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Pakistani Economic Stress Watch

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Pakistani Economic Stress Watch

Postby Peregrine » 02 Jan 2017 18:00

X Posted on the Analyzing CPEC & STFUP Threads

Chambers voice concern at China’s plan to ‘set up industry along CPEC route’
GUJRAT - Cwapistani : The three chambers of commerce and industry of what is termed as “golden industrial triangle” comprising Gujrat, Gujranwala and Sialkot cities, have expressed their grave concern over China’s reported plan of establishing industrial units and warehouses along the route of the China Pakistan Economic Corridor (CPEC).
The leadership of these three chambers has also urged the federal government to take the business community of these industrial cities in confidence about the nature of China’s planned industrial units in the country, warning of its adverse effect on local industry and apprehending that such a scenario might turn Pakistan into a purely consumer market, further weakening its own manufacturing sector.
These concerns were voiced by the presidents of the three chambers of commerce and industry, who gathered at the local chamber (GTCCI) the other day.
The meeting decided that the chambers’ presidents would also hold an exclusive meeting with Prime Minister Nawaz Sharif to share their concerns over the Chinese industrial units along the CPEC route. It regretted the government had not taken the chambers in confidence over the issue.
Mr Bhutta said the local manufacturers’ concerns over the CPEC’s possible effects on the local industry should be addressed forthwith, apprehending that such a situation might hit exports from these cities.
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Pakistani Economic Stress Watch

Postby Peregrine » 05 Jan 2017 17:00

X Posted on the STFUP Thread

Cwapistani Mode of "Economic Development" - Creating a Higher Mountain of Debt!

Birth of another dependency

THE latest quarterly report from the State Bank of Pakistan may sound like a dry affair, but read it a little closely and you’ll notice some startling revelations.

For the past three years now we have grown accustomed to a steady drumbeat of positive news and statements about the economy — the reserves are rising, the circular debt has been contained for almost two years now, growth is ticking upward (even if very slowly), the fiscal deficit is coming down (targeted to hit 3.8pc of GDP this year, the lowest in over a decade).

For a couple of years now we have been told that the country’s macroeconomic fundamentals are stabilising and a new round of investment coming in from China is laying the groundwork for a new growth spurt that will last far into the future.

This story has not been without its skeptics. We have heard similar stories in the past too, only to watch the whole thing unravel very quickly.

The skeptics have pointed out that the rise in reserves owes mostly to declining oil prices and increasing foreign borrowing, and as such is not sustainable.

The continuous declines in exports, drying up of FDI are serious weaknesses, they maintain, and while remittances have shored up the external account, this could change given the fiscal difficulties of the GCC countries.

In short, they have argued that the government’s narrative of an improving economy is built on shaky ground.

The latest SBP report, although optimistic in its overall tone, points towards some changes in the first quarter of the current fiscal year that could lend lasting credence to the voice of the skeptics.

Even though the SBP has taken pains to avoid letting its assessment become fodder for the skeptics to beat the government with, the underlying facts are too stark to now paper over.

We seem to be substituting CSF inflows with commercial borrowings from China as a stopgap measure to plug our current account deficit.
Here are some noteworthy developments the report brings up on the external sector.

Pakistan saw net inflow of $1.1 billion in “net loan and FDI inflows from China in Q1-FY17” says the report.

Out of this, $700 million (the lion’s share of the total) was a commercial loan from the China Development Bank whose only purpose, apparently, was to help pay for the nearly $2bn of machinery that Pakistan imported from China in the same quarter.

In case you missed it, let me put it in plain English here: we’re borrowing money on commercial terms from a Chinese bank to pay for machinery imported from China under CPEC-related projects.

Elaborating on this, the report says “[w]hereas Q1-FY16 had seen a dramatic pick-up in net FDI from China, it was long-term loan disbursements that dominated in Q1-FY17.”

So last year in the same quarter, Pakistan saw net FDI inflow from China of $192m, but this year that figure dropped to $91m.

And loans from China in the first quarter last year were $138m, and this year they jumped to $979m, of which $700m was the commercial loan mentioned above.

These inflows helped cover up a hole that opened up in the country’s external account due to the drying up of Coalition Support Funds (CSF).

In the same quarter last year, Pakistan ran a current account deficit that was less than half of what it ran this year. Last year the CSF inflows played a big role in helping cover the gap.

This year the report says the commercial borrowing from China “helped to cover the increase in current account gap and lower foreign investment in the quarter”.

This is important for a couple of reasons.

First, we seem to be substituting CSF inflows with commercial borrowings from China as a stopgap measure to plug a running deficit in our current account.

CSF was always billed as a “reimbursement”, and booked in our accounts as an export of a service (an awkward classification for what it implies).

But the Chinese loans are on commercial terms and, unlike CSF, have to be repaid with interest.

Another reason is that our three main non debt creating sources of foreign exchange inflows — exports, remittances and FDI — all registered declines in this quarter.

For exports, this was the 10th consecutive quarter of declines that are now becoming alarming.

For remittances, it was the first quarter of decline since 2012, and the report warns that an uptick is unlikely in the foreseeable future.

