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Pakistani Economic Stress Watch

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Peregrine
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Pakistani Economic Stress Watch

Postby Peregrine » 15 Dec 2017 15:19


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Pakistani Economic Stress Watch

Postby Peregrine » 16 Dec 2017 19:10

X Posted on the Terroristan Thread

Pakistan’s external debt, liabilities increase 12.3% to $85b

ISLAMABAD: Amid a weakening currency that has increased the cost of debt servicing, Pakistan’s external debt and liabilities have mounted to $85 billion by September-end this year – a year-on-year increase of 12.3%, reported the State Bank of Pakistan (SBP) on Friday.

In September 2016, the country’s total external debt and liabilities were $75.8 billion that increased by another $9.3 billion, showed the central bank data. The figures are exclusive of $2.5 billion Pakistan obtained last month by floating two sovereign bonds.

The SBP’s external debt bulletin release coincides with the depreciation of the Pakistani rupee against the US dollar. The local currency shed its value by about 4.8%, standing at Rs110.54 to the dollar on Friday.

The external debt and liabilities figures have been released till the period of September 2017 when the value of rupee to a dollar was Rs105.40. Due to the depreciation, Pakistan will require an additional Rs436 billion to service the same amount of debt.

At Rs105.40 to a dollar, external debt and liabilities were equal to Rs8.964 trillion that, due to the depreciation, have increased to Rs9.4 trillion.

Although a weaker rupee had long been predicted due to a weakening position of the external sector, independent economists had warned the government about the implications of exchange rate adjustments. They had said that Pakistan was sitting on explosive mines, as the day it would let the rupee touch its actual value against the US dollar, the country’s external debt would grow.

Former finance secretary Dr Waqar Masood had called on the government to adjust the fiscal deficit target after taking into account the implications of the increase in external debt servicing cost due to rupee depreciation.

The rupee is expected to further shed value in the coming months, as the external sector fundamentals remain weak. The SBP governor said this week that after the recent adjustments the rupee-dollar parity was now closer to the equilibrium.

IMF’s Mission Chief to Pakistan Harald Finger on Thursday said that Pakistan’s external sector and its international reserves would continue to remain under pressure in the coming months.

Out of $85 billion, public external debt including debt and liabilities of the public sector enterprises stood at $70.3 billion by September this year. These were $5 billion higher than a year ago.

The share of the public external debt was $67 billion – higher by $4.6 billion or 7.4% in one year. The public sector enterprises debt increased to $3 billion – also higher by 7.7%.

The debt signed by banks grew phenomenally by 68% to roughly $5 billion in just one year. Out of this, the short-term debt contracted by the banks increased from $1.9 billion a year ago to $3.8 billion by September this year.

The country spent $2.1 billion on repayment of external debt and interest on it during the first quarter (July-September) of this fiscal year, according to the SBP. The figure suggests that like the previous fiscal year, this year again, the overall cost of external debt servicing will remain high.

The cost of public external debt servicing stood at $1.64 billion. The principal loans repayment by the public sector stood at $1.34 billion in just three months. The cost of interest payments increased to $300 million in the first quarter.

The private sector debt servicing cost amounted to $304 million including interest payments.

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Pakistani Economic Stress Watch

Postby Peregrine » 18 Dec 2017 00:02

X Posted on the Terroristan Thread

Economy headed towards point of no return, warn businessmen

LAHORE: Pakistan’s economy is slowing heading towards a point of no return due to interference of the International Monetary Fund (IMF) in economic matters, therefore, people at the helm of affairs must revisit the country’s policies, said the Lahore Chamber of Commerce and Industry (LCCI) while painting a picture of difficult days ahead.

“I have identified 25 sectors that can help overcome the trade deficit,” LCCI President Malik Tahir Javaid said in a statement.

He decried that the industry was the main victim of the deepening economic crisis whereas rupee depreciation was adding to economic miseries of the country.

“All these ills were just because of the IMF’s interference in Pakistan’s economic matters and dictations to the policymakers to take harsh measures,” he said.

The LCCI chief pointed out that Pakistan governments often depended on borrowing from the IMF and in return accepted stringent conditions, adding the global lender always forced Pakistan to adopt bad policies like rupee depreciation and massive increases in electricity and gas tariffs.

“How a country can take independent decisions and its economy can grow when it is carrying a debt burden of over $85 billion and utilising a huge part of the federal budget on debt servicing,” he asked.

Though it was difficult to get rid of the massive loans, it was not impossible, he emphasised. “If Turkey can do it, then why we cannot,” he remarked.

CREATIVE COMMONS

Javaid, along with other office-bearers including Senior Vice President Khawaja Khawar Rashid and Vice President Zeshan Khalil, underscored the need for appointing a permanent finance minister.

At present, the portfolio of finance minister is under the prime minister’s control as per cabinet rules.

They clarified that the business community knew that there was no overnight solution to the economic woes, but there was a dire need to set direction and introduce economic reforms in favour of the trade and industry.

Pakistan faced various economic challenges last year including a decline in exports and foreign direct investment, lowest tax-to-gross domestic product ratio and inefficiency of public sector enterprises.

These challenges could be addressed through meaningful partnership and dialogue between the government and private sector, they suggested.

Saying that there were a number of issues that must be tackled head-on, they pointed out that the biggest one was how to keep the growth momentum going following less-than-targeted expansion of the agriculture and manufacturing sectors. The second big challenge is the widening gap between exports and imports that could be bridged by enhancing shipments to overseas markets.

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Pakistani Economic Stress Watch

Postby Peregrine » 19 Dec 2017 02:05

X Posted on the Terroristan Thread

Market watch: KSE-100 falls with trading volumes lowest since July 2014
KARACHI: The stock market resumed its downward journey as the index once again dipped amid lacklustre trading to close in the red zone.
The KSE-100 Index fell 300 points in intra-day trading due to uncertainty over the political front and lack of positive triggers which kept investors uneasy.
At the end of trading, the benchmark KSE 100-share Index registered a decrease of 261.93 points or 0.68% to settle at 38,383.97.
According to Elixir Securities, Pakistan equities stood lower in lacklustre trading with turnover on the KSE All-share Index ($24 million) touching a 29-month low.
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Pakistani Economic Stress Watch

Postby Peregrine » 20 Dec 2017 01:21

X Posted on the PESW Thread

Pakistan’s stock market: from Asia’s best to Asia’s worst
KARACHI: Asia’s best performing stock market in 2016 – the Pakistan Stock Exchange (PSX) – has regressed to become the worst performing one in 2017 in the region with stakeholders expecting the trend to continue till the 2018 general elections.
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index has fallen 20% since January 1, 2017 to date and 28% from its peak – 52,876.46 points – it achieved on May 24, 2017.
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Pakistani Economic Stress Watch

Postby Peregrine » 24 Dec 2017 16:28

X Posted on the Terroristan Thread

Capital suggestion - The yuan

Federal Minister for Planning Professor Ahsan Iqbal has said that “Pakistan is looking for the possibility of replacing [the] dollar with [the] yuan in cross-border trade with China.” The renminbi (RMB) is the official currency of the People’s Republic of China and the yuan is the primary unit. The People’s Bank of China, the central bank of the People’s Republic of China, is the official issuer of the renminbi.

