The burn of hot money

[Zulfiqar]

Ok then. What are the alternatives? Spit it out.

Structural changes (not short term patch work) after sitting with other govt. stake holders and private players.

Govt is currently negotiating with local banks to rollover PKR 120 B+ circular debt parked under PHPL in next 6 months (41 B in current month as first tranche of 7 B has already become overdue). The reason being they can't make the first principal installment after end of grace period.

Yahan per local players ko daine ke liye paise nahi hain and you are saying that govt should attract hot money in T-bills e.t.c and then arrange dollars for them (that are more than what they would have had to arrange if currency did not appreciate.)

Please do know that these hot money guys will move if the govt. decides to reduce the discount rate. When they do, they won't take out rupees with them but FX which the govt/banks e.t.c would have to arrange.

How do you expect us to arrange more dollars when we are already short on it. Govt. would have to issue FX denominated bonds/another IMF tranche e.t.c so that we can pay off these carry traders.

This is like another form of circular debt just to maintain the FX rate/reserves.

SBP was supposed to improve the yield curve. How will they do that if we keep attracting money in short term maturity papers.

Sir shouldn't they? I mean how much stupid one has to be to call oneself a stupid, imagine 20% return on a sovereign paper with "no tax implications" and "no lock in period", same with stock markets.

In many countries once the FIPI wants to withdraw money their money goes for 45 days to 90 day in Govt treasury with zero returns.

I have not read the local FIPI rules/regulations but we should also do the same if we are not doing it already.

 

[Norwegian]

Now, which of the above would you recommend NOT importing? It is not our imports which are flawed, it is merely our inability to increase exports and with surplus energy and stable power complemented by a large network of newly implemented road network we can start increasing our exports to someday overtake our imports.

Its not that simple. Previous governments that installed power generation and oil, gas importing facilities did so without cost evaluation. Thus Pakistan now generates regions most expensive electricity, while gas and oil prices are unsustainable for consumption, yet alone for export growth. You can thank your smart previous govt for making energy prices so expensive in Pakistan that reduced Pakistans already stagnant exports while increasing imports three fold to 60 billion dollars

After 2013 Pakistani general election, Nawaz Sharif came to power. During their rule of five years, Pakistan's external debt increased from US$52.4 billion to US$76.3 billion, an increase of 46 percent, mainly due to sukuk bonds and China-Pakistan Economic Corridor.

There is a clear difference between debt increase and debt retirement. All these debts increase in previous govt had to be retired by PTI's first year. Hence the increase in total external debt

Please do know that these hot money guys will move if the govt. decides to reduce the discount rate. When they do, they won't take out rupees with them but FX which the govt/banks e.t.c would have to arrange.

I already showed up in the post that by reducing interest rates, hot money doesn't suddenly move out of the country. This is an unnecessary concern

 

[Zulfiqar]

Its not that simple. Previous governments that installed power generation and oil, gas importing facilities did so without cost evaluation. Thus Pakistan now generates regions most expensive electricity, while gas and oil prices are unsustainable for consumption, yet alone for export growth. You can thank your smart previous govt for making energy prices so expensive in Pakistan that reduced Pakistans already stagnant exports while increasing imports three fold to 60 billion dollars


There is a clear difference between debt increase and debt retirement. All these debts increase in previous govt had to be retired by PTI's first year. Hence the increase in total external debt


I already showed up in the post that by reducing interest rates, hot money doesn't suddenly move out of the country. This is an unnecessary concern

There are plenty of differences between Egypt and pakistan.

The picture that I have about circular debt and its servicing while being in the industry among other factors w.r.t this govt. makes me think otherwise.

 

[ps3linux]

SBP was supposed to improve the yield curve. How will they do that if we keep attracting money in short term maturity papers.

I have not read the local FIPI rules/regulations but we should also do the same if we are not doing it already.

Damn thing crossed $2.2 billion in recent auction.

Sir jee I have studied them in detail, unfortunately I have come to the conclusion that either the bureaucrats the inherently incompetent and stupid or traitor to the country by default. Either case dreams of being a developed country with this bureaucracy and this kind of politicians well good pipe dream.