So our current account is weakening almost irreversibly while imports from China are skyrocketing, and the gap is being plugged by commercial borrowing from Chinese banks.

“[T]he structural weaknesses in the external account — reflected by the continuous drop in exports, lower FDI, and the drop in remittances — present a challenge,” says the report.

How sustainable is this?

What are the terms on these loans, and what sort of outflows will be created when repayment begins?

Nobody knows, not even the State Bank it seems.

But noting the shifting gears in the economy, the report does point out that “in the short run, it is imperative that CPEC projects (both power and infrastructure-related) continue at their projected pace, mainly to ensure steady arrival of associated FX inflows from China.”

And then goes on to add that “[t]his financing will also be crucial to offset the rise in the import bill stemming from higher CPEC-related machinery imports.”

Is this a new relationship of dependency being built here?

Are we now getting locked into a cycle of borrowing and imports under the garb of CPEC even as the more important pillars of the external sector — exports, remittances and FDI — shrivel up?

If so, the first quarter of fiscal year 2017 will be the moment when the gears shifted.

Where these trends take us is difficult to foresee, but increasingly the government’s narrative of economic improvement is beginning to sound like a high-stakes bet instead of sound policy.
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Re: Pakistani Economic Stress Watch

Postby yensoy » 05 Jan 2017 20:46

If I borrow a million dollars from the bank, it's my problem.
If I borrow a billion dollars from the bank, it's the bank's problem.

Pak could very well play this card to ensure their survival at all costs, if they borrow a sufficiently large quantity of money from China.

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Re: Pakistani Economic Stress Watch

Postby Peregrine » 06 Jan 2017 02:17

yensoy wrote:If I borrow a million dollars from the bank, it's my problem.
If I borrow a billion dollars from the bank, it's the bank's problem.

Pak could very well play this card to ensure their survival at all costs, if they borrow a sufficiently large quantity of money from China.

yensoy Ji :

Chinawala is smarter than the Cwapies of Cwapistan. China will "Lease" Cwapistan for 99 Years and then like Xinjiang Cwapistan will become Cwapjiang.

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Re: Pakistani Economic Stress Watch

Postby Bheeshma » 06 Jan 2017 04:18

Cwapies will make sure they have enough polio cases and sharia going around that chinis will not set foot there.

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Re: Pakistani Economic Stress Watch

Postby Prem » 06 Jan 2017 04:38

C-pec is C-pet training programme with little pecking at a time. It will be fun to see what Chinee find when they eventually get to put their hand in Paki Chaddi.. a Kabbab Yaan Haddi .

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Pakistani Economic Stress Watch

Postby Peregrine » 08 Jan 2017 04:45

X Posted on the STFUP Thread

Ginners fear Indian cotton imports will imperil Pakistan’s economy

MULTAN: The cotton ginning industry has fiercely opposed duty-free import of Indian cotton, saying it will have destructive effects on Pakistan’s economy.

Speaking at a press conference on Friday, Pakistan Cotton Ginners Association (PCGA) Senior Vice Chairman Suhail Mehmood Haral, Ginners Group Chairman Haji Muhammad Akram and former PCGA chairman Shehzad Ali Khan revealed that more than 2 million bales of cotton were lying unsold in ginning factories, which textile millers were reluctant to purchase.

Another 700,000 bales are expected next month. They saw no justification for lifting an undeclared ban on cotton import from India at the cost of Pakistan’s farmers, arguing fibre import via land or sea was not in the interest of national economy.

They underlined the need for continuing the restrictions on cotton imports through the Wagah border crossing and Karachi seaport.

Farmers have also aired concern over the removal of curbs from cotton import from India, which would imperil the domestic industry.

They demanded that the government ensure crop purchase at reasonable prices from the country’s growers. They were expecting a bumper crop this year, but feared that imports from India would hit the local growers hard.

They decried that the government did not fix the support price for cotton, leaving them at the mercy of textile millers, who would buy the fibre at their desired rates.

Ginners Group Chairman Haji Muhammad Akram asked the government to slap a complete ban on cotton imports from India via Wagah border.

If such imports continued without any curbs, he believed, they would harm cotton production in the country in the next season.

Last year, cotton harvest had dropped 30% and if appropriate measures were not taken, the situation could deteriorate further and affect local output.

Former PCGA chairman Shehzad Ali Khan disclosed that 530,000 bales of cotton had so far been imported from India through the Wagah crossing.

Players of the ginning industry, however, praised efforts of Federal Minister of National Food Security and Research Sikandar Hayat Khan Bosan, who was endeavouring to bring down the cost of cotton production.

He was of the view that the production cost was higher than the prices farmers were receiving for their harvest. The high cost was one of the reasons behind the decline in cotton production, he added.

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Pakistani Economic Stress Watch

Postby Peregrine » 08 Jan 2017 18:05

X Posted on the STFUP Thread

Pakistan´s once-booming textile industry struggles to bounce back

FAISALABAD: As Pakistan slowly emerges from a long-term power crisis, its once booming textile sector is scrambling to find its feet -- but high energy costs and a decade lost to competitors mean recovery is far from assured.

