Pakistani Economic Stress Watch

Airavat · Post by **Airavat** » 07 Apr 2011 05:38

ADB report paints grim poverty, fiscal deficit picture

anupmisra · Post by **anupmisra** » 08 Apr 2011 20:21

Pakistan’s inflation outlook disheartening: State Bank

Add one more prediction to the doom and gloom.

Chinmayanand · Post by **Chinmayanand** » 13 Apr 2011 09:01

Subsidy on oil, gas, electricity to be withdrawn: Naveed Qamar

Time to bring out the IEDs , AKs and Soosai-vests.

menon s · Post by **menon s** » 19 Apr 2011 05:54

Pak team returning without money
http://www.dawn.com/2011/04/19/pak-team ... money.html

Pakistan has already received more than $7 billion in five instalments. The 6th tranche, however, remains suspended since May 2010 because of the country’s inability to meet performance benchmarks attached to the standby arrangement.“And until the 6th tranche is released, it is highly unlikely that the IMF will hold any negotiations on a future arrangement.”Experts noted that with population growth rate not slowing down, youth unemployment at almost 50 per cent, less than 5 per cent investment in public sector development and with a 10 per cent tax to GDP ratio, Pakistan could not hope to revive its economy without drastic reforms.

No wonder why? Pakistan is making more nukes, atleast they can be sold elsewere to make more money?

Airavat · Post by **Airavat** » 21 Apr 2011 06:04

Cement manufacturers rely on India's booming economy

“India will create some enthusiasm for local producers in the north as increasing construction activities in India would keep the grey cement demand alive for the foreseeable future,” said Topline Securities analyst Furqan Punjani in a research note. The Indian government is expected to allocate $1 trillion for housing construction during the next five years, which will boost the demand for cement in the country. Few major producers have started exports to India this month including DG Khan Cement, Lucky Cement, Maple Leaf Cement and Lafarge Pakistan Cement.

Producers in the northern part of the country have started exporting cement to India after BIS (Bureau of Indian Standards) certification was renewed for majority cement exporters in the current month. Licences of around 90 per cent cementmakers had expired earlier in the year, leading to a considerable slowdown in exports. Cement prices in India are hovering around Rs570 per bag (300 Indian rupees), hence, profit margins on export to India could be much more than those made on exports to Afghanistan. The current export price to Afghanistan is hovering around Rs225 per bag.

Narad · Post by **Narad** » 04 May 2011 13:47

Power shortfall now 7,200MW

AoA

Narad · Post by **Narad** » 05 May 2011 10:08

India blocks EU proposal on allowing duty-free entry to Pakistan textiles

Posting in full

NEW DELHI: India blocked a $900-million European Union proposal at the World Trade Organization on Tuesday to give duty-free access to the textile exports from Pakistan.

The firm opposition to the proposal, pitched as a relief package for the devastating floods in Pakistan, should dispel concerns in India that the government may take a soft stand on the issue after the breakthrough in trade secretary-level talks.

"We are not dictated by emotions but facts," a commerce department official told ET.

India told the General Council of the WTO, the organisation's topmost decision-making body, that the package would affect the exports of competing countries that would have to continue to pay 6%-12% import duties on textiles in the EU.

India also argued that the relief did not help flood victims in any way.{AoA} Bangladesh, Peru and Vietnam supported India at the Council, which took up the matter after a lower level 'Goods Council' could not take a decision within the specified period of 90 days.

"The EU has said it will continue consultations with opposing members and hopes to resolve the issue by the next goods council meeting later this month," a WTO official told ET.

The 27-member bloc has time till the end of the month to build a consensus or else the proposal will have to be dropped. The EU will give duty-free access to 75 products from Pakistan, 64 of them textiles, for three years.

The propsoal has to be endorsed by other members of the WTO as the multilatral trading rules require all countries be treated equally.