Pakistan’s GDP of $283 billion Not US$ 307 Billion as claimed by the Government of Terroristan is 2.6 percent of China’s $11 trillion GDP. And Pakistan’s GDP is a mere 0.4 percent of its $77 trillion global GDP. Our share in global exports of $16 trillion is a paltry 0.13 percent. What that means is that, whether Pakistan replaces the dollar with the yuan in cross-border trade with China or not, Pakistan’s action will not have any impact on global trade.

But, Pakistan replacing the dollar with the yuan in cross-border trade with China has major implications for Pakistan. Here’s the quantum of trade: Pakistan’s exports to China are around $1.8 billion a year and China’s exports to Pakistan hover around $14 billion a year. Resultantly, Pakistan’s trade deficit with China stands at a colossal $12 billion a year.

Red alert: Pakistan’s trade deficit with China is roughly 40 percent of Pakistan’s total trade deficit with the rest of the world. Currently, Pakistan raises dollar-debt from a wide variety of sources – including multilateral institutions like the IMF – to finance the hefty trade deficit. Once we decide to replace the dollar with the yuan in cross-border trade with China, we would be looking at China to finance the 80 billion yuan trade deficit. That would essentially mean Pakistan moving away from multi-source dependence to single-source dependence.

Red alert: In just five years of trading, our yuan-denominated indebtedness would reach 400 billion yuan or the equivalent of $60 billion. Red alert: Pakistan replacing the dollar with the yuan would mean handing over part of the State Bank of Pakistan’s monopoly over Pakistan’s monetary policy.

China certainly stands to gain. China has long been trying to make the yuan the reserve currency. Yes, China’s investments in Pakistan will face no exchange risk. In essence, it would amount to China’s projection of its economic power over Pakistan – a big geo-strategic plus for China at no added cost.

Here’s what happened in Zimbabwe, China’s other ‘all-weather friend’: between 2010 and 2015, China granted Zimbabwe over $1 billion in low-interest loans. In 2015, President Xi Jinping visited Zimbabwe and cancelled some of Zimbabwe’s China-held debts. In return, Zimbabwe made the Chinese yuan legal tender. Over time, the Zimbabwean dollar became worthless and in 2009 the Reserve Bank of Zimbabwe, the central bank of Zimbabwe, abandoned the Zimbabwean dollar. Resultantly, the Reserve Bank of Zimbabwe lost all control over Zimbabwe’s monetary policy.

Under the Free Trade Agreement (FTA), Pakistan offered China “concessions on 6,803 tariff lines” with zero tariff rates on “electric and electronic products, machinery, chemicals and various raw materials…” The FTA has seriously hurt Pakistan as the balance of bilateral trade is heavily tilted in China’s favour.

To be certain, China and Pakistan had agreed upon a swap arrangement some six years ago. What more does China want? Is it in Pakistan’s interest to have a parallel currency? Countries fight really hard to protect their currencies. Should we surrender ours without a fight? Is it simply the adoption of the yuan as a currency of settlement? Is it a pipe-dream or is it 21st century colonisation?

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Re: Pakistani Economic Stress Watch

Postby ramana » 25 Dec 2017 22:42

From WA group

PESHAWAR (Pajhwok): Pakistan has stocked 9.7 million tonnes of wheat but could not export it to neighbouring Afghanistan for lack of a clear policy, laments a business leader.

Pakistan-Afghanistan Joint Chamber of Commerce and Industry head Ziaul Haq Sarhadi said in an interview published on Saturday the absence of proper policy was damaging the country’s exports.

As a result, he told The News, Pakistan was losing established markets across the border in Afghanistan and Central Asian republics.

With a limited capacity to properly stock the wheat, the government has kept 69 percent of the commodity in open storage facilities. The situation will further worsen when the new wheat season starts in four months.

Sarhadi said India, exploiting the situation, had exported 15,000 tonnes of wheat to Afghanistan through Chabahar port in Iran. India plans more exports to the landlocked nation due to what he called a flawed Afghanistan-Pakistan Transit Trade Agreement.


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Pakistani Economic Stress Watch

Postby Peregrine » 26 Dec 2017 04:28

X Posted on the Terroristani Thread

Despite growth, economy still under risk, says IPR

LAHORE: Despite a revival of growth, Pakistan’s economy is still facing some serious risks and vulnerabilities.

Economic growth has improved with the revival in manufacturing and agriculture, rapid increase in tax revenue has strengthened public finance, however, major foreign financing challenges remain, stated the Institute for Policy Reforms (IPR) in the review of the economy for the first quarter of 2017-18 on Friday.

At 4.4% of GDP, the current account deficit grew by 120% over the same quarter of last fiscal year and far exceeds the target set by the government. Foreign reserves have fallen despite hefty external borrowing. So far, the government has attributed the runaway current account deficit to growth-inducing machinery imports. Machinery imports, however, did not grow during the quarter. Import of power generation equipment fell by 17%.

The report asserts that Pakistan is dependent on external savings and the economy is exposed to continuous loan rollover and re-pricing risks. Recent correction in rupee value may reduce imports and the deficit. The central bank estimates foreign exchange financing gap of $12 billion in FY18 (later retracted). IPR says that the gap will be higher. Next year’s foreign financing gap is a major economic risk.

Fiscal deficit also is higher than target. This has increased government’s indebtedness, both domestic and external. These macroeconomic factors prevent sustained and long-term growth of the economy. They are the result of years of economic decision making that prioritises firefighting to solve immediate problems, but does not show resolve to deal with structural issues.

The problems point to an economic structure that does not allow the economy to substantially increase investment. It is the result of a political economy that favors the privileged at the expense of everyone else.

The report cautions against despondency though because that is the last thing the market needs today. It affirms that Pakistan has the potential to turn the economy around if all institutions show firm intent.

LSM grew by a healthy 8.4% during the first quarter primarily due to improved power supply, better security, low interest rates, low inflation, and past years’ investments. Agriculture has recovered from higher fertiliser off-take, higher credit and mechanisation, and support price for wheat.

GDP growth will be higher than last year’s 5.28%. An expansionary monetary policy coupled with largely steady exchange rate (despite 5% correction in December) and some agriculture and industrial revival have stimulated growth. Continuous growth in public sector investment and China-Pakistan Economic Corridor (CPEC) development projects also have given impetus.

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Pakistani Economic Stress Watch

Postby Peregrine » 27 Dec 2017 03:24

X Posted on the Terroristan Thread

PSX is ugly and broken

Pakistan’s stock exchange resembles a markhor. Imagine it, hearty and proud, holding itself in the manner befitting such a noble animal, such a tough fighter. Imagine it, bold and kingly, hit by a truck on the side of some anonymous stretch of motorway. Imagine it, still and silent, lying there for years on end. Its eyes are glassy and the stale smell is terrible. Flies abound. No one weeps for the markhor. Only stupid animals wander on roads.