Energy production was severely depressed for more than 10 years due to chronic under-investment, inefficiencies in the power network and an inability to collect sufficient revenue to cover costs.

The result was crippling for manufacturers and in particular the textile sector, which employs 30 percent of the working population.

Pakistan is the world´s fourth largest cotton producing country but interminable power and gas cuts have stopped exporters from producing their orders on time.

Many have watched helplessly as their clients have instead turned to Vietnam or Bangladesh.

A third of the production capacity of the sector has disappeared, thousands of factories have closed, and most of the others are running below full capacity, says Rehan Bharara, a former loom owner who now runs a public infrastructure project for the textile industry.

Half the time, "we had to run our factories on diesel generators, which was very expensive. We decided to close down rather than losing money every day," he said.

Only those manufacturers which invested heavily in their own energy production survived.

These include plants run by the Sadaqat company, which provides house linen to major Western retailers such as Debenhams, Tesco and Target. Energy supply to huge printing, cutting and sewing departments is rotated according to need.

"We have three sources of electricity: the main and cheapest one is generation through gas, if we don´t have gas, we go to Wapda (the public utility), if Wapda closes, we go to diesel generators," says chairman Mukhtar Ahmed.

"I have no choice. If I stop producing, we lose our customers."

Smaller plants, notably the hundreds of thousands of cotton loom workshops, lack backup generators and are dependent on the public network.

- "No power, no wages" -

Each time the power cuts, work is interrupted.

"We loom workers only get paid if there is power and looms are running. If there is no power, there are no wages," said Mohammad Rizwan, a 21-year-old weaver.

The government has promised to end power cuts by 2018, and said industry would be prioritised.

In the past few weeks, the biggest manufacturers in Faislabad have been supplied without interruption.

"The key is that they give us 24 hours of electricity a day," said Wahid Raamay, chairman of the Council of Loom Owners in Faisalabad.

Despite these important advancements, textiles are not yet out of danger. As the country´s electricity supply has improved, natural gas imports bills have gone up with the increased cost passed down to consumers.

Bharara estimates the cost of electricity has doubled over eight years, from six rupees per kilowatt/hour to 11.

That´s still much lower than 26 rupees per kilowatt hour for electricity produced by a diesel generator, but more than costs in competing countries.

"At this time we are struggling to give competitive power," admits Muhammad Salim Bhatti, general manager of the city´s power distribution company. "Over time, we will become cheaper as new power plants will be more efficient", he hopes. "We´ll be in a position to compete."

But the Asian Development Bank is less optimistic, citing the opaqueness of large-scale Chinese investment in the country's energy infrastructure.

"The power due to be produced by Chinese-built power plants is expected to be expensive" it said, though it anticipates it will still be cheaper than the thermal plants they are set to replace.

In late December, Pakistan´s fourth nuclear power plant went online, built with Chinese assistance as part of Islamabad´s plans to produce 8,800 MW from atomic energy by 2030.

Total exports, meanwhile, 60 percent of which are made up by textiles, declined by 13 percent in the first nine months of this year compared to last, a sign that the industry´s recovery is yet to begin.
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Pakistani Economic Stress Watch

Postby Peregrine » 09 Jan 2017 05:27

X Posted on the STFUP Thread

Ub Pchhtaye Kaa Hoi Jub Chidian Choog Gayi Khet!

Local lobby fears Chinese entrance in textile sector

LAHORE: Pakistan seems to have placed a lot of faith in the ‘game-changing’ China-Pakistan Economic Corridor (CPEC), but the local business community still has some concerns.

Stakeholders of the country’s textile sector are anticipating a further decline, fearing that if Chinese companies started relocating their textile units in different tax-free industrial zones in Pakistan, they would go out of business.

“Whenever China enters any country it damages the domestic market – it’s a fact,” said Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) Senior Vice President Jawad Choudhry while talking to a group of journalists.

“Our industry is currently facing a declining trend due to the high cost of doing business and productivity, whereas China plays with price by increasing its production,” he added.

Industry experts believe that if China locates its textile units to Pakistan they will have an edge over the existing players due to the benefits, such as tax-free zones, under CPEC. An additional benefit for them would be the energy prices as they are setting up their own power plants to feed their industries in Pakistan.

“We expect the government to share CPEC cost and benefit ratio with the local industry so we can plan for our future investments,” said PRGMEA Central Chairman Ijaz Khokhar, adding that CPEC business wing should be established to safeguard the existing local industries as well as international investors.

Khokhar said that Pakistani government should bind Chinese investors to establish new industries as a Joint Venture with local stakeholders with 49:51 equity ratios.

“It is not possible for existing local players to relocate their industries in tax free zones in the current scenario.”
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Pakistani Economic Stress Watch

Postby Peregrine » 09 Jan 2017 21:21

X Posted on the STFUP Thread


Plunging exports cause trade deficit to widen to $14.5b


ISLAMABAD: Pakistan’s trade deficit widened to $14.5 billion during the first half of the ongoing fiscal year due to a steep decline in exports and double-digit growth in imports, torpedoing the government’s external account projections.

