Pakistani Economic Stress Watch

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Re: Pakistani Economic Stress Watch

Postby shaun » 05 Apr 2020 20:40

dinesha wrote:Aftermath of COVID-19 outbreak: IMF likely to delay releasing of $450m third tranche to Pakistan
https://www.thenews.com.pk/print/639767 ... o-pakistan


how come this website "THe News" cover such stories ?? this are not picked up by any other paki MSM

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Re: Pakistani Economic Stress Watch

Postby Manish_P » 10 Apr 2020 11:27

Getting better and better..

Pakistan is abandoning cotton for water guzzling sugarcane

“For cotton producers in Pakistan, the last year was the worst in a decade,” said Kazi Abdul Sattar, a 54-year-old farmer from Ghotki in the southern Sindh province. Sattar was referring to the 60 per cent lower cotton yield on his farm. Even the little that was harvested was of poor quality, he said, as the crop was attacked by the white fly. This year, he has prepared his 70 acres to grow a ‘more profitable’ crop, sugarcane.

..

“The heat was abnormal,” said Sultan, a rare female cotton producer in a 1.5 million-strong growers’ community dominated by men. She described how the sudden rise in temperature of 10 degrees Celsius caused the cotton flowers to shed before they matured. “I’ve never seen such intense heat in the month of September.” A recipient of the first prize for the highest cotton yield in Punjab in 2017, Sultan said it saddens her to see cotton fields shrinking. “Cotton is one crop that is only picked by women, so [a reduction] will bring down the prospect of work for women. It’s an opportunity that has been taken away from them.” Sultan had already decreased her 100 acres of cotton farmland by half last year, and said she will reduce more to replace it with sugarcane and rice for better profits.

..

It is this saga of powerful sugar-mill owners, ensuing advantageous policies for cane and the impact of climate change that have together culminated in a decline in Pakistan’s cotton production. The issue has been compounded by a lack of investment in research and development for cotton, resulting in poor quality of crops, lower market prices and a stunting of industry growth. If this continues, Pakistan stands to lose the enviable position of being the fifth-largest cotton producer in the world. Not only do cotton and its products contribute about 10% to the country’s gross domestic product, they account for 55pc of the foreign exchange earnings of the country.Of Pakistan’s total exports of $23.7 billion in 2018, the textile industry accounted for more than 50% at $13.53 billion.


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Re: Pakistani Economic Stress Watch

Postby Aditya_V » 10 Apr 2020 11:30

Why doesnt Pakistan abondon this Kaffir crops and just focus on Beef and Leather Halal stuff, All land must be kept for Cattle rearing, clear wasteful forests near the LOC and concentrate on putting Leather industry in Northern Pakistani Punjab.

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Re: Pakistani Economic Stress Watch

Postby Lohit » 15 Apr 2020 02:20

IMF approves debt relief for 25 countries, Pakistan not included in list -
reuters.com/article/amp/idUSKCN21V21G

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Re: Pakistani Economic Stress Watch

Postby saip » 15 Apr 2020 03:00

^^How is that possible? Pakistan is the beggarest nation in the world. Imran Khan was the first assistant leader with the begging bowl out.

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Re: Pakistani Economic Stress Watch

Postby Bart S » 15 Apr 2020 05:33

saip wrote:^^How is that possible? Pakistan is the beggarest nation in the world. Imran Khan was the first assistant leader with the begging bowl out.


In fact they are the only country in the world wealthy enough to be able to depute their head of state as a full time begger.

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Re: Pakistani Economic Stress Watch

Postby jash_p » 15 Apr 2020 06:06

IMF approves debt relief for 25 countries, Pakistan not included in list -
reuters.com/article/amp/idUSKCN21V21G


A country having 100s of Nu-clear bombs and need billions of dollars to maintain it, how come that country is poor Hain ji ?

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Re: Pakistani Economic Stress Watch

Postby Aditya_V » 19 Apr 2020 11:57

Pakistani Rupee is doing well with it trading to USD at 163 and no debt payment of USD 12 Billion for the coming. Pakistani Economy is in very good shape.

