loan (L) as:
CAD = X - (Y + R + L) {which is now balanced}
Lol. Pakistans total earnings from exports (22 billion USD) and remittances (20 billion USD) is equal to 42 billion US. With 60 billion USD record imports in 2018, gives a current account deficit of 60-42 = 18 billion USD. This deficit is covered through borrowing from IMF and other external sources, building up country's external debt each year. This is not rocket science. Simple maths. That's the main reason why PKR was massively devalued to stop these mass imports that should not have happened in the first place.
So you do how CAD and TD work. But don't be fooled into thinking that PKR was devalued because of that simply because the moment PKR is devalued, our external debt because X times more expensive for us to pay as our currency loses its worth by that much. It is a criminal move to devalue the currency and that too by that much and that quickly.
Coming back to the Debt problem, the correct way to resolve it is by:
1. slowly and gradually bringing USD around Rs. 120 mark
2. slowly and gradually discourage import of luxury items through much higher taxation; however essential imports such as Computers, Industrial Electronics and Machinery should be tax free for a few years until an Industrial base is established.
3. slowly and gradually start increasing our remittances through banking channels by encouraging Overseas Pakistanis to do so through ease of transfer, speed of transfer, with minimal paperwork and without unnecessary fee.
4. slowly and gradually start increasing our exports focusing more on quality products for Europe/Americas and quantity for Asia and Middle East.
It doesn't matter who that economist was. What's important is that his calculations was right along. Pakistan did get around 20 billion USD deficit as PMLN govt left, leaving behaving massive debt repayments and a country on the verge of bankruptcy.
Well then the economist must have been a PTI's financial hitman and must have insider information how PTI would destroy the economy in the first 6 months to the point where our country would be in this position. PML, quite understandably, had other plans.
At least I am trying to reason with him, and not calling him names.
And thank you for that; evidently someone is missing someone very close, which I categorically state I have not eaten.
If USD is around PKR 50, then Pakistani exports wont remain competitive. Remember what happened to Pakistani exports when your smart govt artificially set USD to 104 PKR for 4 years. Exports fell massively during that time and only started to increase when PKR was devalued.
Then how come Indian exports are still so attractive even though Indian Rupee is almost twice as strong as PKR? The same is the case with Bangladesh which has a much stronger Taka and yet exports over twice what Pakistan does.
The reason for decline in exports under PML Government and PPP Government is because of lack of electricity, we had none and so mos of the industry had to rely on much more expensive diesel generators which made their products more expensive. And still we could not complete the demand because it was just not feasible for business to keep their generators running 24/7 and so many shifted their work to outside Pakistan. Now that we have surplus energy, we can bring it all back and attract even more.
There was a massive shortfall of 20 billion USD in current account when PTI govt took over due to 60 billion USD record imports in 2018. Pakistan's major imports are petroleum based products and they cannot be taxed so much to reduce CAD. Luxury items are already taxed too much.
How much was the CAD in 2016, in 2017 and 2018? You need to compare PML's Governance at the peak of their tenure vs when the Architect moved in for the kill. And you also need to consider Reserves held with Pakistan when you speak of CAD because with 12 Billion Reserves and 20 Billion CAD the shortfall is a mere 8 Billion in reality.
Well, we can learn to live without luxuries for a few years.
That's what they planned to do. Their finance minister on record said he would:
The external current account deficit rose to $14bn in the first 10 months of the 2018 financial year, a 50 percent rise from the same period last year.
"[Pakistan's] growth has been accompanied in the past 18 months with an increase in macroeconomic imbalances," says the World Bank's Armos. "These imbalances will need to be corrected […] we think that further adjustments will be needed to put the economy on a much stronger footing, narrowing fiscal deficits and a combination of policies to reduce the trade deficit."
The outgoing government, however, said it was not worried.
"We are borrowing from the international market, and there is no difficulty in that, and we will be borrowing again," said Ismail, the outgoing finance minister.
In May, days before its term was completed, the government announced it would be taking an additional loan of up to $2bn from Chinese lenders in order to avert a balance of payments crisis.
https://www.aljazeera.com/indepth/f...ers-economic-growth-cost-180625090954388.html
Miftah Ismail a Finance person? He was a retard. Ishaq Dar was the genius who should have been allowed to serve all 5 years.
Nevertheless, there was no need to return to IMF with the way things were until 2017. But, I suspect the new Government in 2023 will need a much much bigger IMF loan to help Pakistan avoid default, if we haven't already defaulted by then.
I don't need your respect when you blindly worship those that nearly bankrupted Pakistan:
The PML-N says it will focus on increasing exports if it returns to power, but analysts warn, that it may not be enough.
"If the past is anything to go by, then the present appears to be taking us back towards the IMF," says Hussain.
"This is how it has always worked, for the last 20 years we have seen this pattern. Reserves rise for a period, then they hit a peak, and then as they fall they do not autocorrect."
Opposition leaders, too, have been pointing to rising debt levels as the government struggles to control macroeconomic imbalances as being of significant concern.
"It is pretty much in the same spot that we were five years ago, except this time as we get ready for a new bailout, we are starting with a current account deficit which is far bigger, and a significantly larger external debt," said Asad Umar, of the opposition Pakistan Tehreek-e-Insaf (PTI) party.
Pakistan's PML-N delivers economic growth, but at what cost?
Every successive Government may need bigger loans and they will all blame their predecessors. The bigger loan, for the millionth time, is not of concern otherwise US, China, Japan etc., would have set themselves on fire by now! The concern is bigger CAD which needs to be plugged and planning needs to be made for short term (balancing), intermediate term (debt retirement) and long term (debt free).