 

[Mav3rick]

Its not that simple. Previous governments that installed power generation and oil, gas importing facilities did so without cost evaluation. Thus Pakistan now generates regions most expensive electricity, while gas and oil prices are unsustainable for consumption, yet alone for export growth. You can thank your smart previous govt for making energy prices so expensive in Pakistan that reduced Pakistans already stagnant exports while increasing imports three fold to 60 billion dollars

Actually, at a sustained PKR 105/USD, the power generation from Gas was still extremely reasonable and that was the plan and working of the PML Government. You and all other PTI supporters may as well place all blame on the previous Governments, as you all will continue to do so for the next 3.5 years too. However, it will not change the 'FACT' that the massive massive devaluation of PKR was the single most criminal thing that any Government could have done when it was done. The consequences of the move far out-weight the supposed benefits of the move (based on the reasons given for the move)!

The exports were very low by the time PML came into power and imports already higher. Matter of fact if you consider the CAB in the past 25 years, there's hardly any time when it has been in positive. Most of the CAD is covered through Remittances whereas the remaining is covered by loans; incidentally our economy grows bigger every year and so does the debt. The debt can be retired in the next 15-25 years as we slowly and gradually start producing local goods, increase our exports and decrease imports. But trying to do it in a year or 2 will cause more damage, just like we are witnessing today.

There is a clear difference between debt increase and debt retirement. All these debts increase in previous govt had to be retired by PTI's first year. Hence the increase in total external debt

There is indeed. In 2008, when Pakistan Peoples Party came to power, Pakistan's debt increased from US$42.8 billion in 2008 to US$52.4 billion in 2013. Under PML, after 2013 Pakistan's external debt increased from US$52.4 billion to US$76.3 billion. As of March 2019, external debt of Pakistan is now around US$105 billion. Whom would you blame for the 28.7 Billion debt (and possibly even more by now), the previous Government?

I already showed up in the post that by reducing interest rates, hot money doesn't suddenly move out of the country. This is an unnecessary concern

It is not exactly an unnecessary concern because hot money vanishes, flying off to greener pastures, the moment your interest rate becomes unattractive.

 

[Norwegian]

Actually, at a sustained PKR 105/USD, the power generation from Gas was still extremely reasonable and that was the plan and working of the PML Government.

Lol. PKR went up to 120 USD already in the last year of PMLN govt because it was impossible to sustain it. So stop blaming Imran Khan for your own smart govt mistakes.

However, it will not change the 'FACT' that the massive massive devaluation of PKR was the single most criminal thing that any Government could have done when it was done. The consequences of the move far out-weight the supposed benefits of the move (based on the reasons given for the move)!

Lol. Your fav smart govt suddenly increased PKR from 104 USD to 120 USD last year of 2018 after causing record 40 billion dollar trade deficit and 18 billion dollar current account deficit.

The exports were very low by the time PML came into power and imports already higher. Matter of fact if you consider the CAB in the past 25 years, there's hardly any time when it has been in positive. Most of the CAD is covered through Remittances whereas the remaining is covered by loans; incidentally our economy grows bigger every year and so does the debt. The debt can be retired in the next 15-25 years as we slowly and gradually start producing local goods, increase our exports and decrease imports. But trying to do it in a year or 2 will cause more damage, just like we are witnessing today.

Lol. Pakistan's exports actually declined all the time when PKR was artificially set at 104 USD. Where did your smart fav government made any improvement? Economic growth you cherish was actually due to massive import and debt growth. It wasn't real!

There is indeed. In 2008, when Pakistan Peoples Party came to power, Pakistan's debt increased from US$42.8 billion in 2008 to US$52.4 billion in 2013. Under PML, after 2013 Pakistan's external debt increased from US$52.4 billion to US$76.3 billion. As of March 2019, external debt of Pakistan is now around US$105 billion. Whom would you blame for the 28.7 Billion debt (and possibly even more by now), the previous Government?