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Re: Pakistani Economic Stress Watch

Postby RKumar » 19 Apr 2020 17:53

jash_p wrote:
IMF approves debt relief for 25 countries, Pakistan not included in list -
reuters.com/article/amp/idUSKCN21V21G


A country having 100s of Nu-clear bombs and need billions of dollars to maintain it, how come that country is poor Hain ji ?


Very good point, we all forgot this argument while Im the dim crying in front of world. India must point it out on every forum that Napak are the one who are increasing their no-clear bums at unprecedented rate. If they can spend money there how come they are pure, ah poor? I second that thought... hain ji :P

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Re: Pakistani Economic Stress Watch

Postby g.sarkar » 19 Apr 2020 18:11

https://nation.com.pk/19-Apr-2020/pakis ... argets-imf
Pakistan likely to miss all economic targets: IMF
Imran Ali Kundi, April 19, 2020

ISLAMABAD - The International Monetary Fund (IMF) has projected that Pakistan would miss all economic targets during the ongoing fiscal year as the country is facing unprecedented health and economic shocks from the rapid propagation of the COVID-19 outbreak.
The IMF in its latest report on Pakistan’s economic situation has noted that the budget deficit would swell to Rs4 trillion in the current fiscal year (FY20) after coronavirus situation against the early projection of Rs3.2 trillion. The primary deficit is now expected to deteriorate to 2.9 percent of GDP in FY 2020 (from 0.8 percent expected earlier) due to a 1.8 percentage point decline in tax revenue relative to the pre-virus baseline, and the needed higher spending to support the health response, social safety nets for the very poor and unemployed.
.....
Gautam

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Re: Pakistani Economic Stress Watch

Postby Vips » 19 Apr 2020 18:46

Porkis will be facing even more challenges next year. Abduls and Ayeshas will be squeezed with all sorts of indirect taxes and charges and levies. Pakjabis will now be praying for either Floods or earthquake to hit them next year

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Re: Pakistani Economic Stress Watch

Postby Bart S » 19 Apr 2020 19:02


https://www.youtube.com/watch?v=-MIiBKTLldg

Paki mindset 101

Claims that Pakistan won't see much economic impact because their economy is nothing to speak of anyway, and gloats that 'rich western nations' have been badly hit economically. :roll:

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Re: Pakistani Economic Stress Watch

Postby Vips » 28 Apr 2020 19:34

Pak gets 4-month reprieve as FATF suspends activities due to Covid-19 crisis.

Pakistan on Tuesday got a four-month reprieve for meeting a deadline set by the Financial Action Task Force (FATF) to counter terror financing as the multilateral watchdog announced a temporary suspension of its activities because of the Covid-19 crisis.

However, the Paris-based organisation said in a statement that there would be no let-up in its efforts to fight money laundering and terror financing, and that it would actively monitor the impact of the Covid-19 crisis on measures to counter illicit financing.

The move had been widely anticipated as officials of FATF and affiliated regional groups have been unable to make visits to countries such as Pakistan to monitor the implementation of action plans and other programmes because of travel restrictions imposed around the world to prevent the spread of the pandemic.

Pakistan has been on FATF’s “grey list” of “monitored jurisdictions” since June 2018 for failing to counter terror financing, especially by groups such as Lashkar-e-Taiba (LeT), Jaish-e-Mohammed (JeM), Taliban, al-Qaeda and Haqqani Network. A FATF plenary meeting in February had warned Pakistan that it had failed to meet all deadlines for a 27-point action plan, and given the country four more months to implement it.

The FATF’s statement said the watchdog had “decided on a general pause in the review process for the list of high-risk jurisdictions subject to a call for action and jurisdictions subject to increased monitoring, by granting jurisdictions an additional four months for deadlines”.

“Thus, the FATF is not reviewing them in June,” the statement said, adding the organisation’s plenary had agreed to “temporarily postpone all remaining FATF mutual evaluations and follow-up deadlines”. Though FATF posted an updated assessment calendar, Pakistan wasn’t among the countries for which details have been finalised so far. The FATF said the calendar would be updated as the situation evolves.