It’s difficult to say when the PSX was hit by a truck and ended up in its current foul state of decay. Maybe it was never alive. But as far as legitimate investments being allowed to foster go, it flat-lined a long time ago. Then again, isn’t this just the way things go? The narrative of the broken exchange system is hardly a new one. From Amsterdam to New York, stock exchanges go through phases (or eras) of massive corruption before a government body steps in and enacts legislation like the Securities Exchange Act of 1934. To this day, the Western world fights a tedious war on acronyms: HFTs, CDOs, and MBSs via the SEC, FBI, and FED.

Unfortunately, while high finance may be as intensely boring and cyclical as locally-themed road kill, it is also important and bears paying attention to. Exchanges are how a nation’s corporations are able to raise money and provide better products and services. You, the people, invest in companies and they get your money. They ask for money now so they can pay you back later. If they do well then you see a return on your investment. Everyone wins. It is a tremendous system founded on the principle of time value of money. If I am losing you, let me win you back with another metaphor.

The cymothoa exigua is a vile parasite that removes a host fish’s tongue and then supplants itself in its place. This beast gorges on the fish’s rightful food and provides nothing of value. Yet it is a class of species above certain PSX brokers. These PSX brokers work often together to lift huge chunks of money off of the outside (honest) investor by utilising lazy tactics that New York invented in 1920. A century behind the curve, the broker unapologetically eats your lunch while pretending to be but a bastion of service, a holy provider of liquidity, a simple soldier making a market. But he is not. He is the furthest removed thing from pushing forward an agenda of honest capitalism. You place a large order? He puts in his order first to take advantage. You invest based on market trends? He makes them up with his buddies by tossing chunks of equity back and forth between themselves like a financial rugby.

Academics refer to these activities politely as collecting manipulation rents, front-running, and pump-and-dump schemes. You might have heard of them in less civil terms.

Most people may feel a lack of concern for this phenomenon. That the financial system of Pakistan is as broken and corrupt as the governing one is hardly a surprise. But one should find a spurious anger in a broken market. How much anger? About $100 million worth (10% of market cap). That’s the amount parasitic brokers implementing manipulative schemes manage to “expropriate” from masoom shareholders looking to invest savings. 100,000,000. That’s eight zeros. Nine digits. Per year.

That’s so many zeros that you could build more than a half-thousand Minar-e-Pakistan’s with it.

That’s so many zeros that in less than six years they’ll be able to buy Somalia. They shouldn’t. That won’t be good for any party involved. But they could.

That’s so many zeros that they could buy three Learjet 85s, crash them into each other and still buy another and then a few restaurants on M M Alam Road. It would make for a frighteningly odd portfolio. But they could.

But, beyond possessing a base sense of morality, why should you care if you do not invest in companies in Pakistan? Because then the scourge of apathy lends itself to simple reactions in the market. Companies stop listing on exchanges (as they have) because they know that you will not invest (as you haven’t) and they will not be able raise capital. Those that do list find themselves victims of the aforementioned brokers. Some companies delist. They stop producing goods and services of the same quality. They raise prices to stay alive. Now you care. But it is too late. The markhor is dead. The fish is dead. The PSX is ugly and broken.

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Re: Pakistani Economic Stress Watch

Postby Trikaal » 27 Dec 2017 12:48

No one is as savage on pakistan as their own media. Comparing it to roadkill and dead diseased fish is going so far, that even enemies might pity it.

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Pakistani Economic Stress Watch

Postby Peregrine » 07 Jan 2018 03:42

X Posted on the Terroristan Thread

‘Pakistan will be no way near $35b export target in June 2018’

KARACHI: Pakistan is all set to miss its over-ambitious export target of $35 billion by June 2018, which the federal government set in the three-year Strategic Trade Policy Framework 2016-18, say high-ranked officials.

After failing to meet the goal in three years, the government will try to achieve the target in the new trade policy but this time the timeframe will be for five years from 2019 to 2023.

“We can push exports above $36 billion in the next five years,” declared Ministry of Commerce Director General Trade Policy Nauman Aslam.

After a drop in exports over the past three years, the shipments have recovered at an average pace of 10-11% per month since the beginning of current fiscal year in July 2017.

“If the pace of growth is maintained in remaining months of the year, then Pakistan’s exports will reach $23 billion by the end of current fiscal year,” Commerce Division Secretary Muhammad Younus Dagha said.

They were speaking at a consultative session on the Strategic Trade Policy Framework (2019-23), jointly organised by the Ministry of Commerce and US Agency for International Development (USAID).

Aslam said exports of $36 billion would be achieved if the current average growth of 10-11% was maintained in all months throughout the next five years.

“This (10-11% growth) is a very moderate approach. We have a lot of potential and…can achieve a higher growth of 15-20% (per year),” he said.

He acknowledged that Pakistan would miss the $35-billion export target this year mainly due to delay in implementation of most of the policy initiatives and partly due to nine-month delay in announcement of the policy.

Major causes of the policy failure are lack of diversification of exports, little innovation and value addition in export goods, insignificant research to know latest consumer needs and failure to find new markets.

“Seventy per cent of exports comprise three traditional products including textile,” Aslam said. Secondly, the country mostly exports commodities in bulk instead of shipping them in packages.

“Around 74% of food items and 40% of textile goods are exported in the form of commodity. Value addition may attract higher export values,” he suggested.

Free trade agreements

The DG trade policy said a review of free trade agreements (FTAs) with two countries and signing of FTAs with more countries were on the cards with the objective of reviving exports under the new trade policy.

FTAs with China and Indonesia are being reviewed these days whereas talks have been going on with Turkey and Thailand for free trade deals which are believed to give a boost to trade with them.

Besides, Pakistan is searching for new markets in countries and regions like Australia, China and Africa. “Look Africa Plan and Emerging Pakistan are some of the initiatives of the Ministry of Commerce,” he said.

Meat exports

Commerce Secretary Dagha said the new trade policy would promote meat exports and in that regard the government would soon announce a package for the poultry industry.

The policy will also promote those sectors that have been under pressure due to liberal imports like that of steel.

He pointed out that the government had addressed exporters’ concerns through rupee depreciation against the dollar in December 2017 when the State Bank of Pakistan let the rupee weaken 4.8% to Rs110.64.

The depreciation, along with the Rs180-billion PM export package, has started reviving exports and the trend may continue in coming months.

“Initial reports suggest the growth in exports (in December 2017) was much better (than the 10-11% average so far this year),” he said.

Buyers’ conference

For the first time in history, Pakistan is organising a buyers’ conference in Islamabad to know about their demands and expectations.

“We have been consulting with exporters and importers to address their grievances and to learn what they want. This would be for the first time Pakistan is inviting buyers,” he said.

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Re: Pakistani Economic Stress Watch

Postby disha » 08 Jan 2018 01:54

^A pindi chana blast at the buyers conference will flat line the KSE.