Lol. It was already calculated back in 2016 by independent economists that external debt of Pakistan was to be increased that much in the next 4 years due to your smart fav govt policies:

Pakistan's overall economic situation was targeted in the critical analysis from independent experts and availed prominent coverage in media. Federal Finance Minister Ishaq Dar, however, vehemently denied their comments as miscalculation and wrote a detailed article to put the record straight.
According to these experts, the external debt of Pakistan is projected to grow to USD 110 billion within four years and it will need over USD 22 billion a year just to meet external payment requirements, economists said.
https://www.business-standard.com/a...t-four-years-warn-experts-117020300875_1.html
https://tribune.com.pk/story/122915...s-external-debt-likely-swell-110b-four-years/

It is not exactly an unnecessary concern because hot money vanishes, flying off to greener pastures, the moment your interest rate becomes unattractive.

So why your smart fav government did massive trade and current account deficits? Why didn't they check country's financial situation before making massive investments through expensive debt? How did they expect to return these massive debts and deficits? At least this govt did its best to avoid default by attracting hot money.

 

[Mav3rick]

Lol. PKR went up to 120 USD already in the last year of PMLN govt because it was impossible to sustain it. So stop blaming Imran Khan for your own smart govt mistakes.

Correction: By the time PML left, the USD was around 110 and NOT 120!

However, you are somewhat correct, blame can not entirely be laid at the feet of IK because at the end of the day, he is just a puppet; he is still a tool in the hands of the architect for which he also shoulders blame. But, I rather blame the architect of the entire 2017/18 debacle when an elected PM was unceremoniously and quite dubiously removed from office which started the landslide of our economic demise. You have to, however, admit that under NS and ID the PKR did not go over 105.

And my love with the previous Government is merely because people all around were living much, much better lives and were financially stable by magnitudes, when compared to today. And I don't mean the middle class only, I specifically mean the lower middle class and the lower class. Their lives are a living hell today.....whereas we merely type on our keyboards how hard life is.

Lol. Your fav smart govt suddenly increased PKR from 104 USD to 120 USD last year of 2018 after causing record 40 billion dollar trade deficit and 18 billion dollar current account deficit.

As corrected above, By the time PML left, the USD was around 110 and NOT 120!

Trade Deficit is not the real cause of concern, our Trade has almost always been in the deficit. It is the CAD that is a cause for concern but considering that the groundwork was all but complete for launching our economy by 2020; stable growing economy + cheap, stable and surplus power + USD @ 105 + a massive road network + CPEC .......... all that we had to do was start localization and manufacturing which, as I said earlier, could have erased the CAD and even Trade Deficit in the next 10-20 years.

Ah, what a dream it was.......and then came the Architect and destroyed it all, for his own personal ego!

Lol. Pakistan's exports actually declined all the time when PKR was artificially set at 104 USD. Where did your smart fav government made any improvement? Economic growth you cherish was actually due to massive import and debt growth. It wasn't real!

Now read very very carefully, for any country which intends to produce or manufacture its way out of debt and CAD, the most fundamental and basic requirement is power and transport infrastructure, we had neither when PPP left power. PML had to prepare a launch pad for activities to start and for all that, for power generation, for transport infrastructure, for CPEC etc., imports had to be increased of heavy equipment, machinery, oil, gas etc. but it was all supposed to pay back, the only condition was that the policy and stability of Governance should have continued. The sort of support that the establishment has given to PTI is almost unprecedented and yet they have grounded everything into the dirt.....if only 25% of this support had been given to PML instead of the massive opposition that the establishment created at every point starting with the dharna and NAB cases and Suo Moto cases and what not, we could have been in a much much better situation.

Lol. It was already calculated back in 2016 by independent economists that external debt of Pakistan was to be increased that much in the next 4 years due to your smart fav govt policies

Pakistan's overall economic situation was targeted in the critical analysis from independent experts and availed prominent coverage in media. Federal Finance Minister Ishaq Dar, however, vehemently denied their comments as miscalculation and wrote a detailed article to put the record straight.

According to these experts, the external debt of Pakistan is projected to grow to USD 110 billion within four years and it will need over USD 22 billion a year just to meet external payment requirements, economists said.

]

So you posted the statement by a random 'economist' but ignored the position of IMF in the same article? It makes me wonder whether you are genuinely concerned or merely here to defend PTI by hook or by crook! Anyway, the assertion was destroyed by the person who was managing the affairs much much better than any Finance Minister in the history of Pakistan.