The statement further said: “Despite the decision to temporarily postpone the above-mentioned process deadlines due to the current force majeure situation, the FATF will not let up its efforts to fight money laundering, terrorist financing and proliferation financing, and will continue working with all jurisdictions in its global network to ensure an effective implementation of its standards.

“The FATF is actively monitoring the impact of the Covid-19 crisis on measures to combat illicit financing. We remain vigilant to the threats posed by criminals and terrorists who may seek to exploit this period to further their criminal objectives.”

The gravity of the Covid-19 crisis globally and consequent measures adopted by countries, such as confinement and travel restrictions, are making it impossible for countries and FATF teams to conduct on-site visits and in-person meetings, the statement said.
“This situation has significantly impacted countries’ ability to actively participate in mutual evaluation and related follow-up processes. The FATF Plenary acknowledges these severe challenges that countries face at this difficult time,” it said.

Pakistan’s performance was to be assessed at review meetings to be held in Beijing during June 21-26. The review is now expected to be done in October.

During its assessment at its plenary meeting in February, the FATF concluded that all deadlines for Pakistan’s action plan “have expired” and the country had “largely addressed” only 14 of the 27 points in the action plan.

FATF had warned Pakistan that if its action plan is not fully implemented, it would face the possibility of being moved to the list of monitored countries, commonly known as the “black list”.

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Re: Pakistani Economic Stress Watch

Postby Vips » 20 May 2020 18:25

Pakistan plans to seek $2 bn in new loans from World Bank, ADB: Report.

The cash-strapped Pakistan government plans to seek USD 2 billion in new foreign loans from the global financial bodies to respond to the COVID-19 outbreak and undertake fiscal reforms amid the rapid deterioration of public debt indicators, a media report said on Wednesday.

The loans that Pakistan is seeking to obtain from the World Bank and the Asian Development Bank (ADB) are higher than the USD 1.8-billion debt
relief that Islamabad has sought from the G20 nations, The Express Tribune reported.

The new plan comes as the ADB and Pakistan have finalised a USD 305 million emergency COVID-19 loan to help the country buy medical equipment and disburse money to poor women. (Less then 10% of this will go towards buying medical equipment and all the disbursals will be on paper with money ultimately reaching the armed forces which have already asked for 20% increase in budget for next year starting from June :mrgreen: )

The Asian Development Bank will extend the loan on commercial terms.

Last month, Pakistan had received an emergency loan of USD 1.39 billion from the International Monetary Fund (IMF) and an aid of USD 200 million from the World Bank.

The new proposal for USD 2 billion loan comes as the Ministry of Finance presented over half a dozen concept clearance papers for approval by the Central Development Working Party (CDWP) that met on Tuesday under the chairmanship of Planning Commission Deputy Chairman Jehanzeb Khan.
The concept clearance papers would be considered for approval on Wednesday when the CDWP meets again, the paper reported. Once the CDWP clears concept papers of these loans, the board of directors of the World Bank and ADB would approve the loans, it said.

Pakistan's public debt is projected to increase to Rs 37.5 trillion or a whopping 90 per cent of gross domestic product (GDP) by June this year.The country will this year spend Rs 2.8 trillion or 72 per cent of the estimated Federal Board of Revenue (FBR) tax collection on public debt servicing alone, the report said.

When the Pakistan Tehreek-e-Insaf (PTI) government came to power almost two years ago, the public debt stood at Rs 24.8 trillion that since then has been rapidly growing. Prime Minister Imran Khan, who was once very vocal against seeking foreign loans, is also continuing the policies followed by his arch political rival – the Pakistan Muslim League-Nawaz (PML-N).

"Seven concept clearance projects were presented in the meeting," said a statement issued by the Ministry of Planning and Development, after the CDWP meeting.

The government of Punjab wants a loan of USD 100 million or Rs 16 billion from the World Bank for “solid waste management efficiency programme”.

The Ministry of Finance also proposed USD 75 million in loan for pension reforms.At present, pensions are funded from the budget and the government wants to introduce a contributory pension scheme. Another emergency loan of USD 500 million has been proposed to be obtained from the ADB for the COVID-19 Active Response and Expenditure Support Programme.