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Re: Pakistani Economic Stress Watch

Postby Prem » 08 Jan 2018 04:30

https://tribune.com.pk/story/1602509/2- ... cross-40b/
Foreign loans contracted by government cross $40b
ISLAMABAD: Gross foreign loans contracted by the PML-N government since it came in to power have crossed $40 billion as of the end of October 2017, $6.2 billion higher than the figure the centre shared with a panel of the National Assembly last month.The Economic Affairs Division (EAD), the main window that deals with external creditors, had informed the National Assembly Standing Committee on Finance and Economic Affairs that gross foreign loan disbursements from July 2013 to October 2017 stood at $34.2 billion.However, the figure is lower by $6.2 billion since the EAD did not include the loans taken by the International Monetary Fund (IMF) in its calculations. The confusion is a result of lack of coordination between the Finance Division and the EAD, the two main divisions of the finance ministry. The IMF loans are contracted mainly for balance of payments support, and are dealt by the State Bank of Pakistan.By including the borrowings from the IMF under the three-year Extended Fund Facility programme, gross foreign loans that the PML-N government took till October 2017 amount to $40.4 billion. After including the $2.5 billion Pakistan raised through Euro and Sukuk bond issuances in November 2017, the figure would jump to nearly $43 billion.Pakistan’s total external debt and liabilities as of September 2017 stood at $85 billion. Out of the total, the government’s direct obligations are equal to $67.2 billion, which exclude guaranteed and public sector enterprises’ debt.From July through November of the ongoing fiscal year, the federal government paid Rs625 billion for domestic and external debt servicing.
The PML-N government also obtained $7.5 billion in foreign commercial loans till October 2017 as part of its policy to meet external financing needs instead of undertaking structural reforms that would have ensured flow of non-debt creating inflows. Out of this $7.5 billion, the government either returned or rolled over $5.34 billion it took from commercial banks or as short-term loans.For the next five years (2018-19 to 2022-23), the EAD has estimated Pakistan’s debt servicing cost at $31.4 billion. One-third of it, $10.7 billion, will be returned to multilateral creditors, $5.6 billion to Paris Club members, $4.5 billion to non-Paris Club members, $5.8 billion to commercial banks and $4.3 billion as bond repayments.

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Pakistani Economic Stress Watch

Postby Peregrine » 10 Jan 2018 04:00

X Posted on the Terroristan Thread

Rupee to depreciate further against dollar: Moody’s

SINGAPORE: Moody’s Investors Service has on Tuesday expressed fears for the Pakistani rupee to depreciate further against the US dollar but hopes that the depreciation will bring long-term benefits for the Pakistani currency.

“Over the longer term, allowing the PKR to reflect currency fundamentals would reduce the drain on Pakistan’s (B3 stable) foreign exchange reserves and enhance the sovereign’s capacity to absorb shocks to trade and/or capital flows. Moreover, if inflation expectations are anchored and the government’s liquidity risks do not rise sharply, currency flexibility would also enhance Pakistan’s price competitiveness, given the current overvaluation of the PKR”, Moody’s said in an announcement”, Moody’s said in its announcement.

The credit rating firm observed that ‘PKR depreciated around 5% against the USD, with most of the weakening occurring over three trading days between 8 and 12 December 2017’.

Citing the real problem behind the currency depreciation, Moody’s said that 33% of Pakistan’s debt was in foreign currency and that the debt burden was 68% of the GDP at the end of the previous fiscal year while it should be 55% for the B-rated sovereigns.

It said that at the current levels, Pakistan’s credit rating was not likely to be hit but further depreciation was certainly possible; and likely as well. It hoped that ‘Pakistan’s current account deficit to remain around current levels, at 3%-4% of GDP, due to the high import intensity of domestically-driven growth’.

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Pakistani Economic Stress Watch

Postby Peregrine » 11 Jan 2018 16:09

X Posted on the Terroristan Thread

Trading in the yuan

A LARGE misunderstanding is growing that Pakistan has just opened the door to settling all bilateral trade with China in yuan instead of the dollar. It all began when, in response to repeated queries on the subject, the State Bank put out a press release on Jan 2 saying that such trade has been open for years, and there is no bar to using the yuan to settle payments for trade and investment from China.

“SBP has already put in place the required regulatory framework which facilitates use of CNY in trade and investment transactions such as opening of L/Cs and availing financing facilities in CNY,” the press release said. In fact, the yuan is not the only currency that is allowed to be used for settlement of cross-border trade and investment. Besides the dollar and yuan, the euro and Japanese yen can also be used similarly.

In any case, as the press release emphasised, the bank had “already put in place” all the tools that allow the yuan to be used for trade settlement. The process actually began in December 2011 when a currency swap arrangement (CSA) was signed between China and Pakistan.

The agreement was for three years, subsequently renewed, and up to 10 billion yuan were available to Pakistan to swap against rupees through it. The State Bank governor, in a written note released a week after the signature, said that the main objective of the agreement is to “promote the use of regional currencies for trade settlement purposes”, and for China CSAs of this sort, which were being signed with many other countries as well, were part of its overall ambition to internationalise the yuan and prepare for an era when China’s currency could rival the US dollar as a global currency.

The first auction of yuan was held in June 2013. Not a single bank submitted a bid.

Today, China has such CSAs with at least 30 other countries, totalling more than $550bn. But the ambition of a globalised yuan still remains a distant dream.

In Pakistan’s case, the signing of the CSA was followed by a lengthy period of putting in place the administrative tools necessary for its operation. Central banks of both countries needed the proper channels through which to effect the swap. Then they needed a mechanism through which to make the respective currencies available to their domestic banks.

That process ended in May 2013 when the State Bank announced the operational launch of the yuan settlement system. The way it was going to work was a little complex. The State Bank would conduct competitive auctions of the yuan for banks to participate in. Depending on the demand elicited from these auctions, the State Bank would request the requisite quantity of yuan from China, and offer an equivalent quantity of rupees as a swap. The exchange rate at the time was Rs14 to the yuan.

Banks could now ask to borrow yuan from the State Bank in two tenors: three and six months. After acquiring them, they could make these yuan available to their clients for payments connected to their dealings with Chinese companies, whether trade or investment related. On the settlement date, the banks would return the yuan to the State Bank, which would return them to China and retrieve their rupees.

The first auction of yuan was held in June 2013. Not a single bank submitted a bid. There was no interest whatsoever from the market. But in the meantime, the government of Pakistan was entering a serious balance of payments crisis as the foreign exchange reserves depleted to dangerous levels. During that time, then governor of the State Bank, Yasin Anwar, managed to use the swap facility to draw a large amount of yuan (the exact number was never officially announced, but I think I once heard him say at a public event that it was equivalent to $1bn), convert them into dollars, and place the resultant funds in the reserves, thereby pushing the approaching balance-of-payments crisis down by a few months.

A second auction was held in December 2013, and once again, no bids were received. The market remained uninterested in the facility. From then onwards, the State Bank discontinued the yuan auctions and told the banks to approach the central bank whenever a demand for yuan materialised, and an auction could be organised at short notice. Not a single bank has taken up the offer since then, showing that the level of interest in using yuan to make trade-related payments remains zero to this day.


When I spoke to a group of importers about why there was such a lack of interest in the yuan for settlement of trade payments with China, I received three responses. Some said they were fine with the dollar and simply not interested in the change. Others said the yuan was less stable against the rupee compared to the dollar (the yuan was Rs14 back in 2011, it is Rs17 now), and they did not want to deal with the exchange rate risk. Another group said that the yuan facility requires the transaction to be conducted through a letter of credit issued by a bank, whereas a large amount of under-invoicing takes place in imports from China, where the balance payment is made through an exchange company for concealment.