The gap between exports and imports during July-December period of fiscal year 2016-17 stood at $14.5 billion, reported the Pakistan Bureau of Statistics (PBS) on Monday. The trade deficit was alarmingly 71% of the annual projections of $20.5 billion, suggesting that the government will face serious problems in meeting its external account targets.

The exports plunged 3.82% to $9.9 billion during July-December period of this year, which was $394 million less than the exports made in the comparative period of the previous year. Compared to this, the import bill increased 10.2% to almost $24.4 billion in the same period. In absolute terms, the import bill was $2.24 billion more than the previous year.

In comparison to the $14.5 billion trade deficit during the first half of this year, the gap in the comparative period of the previous year was $11.9 billion, according to the PBS. The first-half trade deficit was $2.63 billion or 22.2% more than the previous year.

For fiscal year 2016-17, the government has projected exports would grow to $24.75 billion and imports bill may remain at $45.2 billion by end of this fiscal year. It had projected $20.5 billion trade deficit for the whole fiscal year. However, the six-month result showed that the deficit may touch $24 billion by end of the fiscal year, as the trade deficit in July-December period was 70.7% of the annual target.

The government closed the last fiscal year 2015-16 at an eight-year low level of exports, which dropped to $20.8 billion despite preferential access to European markets. The exports have been declining since the current government took over, falling from $24.5 billion in 2012-13.
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Pakistani Economic Stress Watch

Postby Peregrine » 15 Jan 2017 23:00

X Posted on the Analyzing CPEC & STFUP Threads

Chinese exports to Pakistan increase following CPEC launching
ISLAMABAD: China’s exports to Pakistan considerably increased following the launching of China Pakistan Economic Corridor (CPEC), China Central Television reported on Saturday.

Trade with countries along the Belt and Road witnessed growth as exports to Pakistan rose from 11 percent to 14.1 percent.

Meanwhile, China’s foreign trade stabilised and returned to growth in the fourth quarter last year with total foreign trade value up 3.8 percent in the three-month period data from the General Administration of Customs (GAC) showed on Friday.

In the fourth quarter of 2016, China’s exports were up 0.3 percent from a year ago while imports climbed 8.7 percent compared with a 0.3 percent decrease in exports and a 2.3 percent rise in imports in the third quarter, according to GAC spokesperson Huang Songping.

The country’s exports in yuan denominated terms dropped 2 percent to 13.84 trillion yuan (about 2 trillion US dollars) year on year in 2016 while imports rose 0.6 percent from the 2015 level to 10.49 trillion yuan.

The total export and import value decreased 0.9 percent year on year to 24.33 trillion, yuan Huang said at a press briefing.

In 2015, the country’s total export and import values decreased 7 percent year on year to 24.59 trillion yuan.

China’s foreign trade surplus narrowed to 3.35 trillion yuan in 2016 down 9.1 percent from a year earlier, according to GAC data.

Huang attributed the trade recovery to supportive policies, a rebound in external demand and a stabilising domestic economy. Despite the sluggish world economy and shrinking trade activity in the past year, some economic indicators slowly improved, Huang said citing the purchasing managers’ indexes in developed economies which suggested expansion in the last quarter.

Boosted by growing domestic demand crude oil imports in 2016 rose 13.6 percent to 381 million tons while iron ore imports climbed 7.5 percent to 1.024 billion tons, the GAC reported.
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Pakistani Economic Stress Watch

Postby Peregrine » 22 Jan 2017 03:15

X Posted on the STFUP Thread

‘Textile units are relocating to other countries’

KARACHI: The National Assembly’s Standing Committee on the Textile Industry was informed on Tuesday that a large number of textile units have either shut down or relocated to regional countries due to a high cost of utilities.

Representatives of the value-added textile sector informed committee members about a number of factors that have put the country’s exports at risk.

The members expressed surprise that the K-Electric CEO failed to show up at the meeting being held at Pakistan Hosiery Manufacturers and Exporters Association (PHMA) House despite being invited.

The committee members, led by Haji Muhammed Akram Ansari, passed a resolution that asked all heads of utility companies and the secretary of the Ministry of Water and Power to attend the next meeting, which will take place within a month in Islamabad.

Speaking on the occasion, Pakistan Apparel Forum (PAF) Chairman Jawed Bilwani said the textile industry has been struggling due to a high cost of doing business. Pakistan’s textile exports in the last three years dropped 9.22 per cent to $12.4 billion. In contrast, Bangladesh’s textile exports have increased 14.5pc to $30.3bn since 2013-14. The corresponding increase in the textile exports of Vietnam was 26.1pc to $25.3bn.

The industry representatives said electricity tariffs in Pakistan stand at $0.11 per kWh as opposed to $0.09 in Bangladesh, $0.09 in India and $0.08 in Vietnam. They said Pakistan’s industrial gas tariff is 173pc, 44pc and 12pc higher than those in Bangladesh, India and Vietnam, respectively.