Pakistan also wants to take USD 300 million in loan from the ADB in the name of “financial markets development programme”. The money will be utilised by the finance ministry, State Bank of Pakistan (SBP), Securities and Exchange Commission of Pakistan and Federal Board of Revenue to “strengthen market stability, market facilitation, supply measures and demand measures”, according to the documents.

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Re: Pakistani Economic Stress Watch

Postby kit » 20 May 2020 22:08

Vips wrote:Pakistan plans to seek $2 bn in new loans from World Bank, ADB: Report.

The cash-strapped Pakistan government plans to seek USD 2 billion in new foreign loans from the global financial bodies to respond to the COVID-19 outbreak and undertake fiscal reforms amid the rapid deterioration of public debt indicators, a media report said on Wednesday.

The loans that Pakistan is seeking to obtain from the World Bank and the Asian Development Bank (ADB) are higher than the USD 1.8-billion debt
relief that Islamabad has sought from the G20 nations, The Express Tribune reported.

The new plan comes as the ADB and Pakistan have finalised a USD 305 million emergency COVID-19 loan to help the country buy medical equipment and disburse money to poor women. (Less then 10% of this will go towards buying medical equipment and all the disbursals will be on paper with money ultimately reaching the armed forces which have already asked for 20% increase in budget for next year starting from June :mrgreen: )

The Asian Development Bank will extend the loan on commercial terms.

Last month, Pakistan had received an emergency loan of USD 1.39 billion from the International Monetary Fund (IMF) and an aid of USD 200 million from the World Bank.

The new proposal for USD 2 billion loan comes as the Ministry of Finance presented over half a dozen concept clearance papers for approval by the Central Development Working Party (CDWP) that met on Tuesday under the chairmanship of Planning Commission Deputy Chairman Jehanzeb Khan.
The concept clearance papers would be considered for approval on Wednesday when the CDWP meets again, the paper reported. Once the CDWP clears concept papers of these loans, the board of directors of the World Bank and ADB would approve the loans, it said.

Pakistan's public debt is projected to increase to Rs 37.5 trillion or a whopping 90 per cent of gross domestic product (GDP) by June this year.The country will this year spend Rs 2.8 trillion or 72 per cent of the estimated Federal Board of Revenue (FBR) tax collection on public debt servicing alone, the report said.

When the Pakistan Tehreek-e-Insaf (PTI) government came to power almost two years ago, the public debt stood at Rs 24.8 trillion that since then has been rapidly growing. Prime Minister Imran Khan, who was once very vocal against seeking foreign loans, is also continuing the policies followed by his arch political rival – the Pakistan Muslim League-Nawaz (PML-N).

"Seven concept clearance projects were presented in the meeting," said a statement issued by the Ministry of Planning and Development, after the CDWP meeting.

The government of Punjab wants a loan of USD 100 million or Rs 16 billion from the World Bank for “solid waste management efficiency programme”.

The Ministry of Finance also proposed USD 75 million in loan for pension reforms.At present, pensions are funded from the budget and the government wants to introduce a contributory pension scheme. Another emergency loan of USD 500 million has been proposed to be obtained from the ADB for the COVID-19 Active Response and Expenditure Support Programme.

Pakistan also wants to take USD 300 million in loan from the ADB in the name of “financial markets development programme”. The money will be utilised by the finance ministry, State Bank of Pakistan (SBP), Securities and Exchange Commission of Pakistan and Federal Board of Revenue to “strengthen market stability, market facilitation, supply measures and demand measures”, according to the documents.


why does the paki army need a 20% increase ? , i was looking at their capex vs manpower exp and it seems that are going in for big time acquisitions , catching India off guard ?? ..Reportedly Saab reports delivering a new Erieye to an "unidentified" customer., china plans to export its " nuclear capable" howitzers to pakis, besides new version of SAMs, 7 conventional subs and the like on short order ., there is more to this than meets the eye, Pakis planning a mil buildup using loans !!! ., India should counter this

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Re: Pakistani Economic Stress Watch

Postby vimal » 21 May 2020 01:19

Last two years of LoC actions have rattled them. I'm not surprised that they are buying beyond their means.