When asked why not use the yuan for the amount paid via L/C and the dollar for the remainder, they simply replied ‘why complicate things? If I’m dealing in dollars anyway, why shift to yuan for a part of the payment?’

So there is nothing new in the Jan 2 announcement of the State Bank. It is possible that at the moment, the Chinese authorities are simply focused on creating the pathways through which yuan settlement can be effected. Once in place, they will turn their attention towards getting increased utilisation. A set of incentives will be offered for the purpose, but until then, it remains business as usual.

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Re: Pakistani Economic Stress Watch

Postby anupmisra » 12 Jan 2018 05:36

Pakistan’s debt to GDP ratio reaches 67.2 percent; Finance Ministry

The public debt of Pakistan to GDP ratio has been increased to 67.2 percent due to increased borrowing by the present government in its tenure which is 7.2 percent above the legal ratio of 60 percent to the GDP allowed by the parliament through legislation.
Government Debt to GDP ratio stood at 61.6 percent at end of June 2017

And, now the equal-equal.

Ministry of Finance further explained that developed countries like USA, UK and Japan also carry debt and maintain levels as high as 80 to over 100 percent of their GDPs, well over Pakistan debt to GDP levels.
The Finance Ministry further said even in the developing country peer group, Egypt, Sri Lanka and India carry higher debt to GDP levels as compared to Pakistan.


AoA!

http://www.onlinenews.com.pk/index.php? ... s_id=11210

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Re: Pakistani Economic Stress Watch

Postby A_Gupta » 12 Jan 2018 07:54

This is from December 2015
https://tribune.com.pk/story/1013407/no ... -pakistan/
Automobile analysts say macroeconomic recovery, better security situation and revival of banks’ interest in car financing are helping car sales. “Porsche is opening up a centre in Karachi now. Audi’s sales have picked up and newer BMWs are not as rare as before.

“But these automakers don’t have big numbers, not even in three digits in a month,” he said, when asked about the correlation between economic recovery and luxury car sales.

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Re: Pakistani Economic Stress Watch

Postby A_Gupta » 12 Jan 2018 08:02

This is from November 2016
https://tribune.com.pk/story/1229152/au ... -pakistan/
BMW has been present in Pakistan since 2004 in partnership with Dewan Motors that has launched 2 PHEV models, the X5 40e and the 330e. These models, according to the company, have received a positive customer feedback and are accounting for around 15% of total BMW sales in Pakistan.

However, high end models continue to be imported by individual customers. The X1, priced at Rs3.99 million, has already attracted brand conscious consumers. According to the company, around 120 pre orders have been received and delivery will start in February 2017.

On an average, the company sells 150 units per annum, but Seibert said that the year 2016 has turned out to be a very successful one. “We are estimating that by the end of this year, over 30% more cars will be sold and delivered to the customers as compared to previous year.”

Dewan Motors Chairman Dewan Mohammad Yousuf, however, said that in 2017, they are expecting to sell 250 units in Pakistan, which shows the rising interest of customers in this brand. “We are very much committed when it comes to the BMW Group and investments we have made with them,” Yousuf said.

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Re: Pakistani Economic Stress Watch

Postby A_Gupta » 12 Jan 2018 08:08

In PKR terms, exports are just reaching back to the level in 2014.
https://tradingeconomics.com/pakistan/exports

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Pakistani Economic Stress Watch

Postby Peregrine » 13 Jan 2018 15:54

X Posted on the Terroristan Thread

World Bank puts $250m policy loan for Pakistan on hold

ISLAMABAD: Amid Pakistan’s weakening macroeconomic situation, the World Bank has put on hold a $250-million policy loan, which the lender till recently was ready to give for disaster risk management.

A review mission of the World Bank has not authorised preparations for the loan to continue, according to the Programme Information Document of the Development Policy Credit. The document underlined that Pakistan’s macroeconomic framework continues to face some risks as the overall external account position weakened, the current account deficit widened and international reserves came under pressure during fiscal year 2016-17.

“The Cat-DDO (Catastrophe Deferred Drawdown Option) requires an adequate macroeconomic framework to be approved,” according to the World Bank document. The policy loan is a contingent credit line that provides immediate liquidity in the aftermath of a natural disaster.

Pakistan has been facing serious problems on the external account. The country has been struggling in the face of challenges stemming from a growing trade deficit, which is eating up precious foreign currency reserves. Even after raising $2.5 billion bonds in the ongoing fiscal year, gross official foreign currency reserves have again fallen to below $14 billion.

Sources in the finance ministry said that the World Bank’s policy loans were now contingent upon a good health certificate from the International Monetary Fund (IMF). They said Pakistan and the IMF could not converge on a consensus for the macroeconomic framework during the post-programme monitoring talks, although Pakistan had accepted the IMF’s major demand of devaluing the rupee against the US dollar.

“The World Bank continues its engagement with the authorities on the macroeconomic framework, which is also informed by the ongoing dialogue between the government and the IMF,” said a spokesperson for the World Bank while responding to a question on Pakistan’s macroeconomic vulnerabilities.

About two months ago, the World Bank also slowed down the process of policy loans for budgetary support due to a deteriorating macroeconomic situation.

Sources in the finance ministry said that the positions of Pakistan and the IMF team would be presented to the executive board of the fund that will then approve a macroeconomic framework. Sources said that the major policy difference between the IMF and Pakistan was on the extent of the current account deficit and net international reserves.

“The project has not been dropped, it is under preparation and further steps will be informed by the macroeconomic situation,” said the World Bank spokesperson. The spokesperson said that the proposed policy loan fell under a modality called the Catastrophe Deferred Drawdown, which provides financial support to the government in case of natural disasters and health emergencies. In that sense, it differs from regular budgetary support.

But the spokesperson underlined that a recent report of the World Bank also discussed the growing current account deficit and the decline in reserves as well as the widening fiscal deficit, which has reversed a trend of fiscal tightening over the previous three years.

The report argues that policy adjustments are needed to restore and maintain macroeconomic stability, and the government is taking steps in that direction.

The $250-million loan was aimed at strengthening the regulatory and institutional framework to manage climate change and disaster risk in Pakistan and increase the country’s financial capacity to respond to the adverse natural disaster events.

The World Bank noted that after the 18th Amendment in the Constitution the transfer of responsibilities to the provinces have affected Pakistan’s disaster risk management approach. It said that the natural disaster events foster poverty and human capital losses, eventually leading to poverty traps.

Nearly three-quarters of Pakistan’s population are either poor or vulnerable in part because many households are clustered near the poverty line, according to World Bank documents.

World Bank Country Director Illango Patchamuthu met with Advisor to PM on Finance Dr Miftah Ismail and discussed with him future cooperation. The World Bank spokesperson did not directly comment whether both sides discussed the issue of restoring the budgetary support to Pakistan.

“The World Bank regularly meets with government agencies and discussion (with the advisor) is part of the deliberative process,” according to the spokesperson.