They said that even the minimum wage in Pakistan is 98pc, 17pc and 19pc higher than those in Bangladesh, India and Vietnam, respectively. The textile sector representatives informed the committee members about the disparities in tariffs of gas, power and water within provinces. If Punjab is paying high gas tariffs, the Karachi-based industry is also bearing a high cost of water, they said. The industrial water tariff in Karachi is 357pc and 507pc higher than those in Punjab and Balochistan.

There was a jump in exports after the announcement of the textile policy in 2009, they said. For unknown reasons, the policy was discontinued within three years, they added.

With regard to the latest relief package announced by the prime minister, the industry leaders said it may not fully produce the desired results. Some of it will be absorbed by the high cost of doing business while another portion of it will end up being shared with foreign buyers, the representatives of the textile sector told the committee members.

They said there should be no cash rebate and the government should ensure level playing field with regional countries to grow exports.

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Pakistani Economic Stress Watch

Postby Peregrine » 10 Feb 2017 16:31

X Posted on the STFUP Thread

And now - Tantara Tantara Tantara!

Pakistan to borrow $600m from China

ISLAMABAD: Pakistan has decided to borrow $600 million from China to boost its dwindling foreign currency reserves that have depleted by $1.7 billion since expiry of the International Monetary Fund programme.

It is the second time in the last three years that the Pakistan Muslim League-Nawaz government has decided to ask a friendly country to boost its foreign currency reserves. Earlier, Saudi Arabia had gifted $1.5 billion to Pakistan in two equal tranches in 2014.

Pakistan’s debt pile soars to Rs22.5tr

The country’s top economic managers on Thursday held a meeting to thrash out details for the Chinese loan, finance ministry sources said. State Bank of Pakistan Governor Ashraf Wathra, Finance Minister Ishaq Dar and Finance Secretary Tariq Bajwa attended the meeting.

The Bank of China will provide the loan on commercial terms, the sources said. They said the amount will be disbursed this month. The loan is expected to be given for a period of three years at an interest rate ranging between 3.1% and 3.2%, said the sources.

The response of SBP spokesman Abid Qamar was awaited till the filing of the story. He had been requested to confirm whether Pakistan has already received $300 million out of $600 million from China.

With fresh borrowings, the Chinese contribution in Pakistan’s official foreign currency reserves held by the SBP would increase to $1.3 billion, as China Development Bank has already lent $700 million for balance of payment support during the current fiscal year. The China Development Bank has given the loan for a period of three years.

The $1.3 billion Chinese borrowings are part of $2 billion foreign commercial bank loans that Pakistan has budgeted for current fiscal year 2016-17. In addition to Chinese $1.3 billion borrowings, Pakistan also obtained $200 million from Noor Bank of United Arab Emirates. The foreign loans would support the reserves besides helping to meet the budget financing needs.

Will Pakistan forever be indebted to China for CPEC?

Sources said the cabinet has already approved a summary to obtain these loans from China. Last month Pakistan had returned $500 million that it had obtained from China about five years back for providing a cushion to the foreign currency reserves. The reason for returning $500 million loan was that there was a requirement of sending a formal request by prime minister of Pakistan to China to extend the $500 million loan after every year, said the sources.

In October 2016, Pakistan’s official foreign currency reserves stood at $18.925 billion, according to the central bank. During the week ending on February 3, the SBP’s reserves decreased to $17.218 billion, said the SBP on Thursday. There was a reduction of $376 million in one week alone, taking the total tally to $1.72 billion since the expiry of the IMF programme.

Pakistan has been struggling to maintain its official foreign currency reserves that it has built largely by obtaining expensive foreign loans during past three years. The government’s failure to enhance exports, attract foreign investment complicated the matters for it.

Growing China Pakistan Economic Corridor-related imports, decline in exports, absence of Coalition Support Fund, and slowdown in remittances, pushed the current account deficit to $3.6 billion in the first half of FY17, from $1.7 billion in the same period last year, according to latest Monetary Policy Statement of the SBP. It added this higher deficit was financed by an increase in bilateral and multilateral funding along with pick up in investment flows.

“Going forward, with the aforementioned risks to the external sector, the need of financial inflows would grow further,” the central bank cautioned.

During first half of this fiscal year, the federal government borrowed $4.1 billion from the foreign lenders. This includes $900 million foreign commercial bank borrowings and $1 billion raised by issuing Sukuk bonds. The relatively cheaper foreign financing from multilateral financial institutions has significantly slowed down for past many months.