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Re: Pakistani Economic Stress Watch

Postby vishvak » 21 May 2020 02:17

Pakis have got a lot of hardware in fact entire sub fleet while bankrupt. When were pakis not in financial need.

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Re: Pakistani Economic Stress Watch

Postby schinnas » 21 May 2020 07:21

SAAB and Embraer are probably in financial dire straights. We should buy them out, do ToT and move manufacturing to India.

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Re: Pakistani Economic Stress Watch

Postby vimal » 21 May 2020 07:25

. ot
Last edited by vimal on 21 May 2020 09:19, edited 1 time in total.

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Re: Pakistani Economic Stress Watch

Postby Mort Walker » 21 May 2020 08:46

kit wrote:
why does the paki army need a 20% increase ? , i was looking at their capex vs manpower exp and it seems that are going in for big time acquisitions , catching India off guard ?? ..Reportedly Saab reports delivering a new Erieye to an "unidentified" customer., china plans to export its " nuclear capable" howitzers to pakis, besides new version of SAMs, 7 conventional subs and the like on short order ., there is more to this than meets the eye, Pakis planning a mil buildup using loans !!! ., India should counter this


And that is the crux of the problem. They have reached parity by preventing India from launching any offensive on the land, sea or air. They've done it by hook and crook, even if it hurts them in the long run. Everyone in the world knows TSP is not going to repay any of its loans.

In India the forces are going to see a 20-25% budget reduction this FY because of COVID-19. It's surprising no one in this forum is talking about this. This will impact new acquisitions, operations, safety and maintenance. If that is the case, then GoI should seek peace with TSP and Chinis.

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Re: Pakistani Economic Stress Watch

Postby Aditya_V » 21 May 2020 15:09

TSP or China are not interested in peace, they are bullies. No point talking to them. We can definitely deal with them

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Re: Pakistani Economic Stress Watch

Postby chetak » 21 May 2020 19:32

Aditya_V wrote:TSP or China are not interested in peace, they are bullies. No point talking to them. We can definitely deal with them


the next general elections in India will be the one to watch.

many entities, the world over, are extremely uncomfortable with Modi and his type of tough nationalistic stance and especially the "India first" and the "make in India" themes that has hurt them immeasurably.

and they will all try to interfere in the coming elections, one way or the other.

and not surprisingly, all of them are loathe to admit that they all follow the exact same stances in their own countries but want only India to "open up" its economy almost unconditionally.

the chinese anger springs from the fact that India did not turn out to be the pushover that the hans expected her to be, both in economic and military terms. Negating OBOR and being blocked off from freely accessing the larger Indian markets the han plans have been set back by decades.

so they desperately need the congis and the commies back in the driving seat so as to open the doors of India to them and so does the EU, UK, the ME with the saudis leading the sunni charge, and the US all with some other dubious agendas in mind.

TSP needs the commies and the congis to cool down the border and allow them free access to cashmere where the commies and the congis have their own agenda to drive and maybe handover cashmere on a platter as the BIF has always wanted.

just imagine what would have been our sad fate today if the congis and the commies had been in power instead of Modi and the BJP.

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Re: Pakistani Economic Stress Watch

Postby Mort Walker » 21 May 2020 20:07

Chetak,

I understand and agree with you, but a defence budget cut in the face of a crisis comparable to COVID-19 is just wrong. I can see a freezing of the budget, but there should be no cuts. Instead the economic stimulus package should have included more indigenous platforms such as the Tejas, Dhanush and Arjun, along with a boost to artillery and ammunition manufacturing.

If they want cuts, then better to seek talks instead of putting the forces in harms way.

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Re: Pakistani Economic Stress Watch

Postby chetak » 21 May 2020 21:01

Mort Walker wrote:Chetak,

I understand and agree with you, but a defence budget cut in the face of a crisis comparable to COVID-19 is just wrong. I can see a freezing of the budget, but there should be no cuts. Instead the economic stimulus package should have included more indigenous platforms such as the Tejas, Dhanush and Arjun, along with a boost to artillery and ammunition manufacturing.

If they want cuts, then better to seek talks instead of putting the forces in harms way.


sirji,

I don't think that the cuts are being done unilaterally. That said, money has to come from somewhere to fund the revival of the economy.