Having said that, let me again strongly assert that higher debt does not necessarily mean a bad thing as long as your position is strong to make repayments. With a rising debt, the economy was also consistently rising and with it our ability to retire our debts, eventually.

So why your smart fav government did massive trade and current account deficits? Why didn't they check country's financial situation before making massive investments through expensive debt? How did they expect to return these massive debts and deficits? At least this govt did its best to avoid default by attracting hot money.

It is the actions of the incumbent which are wreaking havoc with the economy and with the lives of the common Pakistani, and that was the point I had made in response to your post about hot money. I wonder how that comment is relevant to your point here.

By the way, did you at any point consider that PML was confident of coming back to power and that power was snatched away from them by powerful quarters? The fact to ponder is, were we really in such a bad situation as being made out by PTI (which is actually to hide its failures, incompetence, nepotism and corruption) and would PML have fought tooth and nail to come back to power under same conditions? The logical conclusion is that PML wanted to return to power because we were NOT in the financial crisis which is made out.

 

[Kabotar]

Why are you lying? Here are two clips of PMLN finance minister.

https://twitter.com/x/status/976899766834614272

https://twitter.com/x/status/1006293241065504769

Was it PTI governments fault and incompetence that the country was in the verge of default before they took office with only $2.7B of net reserves?

Do you get paid for taking this nonsense? Can I get in on the action?

Correction: By the time PML left, the USD was around 110 and NOT 120!

However, you are somewhat correct, blame can not entirely be laid at the feet of IK because at the end of the day, he is just a puppet; he is still a tool in the hands of the architect for which he also shoulders blame. But, I rather blame the architect of the entire 2017/18 debacle when an elected PM was unceremoniously and quite dubiously removed from office which started the landslide of our economic demise. You have to, however, admit that under NS and ID the PKR did not go over 105.

And my love with the previous Government is merely because people all around were living much, much better lives and were financially stable by magnitudes, when compared to today. And I don't mean the middle class only, I specifically mean the lower middle class and the lower class. Their lives are a living hell today.....whereas we merely type on our keyboards how hard life is.





As corrected above, By the time PML left, the USD was around 110 and NOT 120!

Trade Deficit is not the real cause of concern, our Trade has almost always been in the deficit. It is the CAD that is a cause for concern but considering that the groundwork was all but complete for launching our economy by 2020; stable growing economy + cheap, stable and surplus power + USD @ 105 + a massive road network + CPEC .......... all that we had to do was start localization and manufacturing which, as I said earlier, could have erased the CAD and even Trade Deficit in the next 10-20 years.

Ah, what a dream it was.......and then came the Architect and destroyed it all, for his own personal ego!





Now read very very carefully, for any country which intends to produce or manufacture its way out of debt and CAD, the most fundamental and basic requirement is power and transport infrastructure, we had neither when PPP left power. PML had to prepare a launch pad for activities to start and for all that, for power generation, for transport infrastructure, for CPEC etc., imports had to be increased of heavy equipment, machinery, oil, gas etc. but it was all supposed to pay back, the only condition was that the policy and stability of Governance should have continued. The sort of support that the establishment has given to PTI is almost unprecedented and yet they have grounded everything into the dirt.....if only 25% of this support had been given to PML instead of the massive opposition that the establishment created at every point starting with the dharna and NAB cases and Suo Moto cases and what not, we could have been in a much much better situation.



]

So you posted the statement by a random 'economist' but ignored the position of IMF in the same article? It makes me wonder whether you are genuinely concerned or merely here to defend PTI by hook or by crook! Anyway, the assertion was destroyed by the person who was managing the affairs much much better than any Finance Minister in the history of Pakistan.

Having said that, let me again strongly assert that higher debt does not necessarily mean a bad thing as long as your position is strong to make repayments. With a rising debt, the economy was also consistently rising and with it our ability to retire our debts, eventually.





It is the actions of the incumbent which are wreaking havoc with the economy and with the lives of the common Pakistani, and that was the point I had made in response to your post about hot money. I wonder how that comment is relevant to your point here.

