Bharat Rakshak Forum Announcement

Hello Everyone,

A warm welcome back to the Bharat Rakshak Forum.

Important Notice: Due to a corruption in the BR forum database we regret to announce that data records relating to some of our registered users have been lost. We estimate approx. 500 user details are deleted.

To ease the process of recreating the user IDs we request members that have previously posted on the BR forums to recognise and identify their posts, once the posts are identified please contact the BRF moderator team by emailing BRF Mod Team with your post details.

The mod team will be able to update your username, email etc. so that the user history can be maintained.

Unfortunately for members that have never posted or have had all their posts deleted i.e. users that have 0 posts, we will be unable to recreate your account hence we request that you re-register again.

We apologise for any inconvenience caused and thank you for your understanding.

Regards,
Seetal

Pakistani Economic Stress Watch

The Strategic Issues & International Relations Forum is a venue to discuss issues pertaining to India's security environment, her strategic outlook on global affairs and as well as the effect of international relations in the Indian Subcontinent. We request members to kindly stay within the mandate of this forum and keep their exchanges of views, on a civilised level, however vehemently any disagreement may be felt. All feedback regarding forum usage may be sent to the moderators using the Feedback Form or by clicking the Report Post Icon in any objectionable post for proper action. Please note that the views expressed by the Members and Moderators on these discussion boards are that of the individuals only and do not reflect the official policy or view of the Bharat-Rakshak.com Website. Copyright Violation is strictly prohibited and may result in revocation of your posting rights - please read the FAQ for full details. Users must also abide by the Forum Guidelines at all times.
Peregrine
BRF Oldie
Posts: 4003
Joined: 11 Aug 2016 06:14

Pakistani Economic Stress Watch

Postby Peregrine » 02 Jan 2017 18:00

X Posted on the Analyzing CPEC & STFUP Threads

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

Peregrine
BRF Oldie
Posts: 4003
Joined: 11 Aug 2016 06:14

Pakistani Economic Stress Watch

Postby Peregrine » 05 Jan 2017 17:00

X Posted on the STFUP Thread

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

Birth of another dependency

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

This is important for a couple of reasons.

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

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

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

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

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

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

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

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

How sustainable is this?

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

Nobody knows, not even the State Bank it seems.

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

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

Is this a new relationship of dependency being built here?

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

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

Where these trends take us is difficult to foresee, but increasingly the government’s narrative of economic improvement is beginning to sound like a high-stakes bet instead of sound policy.
Cheers Image

yensoy
BRFite
Posts: 561
Joined: 29 May 2002 11:31
Location: USA

Re: Pakistani Economic Stress Watch

Postby yensoy » 05 Jan 2017 20:46

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

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

Peregrine
BRF Oldie
Posts: 4003
Joined: 11 Aug 2016 06:14

Re: Pakistani Economic Stress Watch

Postby Peregrine » 06 Jan 2017 02:17

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

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

yensoy Ji :

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

Cheers Image

Bheeshma
BRFite
Posts: 592
Joined: 15 Aug 2016 22:01

Re: Pakistani Economic Stress Watch

Postby Bheeshma » 06 Jan 2017 04:18

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

Prem
BRF Oldie
Posts: 20342
Joined: 01 Jul 1999 11:31
Location: Weighing and Waiting 8T Yconomy

Re: Pakistani Economic Stress Watch

Postby Prem » 06 Jan 2017 04:38

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

Peregrine
BRF Oldie
Posts: 4003
Joined: 11 Aug 2016 06:14

Pakistani Economic Stress Watch

Postby Peregrine » 08 Jan 2017 04:45

X Posted on the STFUP Thread

Ginners fear Indian cotton imports will imperil Pakistan’s economy

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

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

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

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

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

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

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

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

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

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

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

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

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

Cheers Image

Peregrine
BRF Oldie
Posts: 4003
Joined: 11 Aug 2016 06:14

Pakistani Economic Stress Watch

Postby Peregrine » 08 Jan 2017 18:05

X Posted on the STFUP Thread

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

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

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

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

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

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

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

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

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

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

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

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

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

- "No power, no wages" -

Each time the power cuts, work is interrupted.

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

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

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

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

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

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

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

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

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

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

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

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

Peregrine
BRF Oldie
Posts: 4003
Joined: 11 Aug 2016 06:14

Pakistani Economic Stress Watch

Postby Peregrine » 09 Jan 2017 05:27

X Posted on the STFUP Thread

Ub Pchhtaye Kaa Hoi Jub Chidian Choog Gayi Khet!

Local lobby fears Chinese entrance in textile sector

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

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

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

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

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

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

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

“It is not possible for existing local players to relocate their industries in tax free zones in the current scenario.”
Cheers Image

Peregrine
BRF Oldie
Posts: 4003
Joined: 11 Aug 2016 06:14

Pakistani Economic Stress Watch

Postby Peregrine » 09 Jan 2017 21:21

X Posted on the STFUP Thread


Plunging exports cause trade deficit to widen to $14.5b


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

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

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

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

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

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

Peregrine
BRF Oldie
Posts: 4003
Joined: 11 Aug 2016 06:14

Pakistani Economic Stress Watch

Postby Peregrine » 15 Jan 2017 23:00

X Posted on the Analyzing CPEC & STFUP Threads

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

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

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

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

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

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

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

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

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

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

Peregrine
BRF Oldie
Posts: 4003
Joined: 11 Aug 2016 06:14

Pakistani Economic Stress Watch

Postby Peregrine » 22 Jan 2017 03:15

X Posted on the STFUP Thread

‘Textile units are relocating to other countries’

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

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

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

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

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

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

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

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

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

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

Cheers Image

Peregrine
BRF Oldie
Posts: 4003
Joined: 11 Aug 2016 06:14

Pakistani Economic Stress Watch

Postby Peregrine » 10 Feb 2017 16:31

X Posted on the STFUP Thread

And now - Tantara Tantara Tantara!