Everyone and his uncle is out there with hands outstretched for the thundershower of doles that are expected and as usual, the ones who will benefit the most, are the ones who are politically connected, especially ones who know how to work the rotten system.

The concerned people would have done a deep risk analysis and arrived at some conclusion after consulting all the stakeholders because it is the Forces that will bear the brunt of the attack and that too with increased casualties.

At this point, one does not really know where one stands with the virus thingee.

Is it just the beginning, or nearer the end phase or somewhere undetermined in the middle of the ongoing evolution of this pandemic. Is more money required and if so, how much more will be the outflow. The economy has slowed considerably and the silly stories of MSMEs starving are mostly just a bunch of propaganda. Most of the MSMEs that I have worked with have plenty of cash stashed away and that too, most of it is in black. Yes, there are many that are really struggling and these poor guys will be the first to fold.

Today, everyone saves and for a variety of reasons. A great many of the veg hawkers in south Indian metros have kids in english medium schools. I have seen and also spoken to enough school kids in uniform helping out at their parents vegetable handcarts after school. I always stop to talk to them because we help with the school fees, books and uniforms of really deserving kids

Maybe more stimulus is required as the situation unfolds so the Govt is keeping its powder dry.

We still have very healthy reserves that we have not even touched so far. In addition, the RBI is sitting on a virtual treasure trove and all these can be leveraged in times of real threat. So, the money is available if really required.

Don't go completely by the sold out media and motivated presstitute reportage

All the Modi package naysayers and critics have a simple agenda: Their goal is to get him to repeat the UPA's profligate financial mistakes, spike the recovery, and ensure that he courts defeat at the next elections by bankrupting the economy, ensuring high inflation and high unemployment.

Their deep frustration is over his determined refusal to oblige them by committing economic hara kiri which is why the demand for the 50% of GDP revival and stimulus package was so quickly and vociferously voiced by the congis, commies and the urban naxals.

So, have patience and wait for it all to play out.

The BIF are trying to get Modi to cut the very branch he is sitting on.

And I am equally sure that by now, the realization has dawned upon you that the CDS is not merely a military appointment but it is primarily a political appointment.

Nothing like a diamond to cut a diamond, no
Last edited by chetak on 21 May 2020 22:10, edited 1 time in total.

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Re: Pakistani Economic Stress Watch

Postby ArjunPandit » 21 May 2020 22:07

Rating Action: Moody's places Pakistan's B3 rating under review for downgrade

4 May 2020
Singapore, May 14, 2020 -- Moody's Investors Service, ("Moody's") has today placed the Government of Pakistan's local and foreign currency long-term issuer and senior unsecured B3 ratings under review for downgrade.

The decision to place the ratings under review for downgrade reflects Moody's expectation that the government will request for bilateral official sector debt service relief under the recently announced G20 initiative. Suspension of debt service obligations to official creditors would be unlikely to have rating implications; indeed such relief would increase the fiscal resources available to the government for essential health and social spending due to the coronavirus outbreak.

However, the G20 has called on private sector creditors to participate in the initiative on comparable terms. Consistent with Moody's approach globally, the review period will allow the rating agency to assess whether Pakistan's participation in the initiative would likely entail default on private sector debt, notwithstanding the intended voluntary nature of private sector participation and the fact that the country has not, to Moody's knowledge, indicated interest in extending the debt service relief request to the private sector; and, if so, whether any losses expected to arise from that participation would be consistent with a lower rating.

The rapid spread of the coronavirus, sharp deterioration in global economic outlook, and significant reduction in risk appetite are creating a severe economic and financial shock. For Pakistan, the current shock transmits mainly through a sharp slowdown in economic activity, lower tax revenue as economic activity slows, and higher government financing needs relative to pre-coronavirus levels. However, ongoing reforms that pointed to nascent improvement in credit fundamentals before the outbreak and financing from development partners contain the pressure on the sovereign's liquidity and external positions.

Concurrently, Moody's has also placed the B3 foreign currency senior unsecured ratings for The Third Pakistan International Sukuk Co Ltd under review for downgrade. The associated payment obligations are, in Moody's view, direct obligations of the Government of Pakistan.