By the way, did you at any point consider that PML was confident of coming back to power and that power was snatched away from them by powerful quarters? The fact to ponder is, were we really in such a bad situation as being made out by PTI (which is actually to hide its failures, incompetence, nepotism and corruption) and would PML have fought tooth and nail to come back to power under same conditions? The logical conclusion is that PML wanted to return to power because we were NOT in the financial crisis which is made out.

 

[Norwegian]

Correction: By the time PML left, the USD was around 110 and NOT 120!

PMLN govt was dissolved on 31 May 2018. Check the dollar rate back then. It was already approaching 120 PKR.

But, I rather blame the architect of the entire 2017/18 debacle when an elected PM was unceremoniously and quite dubiously removed from office which started the landslide of our economic demise.

Economic demise started already in 2016 as I told you above. All those expensive loans and record deficits that your fav finance minister Ishaq Dollar took by then had to be paid back in next few years. PMs removal was in 2017, and it had nothing to do with financial landmines that your fav govt left behind years ago.

And my love with the previous Government is merely because people all around were living much, much better lives and were financially stable by magnitudes, when compared to today. And I don't mean the middle class only, I specifically mean the lower middle class and the lower class. Their lives are a living hell today.....whereas we merely type on our keyboards how hard life is.

People were feeling great because of rapid import-led growth that ballooned massive trade and current account deficits. This needed to be paid back in next few years, so all this growth and better living was just temporary.

Trade Deficit is not the real cause of concern, our Trade has almost always been in the deficit. It is the CAD that is a cause for concern but considering that the groundwork was all but complete for launching our economy by 2020; stable growing economy + cheap, stable and surplus power + USD @ 105 + a massive road network + CPEC .......... all that we had to do was start localization and manufacturing which, as I said earlier, could have erased the CAD and even Trade Deficit in the next 10-20 years.

Trade deficit is part of CAD. How can you say it is not of concern? And to defend dollar at 105 PKR, you needed Pakistani exports to grow as much as 50 billion USD by 2020! Did your fav smart govt take this in their calculations?

Now read very very carefully, for any country which intends to produce or manufacture its way out of debt and CAD, the most fundamental and basic requirement is power and transport infrastructure, we had neither when PPP left power. PML had to prepare a launch pad for activities to start and for all that, for power generation, for transport infrastructure, for CPEC etc., imports had to be increased of heavy equipment, machinery, oil, gas etc. but it was all supposed to pay back,

You could only pay it all back by increasing exports up to 50 billion USD by 2020, as there was 20 billion USD shortfall when your fav smart govt left office in 2018. While in reality the exports were down to 22 billion USD in 2018 from 25 billion USD when PPP handed over govt to your smart finance minister.

So you posted the statement by a random 'economist' but ignored the position of IMF in the same article? It makes me wonder whether you are genuinely concerned or merely here to defend PTI by hook or by crook! Anyway, the assertion was destroyed by the person who was managing the affairs much much better than any Finance Minister in the history of Pakistan.

It wasn't some random person but independent economists who pointed out calculation mistakes by IMF regarding Pakistan's future financial situation. And they were right all along while both Dar and IMF failed to see where the country was heading. Or they did it purposefully.

Having said that, let me again strongly assert that higher debt does not necessarily mean a bad thing as long as your position is strong to make repayments. With a rising debt, the economy was also consistently rising and with it our ability to retire our debts, eventually.

Are you serious? The debt repayments are in USD, while the economic growth is in PKR. How did you expect to payback growing USD debt with economic growth in PKR that was financed by massive 60 billion dollar imports?

It is the actions of the incumbent which are wreaking havoc with the economy and with the lives of the common Pakistani, and that was the point I had made in response to your post about hot money. I wonder how that comment is relevant to your point here.

This govt is doing its best to reduce ballooning deficits left by your smart previous govt. Since its artificial economic growth was financed by imports, as new govt reduced imports, the economic growth slowed down too, causing misery for common man. If your smart govt cared so much about common man, they should not have left so disastrous deficits and debts.

By the way, did you at any point consider that PML was confident of coming back to power and that power was snatched away from them by powerful quarters? The fact to ponder is, were we really in such a bad situation as being made out by PTI (which is actually to hide its failures, incompetence, nepotism and corruption) and would PML have fought tooth and nail to come back to power under same conditions? The logical conclusion is that PML wanted to return to power because we were NOT in the financial crisis which is made out.