"There were some fears that India may take a soft stand on the issue after the bilateral commerce secretary level talks in Islamabad last week," an industry official, who did not wish to be named, told ET.

The Pakistan media had also reported that getting the flood relief package approved by India would be high on the country's agenda during the talks.

"Pakistan did not even raise the issue (of the flood relief package) as it knows very well what our stand is on such matters," the commerce department official said.

In response to a letter written by the Pakistani trade minister earlier, India had said it had no objections to EU giving direct assistance to the country as a flood relief measure.

The package would only help the textile industry and not the flood victims, India said justifying its stand.

"EU's proposal for granting trade concessions to Pakistan on the ground of last year's floods is totally unjustified," D K Nair, secretary general, the Confederation of Indian Textiles Industry, said.

EU textile and clothing body Euratex, too, is opposed to the waiver, claiming that there was no economic or even humanitarian reason to give these concessions.

SSridhar · Post by **SSridhar** » 05 May 2011 14:59

Debt servicing consumes 44%, defence 22% & administration 16% of financial resources

Some 82 percent of the available national financial resources in the next fiscal year 2011-12 would go to three sectors: debt servicing, defence and running of civil administration, Awami National Party (ANP) was informed during a budget presentation at the Ministry of Finance on Wednesday.

Debt servicing is to consume 44 percent of the national resources, while defence expenditure is to consume 22 percent, and the civil administration, with the inclusion of Rs 80 billion in pensions of the armed forces, is to consume 16 percent {I don't know what percenage this PNR 80 Billion constitutes in 16%} of national financial resources in 2010-11, the ANP was informed.

ramana · Post by **ramana** » 05 May 2011 20:56

SSridhar and others.
What about a two month all India boycott of Multinational company goods that do business in TSP? Can we organize a facebook/twitter campaign if it can cause some serious hurt?

We need to identify a list of products in TSP made by MNC that have businesses in India. And then organize a campaign to boycott the purchase of goods made by those MNCs in India over a specific period to give them a kick in the fundamentals. For sake of market dynamics we also need to id alternate products for the Indian consumer.

Anindya · Post by **Anindya** » 06 May 2011 02:26

defence expenditure is to consume 22 percent, and the civil administration, with the inclusion of Rs 80 billion in pensions of the armed forces, is to consume 16 percent

Given Pakistani paranoia about their army and the current status of their spending, a perfect weapon that India should use is to raise its defense spending to 3.2% - this would completely kill their economy and also send the TSP army into the next stage of disintegration.

Theo_Fidel · Post by **Theo_Fidel** » 09 May 2011 09:26

http://www.business-standard.com/india/ ... ur/434864/

The noisy, contentious and often childish public debate in India and Pakistan last week, after the United States caught Osama bin Laden, further proves how oblivious strategic analysts on both sides of the border are of the fundamental importance that economics has for a country’s dynamics. However successfully Pakistani spokesmen may brazen it out, and however frustrated Indians may be over their inability to stop Pakistan from exporting terrorism, the hard fact is that Pakistan is losing ground, year after year, month after month.

Most Pakistanis would not be aware that the yield on their government’s 10-year bonds, at 14.1 per cent, is the second highest in the world. This is next to bankrupt Greece (15.7 per cent). That indicates how bleak the markets’ assessment of Pakistan’s economic future is. What is more, the country’s inflation rate (at 12.9 per cent) is the fifth highest in the world. The economic growth rate is abysmal, averaging 3.5 per cent in the last three years, when population growth has been 2.1 per cent. Annual growth of per capita income, therefore, is about 1.4 per cent — less than one-fourth that of India. In 2011, the Pakistan economy’s vital statistics mirror the “Hindu” rates of growth that India recorded in the 1970s. Indeed, with a poor investment rate of 15 per cent (against India’s nearly 40 per cent), Pakistan’s economic growth cannot accelerate much. Moreover, in 1971, the truncated Pakistan had nine million fewer people than new-born Bangladesh; now it has 15 million more — this points to better population control and improved social indicators in India’s eastern neighbour. Though Bangladesh is much poorer than Pakistan, it manages faster economic growth, at 5.4 per cent.