Pakistan's Ba3 local currency bond and deposit ceilings remain unchanged. The B2 foreign currency bond ceiling and the Caa1 foreign currency deposit ceiling are also unchanged. The short-term foreign currency bond and deposit ceilings remain unchanged at Not-Prime. These ceilings act as a cap on the ratings that can be assigned to the obligations of other entities domiciled in the country.

RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS

RATIONALE FOR INITIATING THE REVIEW FOR DOWNGRADE

The driver for the review for downgrade is Moody's expectation that Pakistan will request bilateral debt service relief from G20 creditors under the recently announced initiative and the associated possibility of losses to private sector creditors.

The initiative offers benefits for the world's poorest nations, many of which have large external payment obligations and are exposed to outflows of capital and depreciating exchange rates during this unprecedented shock. Additional financial support and liquidity relief will allow fiscal resources to be devoted to essential health efforts and towards minimising the economic and social impact of the outbreak.

However, the G20 has called on private sector creditors to participate in the initiative on comparable terms. This suggests that, for the countries that elect to seek official sector debt service relief, the initiative may also lead to the suspension of payments or renegotiation of private sector debt service obligations. It is in this context that Moody's has placed Pakistan's ratings under review, in line with the rating agency's approach globally.

During the review period, Moody's will assess whether Pakistan's participation in the initiative will indeed be implemented without private sector participation, consistent with the intended voluntary nature of private sector participation, or whether any losses may be expected to arise for private sector creditors that would be consistent with a lower rating. Pakistan has not indicated any interest in extending the debt service relief to include private sector creditors.

At this stage, Moody's assesses that the main impact of the coronavirus shock is on Pakistan's economic growth, which raises fiscal challenges and delays the government's fiscal consolidation and debt reduction efforts. Ongoing and significant financial and technical support from development partners, as well as the effective use of monetary policy, mitigate the impact of the shock on the sovereign's liquidity and external positions.

The Pakistani economy is relatively closed, with low reliance on exports and private capital inflows and limited trade linkages. However, the coronavirus outbreak presents a significant shock to the domestic economy in part due to the measures aimed at restricting the movement of people to prevent the spread of the virus. Moody's expects Pakistan's economy to contract by around 1% in fiscal 2020 (ending June 2020), and to grow by 2-3% in fiscal 2021 -- below potential.

The economic slowdown will weigh on government revenue and modestly raise spending, in turn pushing the fiscal deficit wider to close to 10% of GDP in fiscal 2020. As a result, Moody's projects the government's debt burden to reach around 85-90% of GDP in fiscal 2020. However, the government's commitment to fiscal reforms, including under its 2019-22 International Monetary Fund programme, provides a crucial anchor for the continued expansion of its revenue base when economic activity gradually normalises. Overall, Moody's expects that the debt burden will return to a downward trend after the initial shock.

The macroeconomic adjustments that have occurred over the past 18-24 months have also reduced external vulnerability risks in the face of a potentially significant shock. Moody's projects the current account deficit to be relatively narrow, around 2% of GDP in this and the next fiscal year, as lower goods and oil imports offset a fall in remittances inflows. Combined with financing inflows from multilateral and bilateral official lenders, the balance of payments is likely to be broadly stable, containing pressure on the exchange rate. In turn, a stable balance of payments will likely allow the State Bank of Pakistan, the central bank, some scope to provide monetary accommodation, which will help contain the government's interest payments. Risks remain on the downside should external pressure be more severe than Moody's currently assesses, whether because the current account widens materially and/or because some external financing looks less secure than the rating agency currently anticipates.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONS

Environmental considerations are significant to Pakistan's credit profile because it is vulnerable to climate change risk. Pakistan is significantly exposed to extreme weather events, including tropical cyclones, drought, floods and extreme temperatures. In particular, the magnitude and dispersion of seasonal monsoon rainfall influence agricultural sector growth and rural household consumption. The agricultural sector directly accounts for around 20% of GDP and exports, and nearly 40% of total employment. As a result, both droughts and floods can create economic, fiscal and social costs for the sovereign.