The World Bank country director apprised the adviser about the forthcoming visit of World Bank Vice President to Pakistan Annette Dixon to discuss the current state of the economy and other related matters. Snezana (Nena) Stoiljkovic, IFC Vice President for Asia, is also visiting Pakistan.

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Pakistani Economic Stress Watch

Postby Peregrine » 19 Jan 2018 02:58

X Posted on the Terroristani Thread

Serious slump in FDI

Foreign Direct Investment (FDI) presented a dismal picture, posting some 3 per cent decline during first half (July-Dec) of this fiscal year (FY17-18). And in December, 2017 alone it went down by 71.5 per cent — amounting to just $197.4 million from $692.1 million in the same month of 2016.

The second component of foreign investment, the portfolio investment also posted a negative growth because of poor performance of the country’s equity market. Portfolio investment declined by 50 per cent to stand at negative $128.4 million during the first half of FY17-18.

Of course, the ongoing political uncertainty in the country may have played a significant role in making foreign investors to adopt a wait-and-see approach on the issue. No doubt, foreign investors do not usually invest in politically uncertain times, especially when the host country is preparing to enter the election phase.

But politics alone is not factored in while taking such decisions. The decisive factors that go into influencing such decisions either way mostly relate to the state of the economy of the host country, including the ease of doing business, cost of doing business, a fair playing field and the level of the physical and social infrastructure available in that country. Our educated population, including those that have any skills, is abysmally low because of which foreign investors normally find it not very profitable to invest in Pakistan. And when the country experiences a prolonged period of economic stagnation that itself becomes a serious negative factor discouraging foreign investment inflows.

Data showed the pattern of foreign investment inflows have significantly changed recently. China now dominates FDI with a share of more than two-thirds in total investments. Significantly, Beijing has emerged first as the largest trading partner of Islamabad and now it has become the top foreign investor. But meanwhile inflows from countries other than China have come down drastically over the same period, indicating the possibility of a co-relationship in flows between China and the rest of the sources.

FDI from China was $969 million during the six months, which constituted 70pc of the total inflows. In the same period of the preceding fiscal year, investment from China had amounted to $393m and constituted 27.6pc of total inflows. This should, indeed, be a matter of concern for economic managers and they would do well to investigate if there is actually any co-relationship between the flows of these two different sources. If there is, they should immediately redress the situation with an appropriate policy overhaul.

The unusual spike in FDI in December 2016 was because of the inflow of $459m from the Netherlands as a Dutch company acquired majority shares in Engro Foods in a one-off transaction. The only other country that invested more than $100m in July-December was Malaysia. Its investment during these six months was $117m from Malaysia against $13.1m a year ago. Other significant investors were the United Kingdom, the United States and Hungary, which invested $77m, $63m and $48m, respectively.

Pakistan enjoys good relations with Arab countries. Yet the government could not find potential investors in the Gulf region. The UAE is the second-biggest trading partner of Pakistan, but its direct investment was just $14.5m in the six-month period. This is also a matter of serious concern for our economic managers to look into because if friendly Muslim countries located in close geographical proximity do not find us economically attractive enough for longer-term investment, then there must be something drastically wrong with Pakistan as a safe and profitable destination for foreign investment.

The countrywise breakdown showed China as the single-largest net investor of $128.4 million in December. China’s investments come as multi-billion-dollar infrastructure and power projects under the China-Pakistan Economic Corridor (CPEC) gather pace. And in line with our urgent needs such as energy, construction, financial businesses, electronics, consumer goods industries, construction and trade and telecommunication sectors attracted the largest chunk of Chinese FDI in December.

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Re: Pakistani Economic Stress Watch

Postby ashish raval » 19 Jan 2018 03:54

China now dominates FDI with a share of more than two-thirds in total investments

Very soon it will the only investor and new mai baap and owner of tfta backside err backyard..

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Re: Pakistani Economic Stress Watch

Postby anupmisra » 19 Jan 2018 04:17

ashish raval wrote:
China now dominates FDI with a share of more than two-thirds in total investments

Very soon it will the only investor and new mai baap and owner of tfta backside err backyard..


Is that really FDI (Equity) or a combination of debt and equity?

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Re: Pakistani Economic Stress Watch

Postby Peregrine » 19 Jan 2018 04:19

ashish raval wrote:
China now dominates FDI with a share of more than two-thirds in total investments

Very soon it will the only investor and new mai baap and owner of tfta backside err backyard..
ashish raval Ji:

Oh yes indeed. The Chinese will be Rambling in the Terroristanis' Rear Garden of Delights!

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Re: Pakistani Economic Stress Watch

Postby ashish raval » 19 Jan 2018 04:31

Peregrine wrote:
ashish raval wrote: Very soon it will the only investor and new mai baap and owner of tfta backside err backyard..
ashish raval Ji:

Oh yes indeed. The Chinese will be Rambling in the Terroristanis' Rear Garden of Delights!

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Really counting when not if pukes declare bankruptcy and yuan becomes official currency of theirs. Every country where Chinese have put their fingers has bankrupted in the past or are on verge of it!! Venezuela, Argentina, Zimbabwe .. Srilanka just escaped in last moment but TFTA saviours are now not investing means there is something rotten for sure.

Many Africans I know from Kenya, Uganda, Zimbabwe and Ghana have started hating Chinese now a days..

They come with bag of cash promising big industrial parks, fancy roads - read carrot and set up and get all market access approval and easy visa availability including retail and viola suddenly out of no where after one industrial park goes live there are droves of Chinese small traders selling all kinds from souvenirs to lingerie set up shops competing with locals on the streets.. this is their FDI..meanwhile original industrial park is converted to mil garrison because host cannot pay loans for road buildings and industrial parks..

Bakis are on that road to perdition..

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Re: Pakistani Economic Stress Watch

Postby Peregrine » 19 Jan 2018 15:10

Peregrine wrote:ashish raval Ji:

Oh yes indeed. The Chinese will be Rambling in the Terroristanis' Rear Garden of Delights!

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ashish raval wrote:Really counting when not if pukes declare bankruptcy and yuan becomes official currency of theirs. Every country where Chinese have put their fingers has bankrupted in the past or are on verge of it!! Venezuela, Argentina, Zimbabwe .. Srilanka just escaped in last moment but TFTA saviours are now not investing means there is something rotten for sure.

Many Africans I know from Kenya, Uganda, Zimbabwe and Ghana have started hating Chinese now a days..

They come with bag of cash promising big industrial parks, fancy roads - read carrot and set up and get all market access approval and easy visa availability including retail and viola suddenly out of no where after one industrial park goes live there are droves of Chinese small traders selling all kinds from souvenirs to lingerie set up shops competing with locals on the streets.. this is their FDI..meanwhile original industrial park is converted to mil garrison because host cannot pay loans for road buildings and industrial parks..

Bakis are on that road to perdition..
ashish raval Ji :

Hallelujah, Amen and AoA to that!

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Re: Pakistani Economic Stress Watch

Postby JohnTitor » 19 Jan 2018 17:15

^^ Not soon enough, my friend, not soon enough!