Pakistan’s sustained under-performance has meant that its economy is now only one-ninth that of India; it used to be one-seventh. At one point, its per capita income was noticeably higher than India’s; now it is 20 per cent lower. Project these trends into the future and it should be clear that Pakistan will find it increasingly difficult to sustain its position as a strategic challenger to India; it will simply not have the money or the technology or the industrial prowess. That does not mean it will cease to be a nuisance; a number of semi-failed states are an international nuisance, and Pakistan has its nukes as well as China’s backing.

The question that Pakistanis should be asking themselves is not whether they can trouble India (they can, in the foreseeable future, if that is what gives them satisfaction) but how they think they will be the winners in that game, considering that all they have achieved so far is to score self-goals. They can continue with their stand on Kashmir, perpetuate a sense of victimhood vis-a-vis the US, seek strategic depth in Afghanistan, and treat the army as the country’s strongest institution. But if the instruments for achieving key national goals are the Hafiz Saeeds and Maulana Masood Azhars of the world, not to mention the Taliban, it will not only reflect poorly on Pakistanis but also deliver more self-goals to a deeply challenged society and an economy that survives on international largesse.

shiv · Post by **shiv** » 10 May 2011 13:54

I am no economist but I will make a few observations and ask some questions.

What does a modern 20th/21st century economy mean? What is a "developed economy" in the current era?

As I see it - a "developed economy" is one in which every citizen has a roof over his head, food and water and equal access to amenities like healthcare and education. You could add the power to exert political will to that - but I don't want to go off on a tangent.

In order to become modern, a state needs to have some means of generating income. That generally means that the entire nation/state generates income for itself by some means. This could be by inherent mineral resources like the oil rich gulf countries. It could mean a predominantly manufacturing economy like Japan of the 60s and China of today. It could be a tourist economy - which is usually possible for small states. It could be a mixed economy where agriculture, tourism, manufacture and other services (banking/insurance/education) economy.

But as far as my knowledge goes there is no economy on earth that thrives on agriculture alone. There may be a few small countries that depend on banana or tobacco export but none of these are economic powers. In order to become a significant developed economy the economy needs to go beyond agriculture alone and enter new areas.

Let me state a postulate I want to make. I am saying it and people are welcome to question it and tear down any assumptions I may have made. I say that the economy of modern day Pakistan cannot support a modern nation state. The economy of Pakistan is predominantly agrarian. Its manufacturing economy has no edge over anyone else. Its only significant manufactured goods are textiles and leather goods. Pakistan does make extra money from odds and ends like tourism, arms exports and "services" as in providing soldiers for others. Pakistan expatriates earn some money for Pakistan.

It seems to me that Pakistan could just pull off a "development" of its country if more of the money that Pakistan earns is used for development.

I am told that Pakistan's budget goes this way:
40% defence
40% debt servicing
20% everything else

We on BRF would like that "40% defence" to be reduced, but it ain't gonna happen.
So the only way Pakistan can spend more on development is by
1. Defaulting on loans, or,
2. Having loans written off.

Let us say Pakistan does not default. The only choice fo Pakistan's "friends" to help Pakistan would be to write off its debts. So that is a development we could possibly see in future.

How would that impact Pakistan? How would that impact lenders? Are there any good reasons why that might not occur?

Lalmohan · Post by **Lalmohan** » 10 May 2011 14:07

debt write offs or its equivalent have so far been US aid or Saudi's providing petroleum for free
the first is pure baksheesh paid to fauji funds - which ofcourse manifest themselves in the economy as housing and mall projects paid for by the military - which i would hazard is a large driver of the non-agrarian service sector. the free oil is possibly much more crucial to keeping both the military and the normal economies running

ofcourse, it is not clear how much petroleum (energy) is actually used outside the defence sector and its offshoots...