PMLN was confident to go to another IMF program as soon they grabbed power in 2018, so to hide their colossal financial Armageddon. If economy was in such a great shape, as your smart govt ministers claimed, why did they need to go to IMF once again? Surely they messed up as they have been doing since 90s with their "smart" policies.

Was it PTI governments fault and incompetence that the country was in the verge of default before they took office with only $2.7B of net reserves?

Do you get paid for taking this nonsense? Can I get in on the action?

No these Nooney Tunes do not need to be paid for spewing nonsense in the defense of their Khota party.

 

[Mav3rick]

PMLN govt was dissolved on 31 May 2018. Check the dollar rate back then. It was already approaching 120 PKR.

Yet still not 120, right? Even 115 is very high but by then the damage had already been done and repercussions were appearing of taking down an elected Government by state institutions. Recall I said that everything was great under NS + ID? The moment that team was broken, so was the investor confidence and FDI.

Economic demise started already in 2016 as I told you above. All those expensive loans and record deficits that your fav finance minister Ishaq Dollar took by then had to be paid back in next few years. PMs removal was in 2017, and it had nothing to do with financial landmines that your fav govt left behind years ago.

It did not start in 2016, it started when NS was removed because with that the FDI started to flow out of Pakistan due to which USD started growing stronger. And honestly you have mentioned the loans to be expensive one 2 many times so please enlighten us all how expensive those loans really were??

And do you really mean to say that removal of an elected PM has NO repercussions, especially in a country with a history as volatile as Pakistan? The entire atmosphere at that time had no bearing on financial condition of the country? Honestly, I don't even have such a big problem with the establishment for removing NS and for rigging elections; my problem is the way in which it was all done, they should have allowed NS to continue his term thereby leading the transition in a stable manner to the next Government. But the haste, the manner and the intention behind it all were all flawed.

People were feeling great because of rapid import-led growth that ballooned massive trade and current account deficits. This needed to be paid back in next few years, so all this growth and better living was just temporary.

Can I ask you 1 thing, is a weak Rupee good or bad for Pakistan? Please answer this question.

You repeatedly speak of growing imports and yet continue to deliberately ignore how much import had to be made under CPEC with the hope that this project alone would bring massive prosperity. All the machinery, for power generation from hydel, thermal, wind, gas and oil based generators, heaving machines for construction of projects and construction of Nuclear Power Plans (Kanupp extension) etc., the requirement for additional Petroleum products and so on, was that all for the Government's luxury???? Was all this investment NOT supposed to pay back??

Trade deficit is part of CAD. How can you say it is not of concern? And to defend dollar at 105 PKR, you needed Pakistani exports to grow as much as 50 billion USD by 2020! Did your fav smart govt take this in their calculations?

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?

You could only pay it all back by increasing exports up to 50 billion USD by 2020, as there was 20 billion USD shortfall when your fav smart govt left office in 2018. While in reality the exports were down to 22 billion USD in 2018 from 25 billion USD when PPP handed over govt to your smart finance minister.

As I explained above, we can fill some of the blanks with Remittances but yes we definately had to improve exports. Now that we have surplus power (albeit very expensive thanks to the massive massive Rupee devaluation due to which Oil, Diesel, Gas have all become a lot more costly), we can establish, or rather reestablish, lost industries and add further new industries to eventually start increasing our exports.....which again will take 10-30 years of hard work and uniform policy by successive Governments to bring a parity between imports & exports.

It wasn't some random person but independent economists who pointed out calculation mistakes by IMF regarding Pakistan's future financial situation. And they were right all along while both Dar and IMF failed to see where the country was heading. Or they did it purposefully.

Actually, it was just 1 random person as there is no mention of any other 'economist'; besides, can you not find like a million economists who have a problem with the current way of working of the PTI Government? Translation -> there will always be those who oppose existing policies, based on personal reasons or understandings. However, we may consider certain institutions to be largely partial and so their outcome matters more.....and so you can go and take a look at Moody's, Fitch's, World Bank's and IMF's reports on Pakistan and their ratings.