Social considerations are material to Pakistan's credit profile. Access to quality healthcare, education and utilities such as electricity and water remains limited, especially in rural areas, although the government is addressing these issues as a key priority through its "Ehsaas" programme that is aimed at reducing poverty and inequality, strengthening social safety nets and promoting human capital development. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. For Pakistan, the epidemic exposes the challenge to the government in enhancing healthcare and public services provision.

Governance considerations are significant to Pakistan's credit profile. International surveys of various indicators of governance, while showing some early signs of improvement, point to weak rule of law and control of corruption, as well as limited government effectiveness. These weaknesses are balanced against a lengthening track record of effective checks and balances and judicial independence for the level of development in the country.

WHAT COULD LEAD TO A CONFIRMATION OF THE RATING AT THE CURRENT LEVEL

The rating would likely be confirmed at its current level should Moody's conclude that participation in bilateral official sector debt service relief would unlikely entail default on private sector debt or, if it would, that any losses experienced would likely be minimal.

Upon conclusion of the review, and under a scenario of no or minimal loss for private sector creditors, expectations that government financing, debt sustainability, and external vulnerability risks are contained would likely be consistent with a stable outlook at B3.

WHAT COULD CHANGE THE RATING DOWN

The rating would likely be downgraded should Moody's conclude that participation in the G20 debt service relief initiative would probably entail default on private sector debt and that losses experienced would likely exceed the threshold consistent with a B3 rating.

Downward pressure on the rating would also stem from a renewed and material deterioration in Pakistan's external position, including through a significant widening of the current account deficit and erosion of foreign exchange reserve buffers, which would threaten the government's external repayment capacity and heighten liquidity risks. A continued rise in the government's debt burden, without prospects for stabilisation over the medium term, would additionally put downward pressure on the rating.

GDP per capita (PPP basis, US$): 5,872 (2019 Actual) (also known as Per Capita Income)

Real GDP growth (% change): 3.3% (2019 Actual) (also known as GDP Growth)

Inflation Rate (CPI, % change Dec/Dec): 8.0% (2019 Actual)

Gen. Gov. Financial Balance/GDP: -8.9% (2019 Actual) (also known as Fiscal Balance)

Current Account Balance/GDP: -4.8% (2019 Actual) (also known as External Balance)

External debt/GDP: 37.9% (2019 Actual)

Economic resiliency: ba2

Default history: At least one default event (on bonds and/or loans) has been recorded since 1983.

On 11 May 2020, a rating committee was called to discuss the rating of the Pakistan, Government of. The main points raised during the discussion were: The issuer's economic fundamentals, including its economic strength, have not materially changed. The issuer's institutions and governance strength, have not materially changed. The issuer's fiscal or financial strength, including its debt profile, has not materially changed. The issuer's susceptibility to event risks has not materially changed.

Mort Walker
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Posts: 8342
Joined: 31 May 2004 11:31
Location: The rings around Uranus.

Re: Pakistani Economic Stress Watch

Postby Mort Walker » 21 May 2020 22:27

Any downgrade in TSP rating means little as they will continue to borrow with never any intention of paying back. What does matter is TSP’s exchange rate at 1 USD = 160 PKR. If that goes to 200 PKR, it will limit their ability to create terror. Remember this is a country that will let its population suffer for the benefit of the army. It is an army with a country, not a country with an army.

Any news report about credit rating degradation is to be taken with exchange rate trends. I was hoping by Jan. 2020 they would be at 200, but it didn’t happen.

Vivek K
BRF Oldie
Posts: 2309
Joined: 15 Mar 2002 12:31

Re: Pakistani Economic Stress Watch

Postby Vivek K » 21 May 2020 23:37

Correct. Ratings are for economies. Pakistan is a beggar and a parasite.

Vips
BRF Oldie
Posts: 2628
Joined: 14 Apr 2017 18:23

Re: Pakistani Economic Stress Watch

Postby Vips » 02 Jun 2020 20:39

Porkis are getting ready to ask for fresh loans of $15 Billion. This is from the budget calculations for the next budget which starts in July. :rotfl:


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