Airavat · Post by **Airavat** » 11 May 2011 06:17

When dollars stop flowing

Let’s now see how Pakistan first got the Americans to commit that kind of money to Pakistan for the war against terror. US aid has basically come in four major forms to Pakistan since 9/11. First, total security-related assistance from the US averaged around $ 1.22 billion per year during the last ten years. This included funds released under the Coalition Support Fund (CSF) to cover some of the mobilisation costs of the Pakistani military in the war on terror, besides money committed under Foreign Military Finance (FMF) to partially cover recent purchases of American weapons for Pakistan.

Interestingly, one day before Osama’s death, a delegation of the Pakistani armed forces was in Washington to claim $ 1.8 billion in arrears under CSF war bills besides delivering a wish list for more American weapons, including drones under the FMF scheme (averaging at $ 0.25 billion yearly for the last 10 years) This money won’t come any time soon now.

The second portion of this American aid is under economic and development related heads, which averaged around $ 640 million annually during the last 10 years. Then there is an average $ 1.5 billion committed under the Kerry-Lugar-Berman Act. The third portion of this aid would be in the shape of withholding the final two tranches of $ 3.1 billion from the total $ 11.3 billion IMF package for Pakistan. This money was expected to be released fully within 2011 after the government satisfied the IMF about its set milestones. Now the release of this money might be in further jeopardy. Pakistan also receives around $ 2.8 billion in foreign aid from international donors other than the US. Interestingly less then 10 percent of the 780 foreign firms registered in Pakistan pay any taxes here. The Pakistani ruling elite has no idea that they will either have to cough up the required money or risk serious inflation by printing more currency.

Airavat · Post by **Airavat** » 15 May 2011 10:29

No electricity from Thar coal before 2016

Gagan · Post by **Gagan** » 15 May 2011 12:26

The realilty of Sialkot: and other cities of Pakistan

http://www.youtube.com/watch?v=5WRkSxjaEWI

This is the town which used to be the center of their leather industry, football export, and surgical instruments.

Similar stories ringing across all town and cities of Pakistan. But why are the people so agitated, they are a wahid ismali nuclear power kyon ji?

chaanakya · Post by **chaanakya** » 16 May 2011 15:19

Gagan wrote: Similar stories ringing across all town and cities of Pakistan. But why are the people so agitated, they are a wahid ismali nuclear power kyon ji?

Not even grass is left now to eat, that's why.

ramana · Post by **ramana** » 17 May 2011 22:04

Watch out for linen(towels, bed sheets etc) from TSP in Target stores in US.

saip · Post by **saip** » 17 May 2011 22:17

Anything special about that? AFAIK Target carried these items for sometime now. The co I was with received lots of rejects from Target made in Pakistan. We just repackaged them and sent them over to some one else. Besides Targer walmart, sears An JCP have Paki goods.

Prem · Post by **Prem** » 17 May 2011 22:23

Gagan wrote:The realilty of Sialkot: and other cities of Pakistan
[This is the town which used to be the center of their leather industry, football export, and surgical instruments
Similar stories ringing across all town and cities of Pakistan. But why are the people so agitated, they are a wahid ismali nuclear power kyon ji?

*******owned more than 80% surgical biz of Sialkot. They started the industry and Poaks destroyed it. Buggers did not maintain any thing .

ramana · Post by **ramana** » 17 May 2011 22:43

Saip, Dont buy paki goods.

Mahendra · Post by **Mahendra** » 17 May 2011 22:47

Premji

1)Don't give out personal details on an open forum
2) Get yourself onto mullah mailing list

saip · Post by **saip** » 18 May 2011 00:08

ramana wrote:Saip, Dont buy paki goods.

Me buy paki goods? No way, Jose! But I suppose 'stealing' a few shouldn't count against me.