Are you serious? The debt repayments are in USD, while the economic growth is in PKR. How did you expect to payback growing USD debt with economic growth in PKR that was financed by massive 60 billion dollar imports?

Again, if you are strong enough to make repayments, which means that your internal systems are strong because of which you make more exports (goods and/or services), then debt is not a bad thing. Consider for a moment that the USD is Rs. 50 instead of Rs. 155 and then tell me if it is tough paying back USD 100 Billion of debt? It becomes easy because the only way USD gets down, if not intentionally kept weak, is by larger remittances, growing exports and lowering of imports (luxury items only and not that of machinery, computers, electronics, raw material etc.). And then even large debts are inconsequential.

P.S. Any idea about US debt? China Debt? Japan Debt? etc.?

This govt is doing its best to reduce ballooning deficits left by your smart previous govt. Since its artificial economic growth was financed by imports, as new govt reduced imports, the economic growth slowed down too, causing misery for common man. If your smart govt cared so much about common man, they should not have left so disastrous deficits and debts.

It is not the reduction of imports that is causing problems for the common man, it is the spiraling cost of living, cost of essential items which is causing problems for the common man and the cause of all those evils is the weak rupee due to which petroleum products get more expensive which has a compound effect on all essentials. Instead of artificially devaluing the Rupee to 164 (and now 155), the Government should have rather imposed heavy taxes on non-essential and luxury items to stem imports.

My life is more expensive not just because of a much stronger USD but also because basic local products have been made 50%-300% more expensive in the last 1.5 years including Taxes, Gas & Electricity. The Government has repeatedly increased the rates of Taxes, Gas, Electricity, Petrol etc., instead of expanding the tax net. This is exactly the same deliberate mistake that the previous Governments were making because they had personal stakes in agriculture which was, and still not, taxed, amongst other things.

PMLN was confident to go to another IMF program as soon they grabbed power in 2018, so to hide their colossal financial Armageddon. If economy was in such a great shape, as your smart govt ministers claimed, why did they need to go to IMF once again? Surely they messed up as they have been doing since 90s with their "smart" policies.

When did they again get power to go to IMF, what are you talking about? PML went to IMF as soon as it came to power and ID successfully completed the program in 2016 I think.

No these Nooney Tunes do not need to be paid for spewing nonsense in the defense of their Khota party.

You had my respect until you posted the above as our argument was largely civil. You stooped down so low, to the level of the other inconsequential being, which was not really required, in my opinion.

 

[Norwegian]

Even 115 is very high but by then the damage had already been done and repercussions were appearing of taking down an elected Government by state institutions.

What are you smoking? PMLN govt was never taken down. It completed its full term from 2013 to 2018.

It did not start in 2016, it started when NS was removed because with that the FDI started to flow out of Pakistan due to which USD started growing stronger.

How is FDI connected to PM? It is connected to govt policies. Even with PM removed, govt policies remain the same.

And do you really mean to say that removal of an elected PM has NO repercussions, especially in a country with a history as volatile as Pakistan? The entire atmosphere at that time had no bearing on financial condition of the country? Honestly, I don't even have such a big problem with the establishment for removing NS and for rigging elections; my problem is the way in which it was all done, they should have allowed NS to continue his term thereby leading the transition in a stable manner to the next Government. But the haste, the manner and the intention behind it all were all flawed.

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?

Can I ask you 1 thing, is a weak Rupee good or bad for Pakistan? Please answer this question.

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 repeatedly speak of growing imports and yet continue to deliberately ignore how much import had to be made under CPEC with the hope that this project alone would bring massive prosperity. All the machinery, for power generation from hydel, thermal, wind, gas and oil based generators, heaving machines for construction of projects and construction of Nuclear Power Plans (Kanupp extension) etc., the requirement for additional Petroleum products and so on, was that all for the Government's luxury???? Was all this investment NOT supposed to pay back??

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"?

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?

Lol. Trade deficit is part of current account. Any huge deficit in trade will reflect in huge current account deficit.

As I explained above, we can fill some of the blanks with Remittances but yes we definately had to improve exports. Now that we have surplus power (albeit very expensive thanks to the massive massive Rupee devaluation due to which Oil, Diesel, Gas have all become a lot more costly), we can establish, or rather reestablish, lost industries and add further new industries to eventually start increasing our exports.....which again will take 10-30 years of hard work and uniform policy by successive Governments to bring a parity between imports & exports.