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Re: Pakistani Economic Stress Watch

Postby Prem » 11 Feb 2017 02:29

https://tribune.com.pk/story/1322889/re ... t-january/
Remittances from Saudi Arabia take a hit in January

KARACHI: Overseas Pakistani workers sent $1,488 million in January 2017, up 1.45% compared with the same month last year, according to the State Bank of Pakistan (SBP) data.However, total remittances in the first seven months (July to January) of fiscal year 2017 came down by 1.8% to $10.95 billion from $11.15 billion in the same period of the previous year.Remittances play a major role in stabilising Pakistan’s external sector, as they make up almost half the import bill and cover deficit in the trade of goods account.The country-wise details for the month of January 2017 show that inflow of remittances from Saudi Arabia – the country that hosts the largest diaspora of Pakistanis (about 2.2 million) – significantly came down to $434.15 million compared with $463.44 million in January 2016.Recently, a Saudi newspaper while quoting security sources said that more than 39,000 Pakistanis have been deported from Saudi Arabia in the past four months.Analysts say job losses due to record low oil prices and growing security concerns are some of the major reasons why the kingdom is fast deporting foreigners. This can create problems for Pakistan as it may receive low remittances in coming months from Saudi Arabia.Money coming from GCC countries (including Bahrain, Kuwait, Qatar and Oman) declined slightly to $186.41 million from $192.10 million in the period under review.Similarly, remittances from the EU countries declined to $31.69 million from $31.94 million.However, money coming from the United Arab Emirates (UAE) went up to $323.11 million in January 2017 from $314.4 million in the same month of the previous year. Similarly, remittances from the US increased to $175.01 million in January 2017 from $168.94 million.Remittances from the United Kingdom (UK) also increased to $180.91 million in January 2017 from $174.48 million in January 2016.Combined remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during January 2017 significantly increased to $156.44 million compared with $121.08 million received in January 2016. (Fear of deportation factor)
Pakistan received remittances amounting to $19.9 billion in 2015-16, up 6.4% from the previous year.Declining exports and a gradual slowdown in remittances are major challenges for the economic managers of the country.Analysts warn the country’s foreign reserves might deplete fast in coming months unless serious steps are taken to increase exports on sustainable basis.

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Pakistani Economic Stress Watch

Postby Peregrine » 13 Feb 2017 13:29

X Posted on the STFUP Thread

Whither the jobs?

The country’s job landscape has changed radically over the past two decades. Currently the accounting/finance, sales/marketing and ICT sectors are top job creators. However, hardly 5pc of total applicants actually succeed in landing a decent job.

Technological disruption, premature shrinkage of the manufacturing sector and demographic changes in an environment of an anaemic growth rate explained the chaos and overcrowding in the job market.

According to human resource practitioners, the unemployment rate is very high and Pakistan currently lacks the capacity to absorb about two million youth entering the already swarming job market every year.

While they do not have figures to back their claim, they estimate that the unemployment rate is at 15pc, three times higher than the current official rate of 5.2pc.

These experts stress that this issue has been ignored for too long and deserves the government’s immediate attention.

“Happenings around the world reaffirm that people care most for jobs. Be it Brexit or Trump’s triumph in the US, it was all about jobs in the end”, said an economist.

He argued that job creation in Pakistan is crucial for three key reasons: sustainability of peace and growth, expanding the constituency for democracy and gaining public support essential for success of the CPEC.

He pressed that poverty and social issues could not be dealt with satisfactorily without mainstreaming the idle work-force that was seeking employment. He thought concessions and direct petty cash transfers can at best provide a temporary relief.

“People wish for and deserved employment opportunities and jobs to lead a decent, dignified life. It would be wrong to assume that growth will necessarily improve the job situation. Rulers must remember voters’ verdict in India in 2004 when they turned the tables on BJP despite a steady GDP growth rate” a lady economist remarked.

Dr Aliya Khan, an economist with a keen eye on labour affairs, recently hammered the idea of valuing the human dimension of policy initiatives. She called to and I quote: “Development of a Labour Market Information and Analysis System (LMIAS), for the CPEC to integrate and mainstream the elements of labour market dynamics in this historic opportunity of Pak-China cooperation for the socio-economic uplift and development of the people of this region, in particular the large proportion of the male and female youth entering the labour market in search of decent and productive jobs”.

An informal survey revealed major distortions in the country’s labour market owing to misallocation, mistreatment and under-utilisation of precious human resource.

The situation, if allowed to persist, would compromise efforts directed to promote efficiency and fairness in the economic system. It would retard the pace of wealth generation and perpetuate income disparities in a society already divided beyond all perceivable ways.

“Pakistan is a signatory to the Sustainable Development Goals that recognises the right to gainful employment to all and calls on governments to make labour market fair and free. Do we ever mean what we pledge?” asked a labour affairs expert.

In Pakistan the job-worker mismatch compromises the productivity potential of the economy and generates friction and frustration in youth. Workforce abundance has empowered employers to dictate terms. Weak governance allowed managements to flout labour laws at will.

Most officers contacted for comments referred to the Pakistan Labour Force Survey that projects the unemployment rate and trends in Pakistan on the basis of a survey of 47,000 people across the country.

According to an informed source associated with the Federal Bureau of Statistics the survey only treated respondents seeking a job and had not been able to find one as being unemployed. The rest were assumed to be employed.

It explains why the survey showed citizens in the age band of 65 years and above, almost cent per cent employed (0.16pc unemployed) with greater employment in old women (0.05pc unemployed). Unemployment was highest in the age band of 15-19 at 1.26pc but girls were luckier as their unemployment rate was stated to be 0.33pc in the same age bracket.