JE Menon · Post by **JE Menon** » 18 May 2011 17:28

Speaking of the surgical biz, I personally know someone involved in the import of these goods from Pak. They supplied a whole country, but my friends are suffering now due to supplier reliability - all kinds of issues. They will dump them probably, if they haven't already, haven't been in touch for a year or so...

Aditya_V · Post by **Aditya_V** » 18 May 2011 17:35

ramana wrote:Watch out for linen(towels, bed sheets etc) from TSP in Target stores in US.

I once stayed in Marriot Hometown or whatever, the Towels said made in Pakistan, I asked for change because of some silly excuse and got Made in USA towels.

Prem · Post by **Prem** » 18 May 2011 23:05

JE Menon wrote:Speaking of the surgical biz, I personally know someone involved in the import of these goods from Pak. They supplied a whole country, but my friends are suffering now due to supplier reliability - all kinds of issues. They will dump them probably, if they haven't already, haven't been in touch for a year or so...

Hint !Hint above, i will be glad to put them in touch with some one in India .

Also please edit my above post as per wise M. Mahendra's advise.

JE Menon · Post by **JE Menon** » 19 May 2011 02:54

Edit what boss?
When I meet up with these guys, I will find out the situation and, if feasible, do the needful.

Prem · Post by **Prem** » 19 May 2011 06:22

JE Menon wrote:Edit what boss?
When I meet up with these guys, I will find out the situation and, if feasible, do the needful.

Tuck so Myket!!

Gaurav_S · Post by **Gaurav_S** » 21 May 2011 06:18

There are many things to watch out when you (NRI) don't want to buy anything made in TSP.

As said before by ramana sir look out for hand towel, bedsheets etc. Target not in massa but everywhere buys lots of stuff from TSP in linen range.

Apart from this many Indian grocery stores sells TSP made rice, pickels etc. At the same time I also find that aam janta doesn't really care much about avoiding or totally boycotting TSP stuff. This movement needs to go beyond BRF through word of mouth and other channels to really see difference. The same can be said for Indian restaurants owned by Indian who may buy TSP rice.

Kashi · Post by **Kashi** » 21 May 2011 08:15

Lots of Paki stores sell Indian brands, which constitute a majority of their stock and surprisingly they sell the Indian stuff cheaper than Indian stores. I wonder how.

harbans · Post by **harbans** » 21 May 2011 08:35

With complete printing presses in Quetta working 24x7x365 making FICN of the best quality possible. Having deposits laundered using same in ME banks, Thailand, Nepal SE Asia and elsewhere, i wonder how many billion USD a year India is subsidizing Pakistan. I always felt Pakistan should have been minus growth. But it grows 3% or so, which is awesome growth really in these circumstances. With reports of Chinese cooperation in it too, i really at times wonder if inflation in India too is a result of laundering of all what Quetta produces. The FICN racket is really BIG IMHO. GOI should take this up at an international level. This is warfare against India.

suryag · Post by **suryag** » 21 May 2011 08:55

Why cant Mr.Brandy from our consulate in AFG be dispatched to set fire to these presses

g.sarkar · Post by **g.sarkar** » 21 May 2011 09:23

Mahendra wrote:Premji
1)Don't give out personal details on an open forum
2) Get yourself onto mullah mailing list

Guruji,
please tell this balak what is Mullah Mailing List?
AOA,
Gautam

Mahendra · Post by **Mahendra** » 21 May 2011 13:50

g.sarkar wrote:
Mahendra wrote:Premji
1)Don't give out personal details on an open forum
2) Get yourself onto mullah mailing list
Guruji,
please tell this balak what is Mullah Mailing List?
AOA,
Gautam

Mere Hukum, mere Sarkarji

Mullah mail is a burqah within a burqah where mullahs dis-cuss issues on personal email. A thorough missile check is a pre-condition before one is accepted.

krisna · Post by **krisna** » 28 May 2011 06:01

http://pragmatic.nationalinterest.in/20 ... vis-a-vis/

for pakilurkers viewing pleasure onlee.