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.

 

[Syed1.]

What are you smoking? PMLN govt was never taken down. It completed its full term from 2013 to 2018.


How is FDI connected to PM? It is connected to govt policies. Even with PM removed, govt policies remain the same.


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?


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.


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"?


Lol. Trade deficit is part of current account. Any huge deficit in trade will reflect in huge current account deficit.

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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.
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You are trying to reason with a patwari....good luck. These subhumans have lower IQs than the donkeys they consume.

 

[Norwegian]

Actually, it was just 1 random person as there is no mention of any other 'economist'; besides, can you not find like a million economists who have a problem with the current way of working of the PTI Government? Translation -> there will always be those who oppose existing policies, based on personal reasons or understandings. However, we may consider certain institutions to be largely partial and so their outcome matters more.....and so you can go and take a look at Moody's, Fitch's, World Bank's and IMF's reports on Pakistan and their ratings.

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.

You are trying to reason with a patwari....good luck. These subhumans have lower IQs than the donkeys they consume.

At least I am trying to reason with him, and not calling him names.

Again, if you are strong enough to make repayments, which means that your internal systems are strong because of which you make more exports (goods and/or services), then debt is not a bad thing. Consider for a moment that the USD is Rs. 50 instead of Rs. 155 and then tell me if it is tough paying back USD 100 Billion of debt? It becomes easy because the only way USD gets down, if not intentionally kept weak, is by larger remittances, growing exports and lowering of imports (luxury items only and not that of machinery, computers, electronics, raw material etc.). And then even large debts are inconsequential.

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.

It is not the reduction of imports that is causing problems for the common man, it is the spiraling cost of living, cost of essential items which is causing problems for the common man and the cause of all those evils is the weak rupee due to which petroleum products get more expensive which has a compound effect on all essentials. Instead of artificially devaluing the Rupee to 164 (and now 155), the Government should have rather imposed heavy taxes on non-essential and luxury items to stem imports.

My life is more expensive not just because of a much stronger USD but also because basic local products have been made 50%-300% more expensive in the last 1.5 years including Taxes, Gas & Electricity. The Government has repeatedly increased the rates of Taxes, Gas, Electricity, Petrol etc., instead of expanding the tax net. This is exactly the same deliberate mistake that the previous Governments were making because they had personal stakes in agriculture which was, and still not, taxed, amongst other things.

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.

 

[Bilal Khan (Quwa)]

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.


At least I am trying to reason with him, and not calling him names.


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.
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The challenge now is that though exports are going up, they're primarily in agricultural goods, and that is driving up inflation of foodstuffs and essentials. We now need to figure out a way to push higher value manufactured goods -- but the difficulty there is everything from a lack of sufficient industrial capacity to securing markets. This isn't really a ding on IK in as much as a structural problem (beyond even this government, but certainly caused in part by the policies of the last government and the years/decades of negligence before then).

I'd say we could gain unprecedented economic momentum if:

1. We somehow cut the cost of energy, either through increased self-reliance or 'methods' -- the latter potentially biting the bullet and actively helping the GCC Arabs with whatever security issues they have so as to get $0 fuel.

2. Increasing the share of manufactured goods' in our exports and, ideally, also finding a way to produce more agriculture to both support local and domestic needs. But to do this without selling out key generators of economic activity to China/Saudi, we'd need money to invest locally.

This in part can come from reviving Pakistani investor confidence, but that might again require cold cash (via grants, subsidies, investment, etc) from the government.

How we get that cash could once again have us look at our sole relative advantages: labour and defence. We might seriously need to consider becoming a 'mercenary state' as a matter of foreign policy -- otherwise, what else do we have, honestly?​

 

[Norwegian]

When did they again get power to go to IMF, what are you talking about? PML went to IMF as soon as it came to power and ID successfully completed the program in 2016 I think.

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

You had my respect until you posted the above as our argument was largely civil. You stooped down so low, to the level of the other inconsequential being, which was not really required, in my opinion.

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?