The labour force in the survey referred to all citizens of 10 years of age or over. When contacted over phone a senior officer, who wished not to be identified, told Dawn that internationally accepted definitions were used since the data was consistently used by multilateral agencies as well.

According to the survey, agriculture employs 43.7pc of the workforce, 33.9pc are absorbed by the service sector and 22.4pc by the industry.

Monas Rahman, CEO and founder of Rozee, a match-making online portal for the labour market, found an official 5.2pc unemployment rate grossly understated.

“For about a thousand new jobs advertised on this one portal daily, about 40,000 people apply”, he said, substantiating his perception of a wide supply demand gap.

“Pakistan is an employers’ market because of a widening supply and demand gap. What bargaining position can anyone have when there are teeming millions waiting outside the gate ready to replace you for half the pay”, remarked an observer.

“The delusional policymakers can’t hide behind the official unemployment rate for good”, said another observer.

Unfortunately politicians, across the political divide, talk of merit in recruitment but indulge in nepotism unabashedly.

“Government jobs and posting are used by power wielders to reward their relatives/loyalists without any regard to merit, or sold for a high price beyond the affordability of the common man. The running rate for a police constable in Sindh is Rs600,000”, commented a bitter retired bureaucrat.

Some concerned high ranking officials talked of contempt in the private sector towards workers. “The moment one tries to raise issues related to the labour force, company heads close ranks to resist. They consider it an assault on the free market ideology and an expression of ‘socialist bend’ in the government”, he said.

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Peregrine
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Pakistani Economic Stress Watch

Postby Peregrine » 13 Feb 2017 16:31

X Posted on the STFUP Thread

Pakistan’s steely decision to protect its own
KARACHI: Pakistan’s decision to slap up to 40% anti-dumping duty on Chinese steel is a massive development for two reasons – it paves way for growth of the local industry and, more importantly, signals the country’s intention that it will protect the interests of its own even if over $55 billion are coming from the same geographic location.

The duty, imposed by the National Tariff Commission (NTC) last week, will be in effect for five years from the date the body commenced its investigations into the local industry’s claims that the import of Chinese steel is causing it material injury. The investigation began in August 2015.

Chinese supply glut

China has a massive supply of steel and this has turned into an international trade complexity. Steel producers all over the world often accuse China of dumping cheaper steel in their markets. They say Chinese enjoy government subsidies, allowing them to produce the commodity cheaper, rendering other players uncompetitive.
How will Highel than the Himalayas, Deepel than the Pacific Ocean, Sweetel than Honey and Mole Plecious than Eyes Fliend Leact?
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Re: Pakistani Economic Stress Watch

Postby Prem » 14 Feb 2017 23:02

https://tribune.com.pk/story/1326836/ju ... ns-rs799b/
(all cooked up figures)

SLUMABAD: The government has miserably failed to perform in the area it has claimed to be the hallmark of its economic performance. The budget deficit in the first half of the ongoing fiscal year has widened to Rs799 billion, indicating that it will miss the parliament-approved annual target by a wide margin.The overall budget deficit – gap between expenditures and income – increased to 2.4% of the Gross Domestic Product (GDP) or Rs799 billion during July-December period of this fiscal year, reported the Ministry of Finance on Tuesday.The Finance Ministry missed the target by about Rs200 billion despite showing a huge statistical discrepancy of Rs57.2 billion in the first half. Interestingly, the Ministry does not know where it spent Rs57 billion.Missing the annual budget deficit target of Rs1.276 trillion or 3.8% of GDP would mean more reckless domestic and foreign borrowings to fill the gap. The Finance Ministry insists that parliament approves the budget deficit, which implicitly is a permission to take loans equivalent to the size of the budget deficit.The federal government borrowed Rs240 billion from foreign lenders and Rs558.2 billion from local sources to bridge the budget deficit gap.
The fiscal operations summary of the Finance Ministry showed that the deficit ballooned primarily because of reduction in income, as there was no abnormal growth in expenditures. This was because the government did not fully book the power sector subsidies.Total revenues amounted to only 5.9% of the GDP during the first half of this fiscal – even lower than the performance in the comparative period when this ratio was at 6.5%, according to the fiscal operations summary. The decline was both in tax and non-tax revenues.In absolute terms, the total revenues were below Rs2 trillion, less than the revenues in the comparative period of the last fiscal year. The major hit came from non-tax revenues due to reduction in profit of the State Bank of Pakistan and non-disbursements of Coalition Support Fund by the United States.The interest payments stood at Rs647.4 billion during the first half, which were about Rs16 billion higher than the comparative period. The defense spending recorded at Rs336.4 billion -about Rs33 billion higher than the previous year.The federal development spending was just Rs198 billion as against Rs155 billion last year.

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Re: Pakistani Economic Stress Watch

Postby LokeshC » 15 Feb 2017 00:14

Peregrine wrote:“For about a thousand new jobs advertised on this one portal daily, about 40,000 people apply”, he said


Coupled with a TFR near 3, that paints a truly dark future for Bakistan. Imagine a levant sized crisis every 20 sq km.