Prem · Post by **Prem** » 28 May 2011 08:07

[quoteMere Hukum, mere Sarkarji
Mullah mail is a burqah within a burqah where mullahs dis-cuss issues on personal email. A thorough missile check is a pre-condition before one is accepted.[/quote]

Where do i sign up. Many Mullahs have my Bijli Khat paata.
Huqam karo sarkar tarre torr diyan
Suraj phar ke Tauno, luk maror diyan.

Theo_Fidel · Post by **Theo_Fidel** » 28 May 2011 08:25

That Baaki GDP number is bogus. It was inflated by Shortcut Aziz to reduce the deficit and debt to GDP ratio. It was also conveniently just over the population number miraculously giving TSP a per capita income above $1000.

The last reliable number was in 1999 before Musharaff when the GDP number was $62 Billion. Since then Growth has averaged about 3.5%. With a high of 6% and low of -2%. Even this is very generous. That puts one at about $90 Billion. Considering US dollar inflation of 2% in that time gives one a number of $115 Billion. This would put per capita income at about $600-$700. Much more realistic.

Note that in this time the currency value has dropped exactly in half. So what they really want you to believe is that their GDP is $350 Billion.

g.sarkar · Post by **g.sarkar** » 28 May 2011 10:52

Mahendra wrote: Mere Hukum, mere Sarkarji
Mullah mail is a burqah within a burqah where mullahs dis-cuss issues on personal email. A thorough missile check is a pre-condition before one is accepted.

Burqah within a burqah... sounds complicated. How to get into such a list?
Gautam

harbans · Post by **harbans** » 28 May 2011 14:19

So what they really want you to believe is that their GDP is $350 Billion.

The way they are printing FICN and bringing that into circulation..i think the GDP might be around that. Else i refuse to believe Paki's are eve growing 3%. No way.

arun · Post by **arun** » 30 May 2011 09:18

X Posted. From the Pakistan Arms Sales, Ops, Doctrine etc thread.

The Islamic Republic of Pakistan’s decrepit financial health seems to have had some (past?) impact on its weapon purchase programmes.

US diplomatic cable dated back to Jan. 28, 2009 leaked by Wikileaks states that the Islamic Republic of Pakistan was “behind in payments” for nearly all of its major weapon acquisition programmes. These programmes include the purchase of the F-16 Block 52 from the US, the JF-17 from P.R China and the Erieye AEW&C from Sweden.

Entirely fitting that those who have been criminally stupid enough to arm a nuclear weapon proliferating and terrorist supporting Islamic Republic of Pakistan be afflicted with some small pain:

In 2006, the GOP signed a five year contract to purchase 18 new Block 52 aircraft. The first delivery is scheduled for 2010. As of September 2008, Pakistan had paid $388 million in national funds, leaving a balance due of $1.04 billion. The GOP is over 30 days behind schedule on its December 2008 payment; its September payment was made almost three months late and only after Pakistan received the first tranche of its IMF Standby Agreement payment. The next payments due are: $113M in December 2008 (now overdue), $99.5M in March 2009, and $301M in June 2009.

Finance Minister Tareen confirmed to Ambassador January 28 that Pakistan would make the overdue December payment "soon," but he asked for three-four months grace period on the next two payments, so that they could be included in the GOP's next budget cycle, which begins in June 2009. Both Tareen and Defense Minister Mukhtar have admitted they are not sure if Pakistan can continue to pay. Post firmly believes that the GOP cannot afford to continue to make these payments, and we do not expect this situation to change. The GOP is also reportedly behind in payments to China, Sweden and other countries for JF-17s, Erieye Airborne Early Warning And Control(AEW&C) radar and other aircraft/programs.

From one of the cables earlier posted by me:

189129: The way forward for Pakistan's F-16 program