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Re: Pakistani Economic Stress Watch

Postby soumik » 19 Jan 2018 22:15

meanwhile two pieces of news from terroristan caught my fancy today

https://tribune.com.pk/story/1612383/1-pakistan-faces-11-43b-damages-claims-reko-diq-mining-case/

ISLAMABAD:
The Public Accounts Committee (PAC) has observed that Pakistan faces $11.43 billion damages claims in Reko Diq mining case in international courts due to corrupt practices and inefficiencies of successive governments of Balochistan.


https://tribune.com.pk/story/1612133/2-foreign-exchange-sbps-reserves-decrease-another-2-03-now-stand-13-7b/

KARACHI:
Foreign exchange reserves held by the State Bank of Pakistan (SBP) decreased 2.03% on a weekly basis, according to data released by the central bank on Thursday.

The reserves have been falling continuously for the past five weeks.

On January 12, foreign currency reserves held by the central bank were recorded at $13,699 million, down $283.5 million or 2.03% compared to $13,982.5 million in the previous week.


so if terroristan is forced to pay the 11.43$bn as reported above their forex reserves willdrop down to approx 2$bn.

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Re: Pakistani Economic Stress Watch

Postby yensoy » 20 Jan 2018 07:06

^^^^ It's a theoretical fine. Even the total investment in the mine nor its production seems to be anywhere close to that value. But interesting nevertheless...

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Pakistani Economic Stress Watch

Postby Peregrine » 22 Jan 2018 22:18

X Posted on the Terroristani Thread

Why poverty hasn’t reduced significantly in Pakistan

ISLAMABAD: Poverty is one of the least discussed issues in Pakistan. While many debates centre around different economic issues, poverty is mostly left out. It is quite odd that local discourse on such a serious issue is very elusive in our country.

Successive governments in Pakistan have also intentionally shied away from this debate. For example, the Pakistan Peoples Party government didn’t release poverty statistics for years it stayed in government.

Similarly, the PML-N hasn’t released poverty rates for its tenure. The poverty rate announced in 2016 by then Minister of Planning and Development Ahsan Iqbal was for the year 2013 when PML-N was voted into power. Clearly, political parties don’t intend to land in hot water by talking about poverty.

Academic studies on the subject further confound our understanding of poverty. There is considerable ambiguity around the methodology to estimate the rate of poverty. As a result, there is no single and well-accepted poverty rate in Pakistan. Each academic study on poverty estimation gives its own poverty rate that may be different from others. In some cases, there are significant differences between the calculated poverty rates.

However, according to the latest available official statistics, almost 30% of Pakistanis were living below poverty line of Rs3,030 per adult per month in 2013. This translates to roughly 59 million in absolute terms. The poverty line used by the government is totally absurd. How can we consider an adult as not poor who earns Rs3,030 per month? This casts serious doubts on the poverty rate reported by the government.

A more reasonable poverty line can be the international poverty line of $2 per day. As per this poverty line, a whopping 60% of Pakistanis are poor. Now another type of poverty rate called multidimensional poverty rate is also being calculated in Pakistan, which relies on non-income indicators. Here again, not many are aware of what is multidimensional poverty. In other words as per International Poverty Line Terroristan has 125 Million People living under the Poverty Line!

But poverty is the main reason why international development institutions like the World Bank finance variety of projects in Pakistan.

Pakistan has received millions of dollars in the name of poverty reduction. Varieties of economic policies are framed by the government under the pretext of poverty reduction.

Despite the fact that Pakistan has received a lot of money for fighting poverty from donor institutions; it hasn’t seen significant reduction in poverty levels. This is especially true when comparison is made with India and China. Both of these economies have experienced steep fall in their poverty levels. Pakistan’s progress in this area has been sluggish as best.

Pakistan’s approach to poverty reduction

From 1951 till now, there hasn’t been a year when a government-led poverty reduction program wasn’t under way. The initial programmes were completely donor funded with focus on education and health of the rural economy. Overtime, some programmes under public-private partnership mode also started with a more varied focus like housing, roads, and sanitation.

In addition, government also adopted redistribution policies like land reforms, pricing of agricultural products, subsidies, social security payments, high tax rates and direct income transfers.

In the last few years, redistributive policies have become more popular with both people and the political parties. This shift in policy is influenced by a stream of literature which purports that poverty reduction can only be achieved if inequality is reduced using redistributive policies. Many local studies on poverty have also come up with the same idea.

Such policies place the government at the centre of the effort to redistribute economic gains to reduce poverty.

Failure of government

Focusing too much on programmes and redistributive policies has done more harm than good. Almost all of the programmes have fallen prey to government failure and corruption. The most recent example is that of the Benazir Income Support Program (BISP). Stories of corruption in BISP are common knowledge. The problem is that whenever a programme lands into political hands, political considerations always precede sound economic sense.

The BISP forms were given to PPP MNAs for distribution and naturally, those with strong political connections ended up having it over genuine individuals. Although it must be admitted that programmes run in collaboration with the private sector seem to produce better results than those run exclusively under the government’s watch.

On the other hand, the redistributive policies adversely affect the pricing mechanism. Support prices of key agriculture commodities creates glut-like situation which wipe out economic profits. Along with this, increasing tax rates on corporations in order to pay for welfare programs discourages businesses.

It won’t be wrong to conclude that government’s policies have stunted the impact of economic growth to reduce poverty significantly.

If Pakistan is to reduce poverty significantly, it must promote employment opportunities. The surest way to achieve that is by allowing businesses to employ more people. This can only be achieved if predatory redistributive policies are withdrawn.

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Pakistani Economic Stress Watch

Postby Peregrine » 24 Jan 2018 23:09

X Posted on the Terroristan Thread

Al Jumooriya Islamia Al Terrorstania

Exports and Imports of Goods & Services (Billion US $ ) : June 2017 – Dec 2017

Exports of Goods & Services : June–Dec 2017 : 14.356 : June–Dec 2016 : 13.093
Imports of Goods & Services : June–Dec 2017 : 31,239 : June–Dec 2016 : 26,691
Goods and Services Balance : June–Dec 2017 : 16.883 : June- Dec 2016 : 13.598


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Re: Pakistani Economic Stress Watch

Postby Prem » 26 Jan 2018 06:18

Foreign exchange: SBP's reserves decrease another 1.21%, now stand at $13.5b
KARACHI: Foreign exchange reserves held by the State Bank of Pakistan (SBP) decreased 1.21% on a weekly basis, according to data released on Thursday by the central bank, marking the sixth successive week when the amount has experienced a dip.On January 19, foreign currency reserves held by the central bank were recorded at $13,532.8 million, down $166.2 million or 1.21% compared to $13,699 million in the previous week.The decrease in reserves was attributed to external debt servicing and other official payments.

https://tribune.com.pk/story/1618057/2- ... and-13-5b/

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Re: Pakistani Economic Stress Watch

Postby Vips » 26 Jan 2018 18:32

Haraam Link:Fitch revises outlook on Pakistan’s ratings to negative.

Fitch Ratings has announced that it has revised the outlook on Pakistan’s long-term foreign and local currency issuer default ratings to negative from stable and has affirmed ‘B’ rating for both the categories.