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Pakistani Economic Stress Watch

Postby Peregrine » 17 Feb 2017 00:28

SBP's reserves slide another $224.4m

KARACHI: Pakistan’s foreign exchange reserves are increasingly under pressure, sliding every week as debt payments and loans take their toll.

Foreign exchange reserves held by the State Bank of Pakistan (SBP) decreased 1.3% on a weekly basis on February 10, according to data released by the central bank on Thursday.

The SBP’s liquid foreign exchange reserves decreased by $224.4 million to $16,993.4 million compared to $17,217.8 million in the previous week.

The decrease in SBP’s reserves is on account of government of Pakistan’s debt and other payments.

Total liquid foreign reserves held by the country, including net reserves held by banks other than the SBP, now stand at $21,824.5 million. Net reserves held by banks amounted to $4,831.1 million.

Over a week ago, the SBP made loan repayment of $500 million to the State Administration of Foreign Exchange (SAFE), China.
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Pakistani Economic Stress Watch

Postby Peregrine » 17 Feb 2017 23:53

X Posted on the STFUP Thread

Pakistan’s current account deficit widens by a staggering 90%

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KARACHI: Pakistan’s current account deficit widened by 90% in the first seven months (Jul-Jan) of 2016-17, standing at $4.72 billion compared with $2.48 billion in the same period of the previous year, according to data released by the State Bank of Pakistan (SBP) on Friday.

With the difference between exports and imports being the biggest determinant of current account balance, a deficit/surplus reflects whether a country is a net borrower/lender with respect to the rest of the world.

Increase in the current account deficit means the government faces pressure to address the country’s balance of payments position in the medium- to long-term.

However, some experts believe the deficit is positive in the present situation because it is led by investments instead of consumption. Owing to the construction phase of the China-Pakistan Economic Corridor (CPEC), Pakistan is witnessing more outflows than inflows. However, the situation will change once the returns of CPEC start coming in, they say.

Pakistan’s current account deficit in whole fiscal year 2015-16 stood at $3.26 billion. This year, the gap in the first seven months (Jul-Jan) of the ongoing fiscal year 2016-17 has already widened by 45% compared to the entire last year’s level.

As a percentage of gross domestic product (GDP), the current account deficit widened to 2.5% in the first seven months of 2016-17 as opposed to 1.5% in the same period of last year.

Pakistan exported goods worth $12.32 billion in Jul-Jan 2016-17 compared to exports valuing $12.48 billion in the comparable period of 2015-16, reflecting a year-on-year decrease of 1.28%.

Total imports of goods in the seven months were $25.54 billion as opposed to $23.39 billion in the comparable period of 2015-16, up by a significant 9%.

Balance of trade in both goods and services at the end of the first seven months was recorded at a negative $15.21 billion compared with the deficit of $12.45 billion in the same period of preceding fiscal year.

Worker remittances amounted to $10.95 billion in Jul-Jan 2016-17, down 1.8% from the same period of previous fiscal year, when they totalled $11.16 billion.

Pakistan received remittances amounting to $19.9 billion in 2015-16, up 6.4% from the previous year.

At a time when the country’s exports are on the decline, the slowdown in remittances could be worrying for the country. Remittances make up almost half of the import bill and cover the deficit in trade of goods accounts. Moreover, the country has also been facing low levels of foreign direct investment (FDI).

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Pakistani Economic Stress Watch

Postby Peregrine » 19 Feb 2017 15:39

Fully Posted on the STFUP Thread

CADGING PAKISTAN ENRICHING CHINA - Capital suggestion

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Re: Pakistani Economic Stress Watch

Postby Neshant » 19 Feb 2017 16:43

Bangladesh looks set to exceed Pakistan in GDP per capita if they can keep growing.

With the latter's focus on jehad rather than economic development, they continue to fall further & further behind.

Longer term objective should be to put Bangladesh in 2nd place in the sub-continent economically.

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Re: Pakistani Economic Stress Watch

Postby Gagan » 21 Feb 2017 21:20

How acute is Pakistan's problem of foreign exchange earnings likely to be going forward.
This discussion reports that about 7,00,000 Pakistanis from the middle east, Iran etc have been sent back to Pakistan.
These foreign resident pakistanis, 7 million of them remitted 11.2 Billion dollars in FY2011.

This means that 10% of the overseas pakistanis have been sent back home in the last year. Not a good sign at all.
BTW just look at the pakiness of the lady anchor's arguments !

https://www.youtube.com/watch?v=xLR48Mdu5fo

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Pakistani Economic Stress Watch

Postby Peregrine » 23 Feb 2017 01:31

X Posted on the STFUP Thread

Struggling to make right
The first six months of 2016-17 have witnessed an unwarranted 55 percent fiscal deficit and 90 percent current account deficit leaving behind a big question mark about the much proclaimed economic stabilisation in the country.

These twin deficits at Rs400 billion and $3.6 billion respectively had presumably been allowed to immensely increase after the completion of three years $6.2 billion Extended Fund Facility (EFF) bailout International Monitory Fund (IMF) package that ended in September last year.
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