Porkitsani currency aka toilet paper now certified as Soiled.

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Re: Pakistani Economic Stress Watch

Postby Prem » 27 Jan 2018 00:45

PIA suspends flights to Kuwait and city of Salalah in Oman
( Mauka for China to rescue Paki ..Ina)
KARACHI: Amid challenges due to the open skies policy and internal issues facing the national carrier, Pakistan International Airlines (PIA) has suspended operations to Kuwait and Salalah, Oman.The decision follows the suspension of flights to New York, where PIA said ran into heavy losses.PIA’s accumulated loss has jumped beyond Rs319 billion as of March-end 2017.“Passengers of flights for Kuwait and Salalah (Oman), which will be temporarily suspended, will be re-accommodated through convenient alternatives. However, the resumption of operations will be considered based upon commercial merit and viability,” said a statement issued by PIA.PIA’s fleet is also set to shrink since four of its aircraft, hired on wet lease, are completing their tenure. PIA will bring aircraft on a dry lease now.Meanwhile, PIA is planning to introduce new destinations and increase its flights to Saudi Arabia and China. The decision has been taken after comprehensive analysis and detailed evaluation of existing network, said a PIA spokesperson.


https://tribune.com.pk/story/1619072/2- ... alah-oman/

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Re: Pakistani Economic Stress Watch

Postby Vips » 11 Feb 2018 19:35

Pukistan dreaming for institutional reforms be like China and India.

Reality Check:
Former finance minister Dr Hafiz A Pasha said Pakistan’s unemployment problem is not going to be solved by just providing technical training to its unemployed youth because the economy does not have the capacity to absorb them.


In other words Pukistan is on the irreversible path to seeing its youth commit suci... or don that jacket with a switch :rotfl:

Some of the comments (by Raw agents) on the news article really rub it in for the Pukis.


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Pakistani Economic Stress Watch

Postby Peregrine » 15 Feb 2018 01:37

Pakistan equity ends in red amid foreign selling

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KARACHI: The KSE-100 Index remained in the negative on Wednesday’s session, closing at 43,353.04 after shedding 337.32 points, owing to different factors including persistent foreign selling and threats by the US to move a motion to place Pakistan on a global terror-financing watch list.
The benchmark KSE-100 index witnessed a choppy session with the Index scaling to a high of 91.52 points during the first 2 hours of market open; however bears established made a comeback.
Bearish sentiment at the bourse was triggered by news that USA & its allies have tabled a motion with the FATF to place Pakistan on a watch list of countries considered non-compliant with global anti-terror financing coupled with surging oil production in the United States that is “putting brakes on crude oil prices”.
The bourse remained negative during most part of the day, as it entered the positive range for a short period only, and closed 337 points below. Traded volumes for the day were 207 million shares while value traded totaled to $ 70 million.
Danish Ladhani of JS Research expects market to remain volatile with flows from local institutions and foreigners directing the market.
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Pakistani Economic Stress Watch

Postby Peregrine » 16 Feb 2018 23:40

X Posted on theTerroristan Thread

Pakistan’s external debt, liabilities touch $89 billion

ISLAMABAD: Amid declining foreign exchange reserves and weakening capacity to repay, Pakistan’s external debt and liabilities rose sharply to almost $89 billion at the end of December, reported the State Bank of Pakistan (SBP).

The government booked a higher amount of debt than what an independent economist predicted over two years ago. Former finance minister Dr Hafiz Pasha had predicted in December 2015 that by June 2019, Pakistan’s external debt and liabilities would touch $90 billion. With six months to go, the likelihood of external debt and liabilities crossing $90 billion is extremely high.

Pakistan’s total external debt and liabilities as of December 2017 stood at $88.9 billion, higher by $5.8 billion or 6.9% over six months ago. There was an increase of $13.2 billion in the amount of external debt and liabilities in just one year. In December 2016, external debt and liabilities amounted to $75.7 billion. At the time, Pakistan’s gross official reserves were $18.6 billion, which have already slid to $12.8 billion.

Out of total external debt, the government’s direct obligations are equal to $70.5 billion, which exclude guaranteed and public sector enterprises’ debt.

The main increase came in the external debt contracted by issuing sovereign bonds and taking expensive commercial loans. In the first half, debt obligated by issuing Sukuk and Eurobonds increased by 52% to $7.3 billion.

Similarly, the debt obtained by taking commercial loans increased to $5.3 billion by December 2017 – a net addition of $503 million or 10.4% in six months. On a yearly basis, debt accumulated through commercial loans increased by 189% or $3.5 billion.

The rise in external debt comes at a time when official foreign currency reserves are plunging as well. The SBP has already lost $3.5 billion worth of reserves since the start of the fiscal year.

The alarming figures indicate the government’s inability to ensure enough non-debt creating inflows to meet external account requirements. Due to huge domestic and foreign borrowings, debt servicing is now the single largest charge on the federal budget.

A sum of $3.62 billion was spent on the servicing of outstanding stock of external debt in just six months, according to the central bank. The country paid $2.7 billion in principal loans and $988 million in interest on outstanding loans.

The government could not get any foreign loan rescheduled in the first half of the fiscal year, unlike last year when it was able to roll over $1.2 billion worth of external loans.

Two weeks ago, the government had admitted before the National Assembly that Pakistan’s external debt bearing capacity has deteriorated further. In its Debt Policy Statement 2017-18, which the finance ministry submitted to the lower house of parliament, the government admitted that during the last fiscal year the country’s external debt increased at a faster pace than its foreign exchange earnings did.

In addition, Pakistan’s external debt in percentage of foreign exchange reserves also increased to the three-year high. Similarly, the cost of external debt servicing in percentage of foreign exchange earnings significantly increased – also the highest than the last year of the Pakistan Peoples Party government.

Due to the widening current account deficit, independent economists have lately estimated the gross external financing requirements in the range of $24 billion to $26 billion for the current fiscal year. The government’s conservative estimates put the figure at $18 billion.

The financing gap is estimated at roughly $6 billion for the remainder period of the current fiscal year, which would either be met through more foreign loans or drawing official foreign currency reserves.

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venug
BRFite
Posts: 128
Joined: 15 Aug 2016 21:39

Re: Pakistani Economic Stress Watch

Postby venug » 17 Feb 2018 01:48

^^^ No worries, TSP has CPEC, once that kicks in, there will be shower of gold, silver, next Dubai...till then you wait onlee.

Gagan
BRF Oldie
Posts: 10933
Joined: 16 Apr 2008 22:25

Re: Pakistani Economic Stress Watch

Postby Gagan » 17 Feb 2018 10:01

Speaking of Gold, Reko Dik is right next to Gawadar.
The pakistanis kicked out the Aussie prospecting company, appointed Samar Mubarakmand led company to mine the gold.
1. Pakistan was taken to international court and has to pay close to $ 1 billion as fine
2. Samar Mubarakmand, a known duffer, as usual failed to do anything. (just like his Thar coal gassification a failed technology, and heart stent scams by him)

Now they will give these mines to China, who will easily extract all the gold and ship it off to China via Gawadar.


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