Pakistan to borrow $600m from China

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

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

Pakistan’s debt pile soars to Rs22.5tr

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

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

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

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

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

Will Pakistan forever be indebted to China for CPEC?

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

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

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

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

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

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

Cheers Image

Prem
BRF Oldie
Posts: 20342
Joined: 01 Jul 1999 11:31
Location: Weighing and Waiting 8T Yconomy

Re: Pakistani Economic Stress Watch

Postby Prem » 11 Feb 2017 02:29

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

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

Peregrine
BRF Oldie
Posts: 4003
Joined: 11 Aug 2016 06:14

Pakistani Economic Stress Watch

Postby Peregrine » 13 Feb 2017 13:29

X Posted on the STFUP Thread

Whither the jobs?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Cheers Image

Peregrine
BRF Oldie
Posts: 4003
Joined: 11 Aug 2016 06:14

Pakistani Economic Stress Watch

Postby Peregrine » 13 Feb 2017 16:31

X Posted on the STFUP Thread

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

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

Chinese supply glut

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

Prem
BRF Oldie
Posts: 20342
Joined: 01 Jul 1999 11:31
Location: Weighing and Waiting 8T Yconomy

Re: Pakistani Economic Stress Watch

Postby Prem » 14 Feb 2017 23:02

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

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

LokeshC
BRFite
Posts: 696
Joined: 15 Aug 2016 04:36

Re: Pakistani Economic Stress Watch

Postby LokeshC » 15 Feb 2017 00:14

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


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

Peregrine
BRF Oldie
Posts: 4003
Joined: 11 Aug 2016 06:14

Pakistani Economic Stress Watch

Postby Peregrine » 17 Feb 2017 00:28

SBP's reserves slide another $224.4m

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

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

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

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

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

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

Peregrine
BRF Oldie
Posts: 4003
Joined: 11 Aug 2016 06:14

Pakistani Economic Stress Watch

Postby Peregrine » 17 Feb 2017 23:53

X Posted on the STFUP Thread

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

Image

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

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

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

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

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

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

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

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

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

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

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

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

Cheers Image

Peregrine
BRF Oldie
Posts: 4003
Joined: 11 Aug 2016 06:14

Pakistani Economic Stress Watch

Postby Peregrine » 19 Feb 2017 15:39

Fully Posted on the STFUP Thread

CADGING PAKISTAN ENRICHING CHINA - Capital suggestion

Cheers Image

Neshant
BRF Oldie
Posts: 4071
Joined: 01 Jan 1970 05:30

Re: Pakistani Economic Stress Watch

Postby Neshant » 19 Feb 2017 16:43

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

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

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

Gagan
BRF Oldie
Posts: 10672
Joined: 16 Apr 2008 22:25

Re: Pakistani Economic Stress Watch

Postby Gagan » 21 Feb 2017 21:20

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

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

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

Peregrine
BRF Oldie
Posts: 4003
Joined: 11 Aug 2016 06:14

Pakistani Economic Stress Watch

Postby Peregrine » 23 Feb 2017 01:31

X Posted on the STFUP Thread

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

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

Peregrine
BRF Oldie
Posts: 4003
Joined: 11 Aug 2016 06:14

Pakistani Economic Stress Watch

Postby Peregrine » 25 Feb 2017 18:48

Pakistan’s debt problem]

My last article, which was also about debt. I realised from the responses that there are a lot of misconceptions about debt, its dynamics in Pakistan’s context and other issues related to it. Above all is the million-dollar question: does Pakistan’s debt represent a danger? This article intends to answer some of these vexing queries.

Let’s start by clarifying one of the foremost misconceptions: we take on debt because domestic resources are not enough to meet our requirements. This line has been endlessly perpetuated over time by substandard textbooks and policymakers. First of all, we must define what ‘scarce’ means in the Pakistani context? Our tax revenues, as we are told, are around Rs3 trillion. Does this sound like a scarce resource? As I will argue later, it is not scarcity, but the unproductive use of this money that gives rise to this scarcity.

Pakistan does not necessarily take on debt because resources are scarce. And, as the finance minister has accepted many times, we are taking on loans mostly to pay off former loans.

Is Pakistan’s debt ‘problem’ a problem? Is taking on debt always bad? Other countries also take on debt without all the fuss that we see in Pakistan. So, what’s all the fuss about?

To make sense of all this, let us start with two examples: Amazon and Snapchat. Jeff Bezos, the founder of Amazon, left his job and started the company in 1994 by utilising his parents’ savings. In 1995, he took on a further $8 million in debt. Today, Amazon’s valuation stands at a staggering $300 billion and the company has raked in more than $61 billion in annual revenues. Amazon has made more than 44 acquisitions. The net worth of its founder is an estimated $57 billion.I O W Amazon's Valuation is more than the Cwapistani GDP

Snapchat, like Amazon, is an internet sensation which started out as a product design at the end of 2011. Evan Spiegel, who was 20 years old at the time, came up with this idea while he was still studying. He later took on a debt. In 2016, Snapchat’s income was $367 million and its market valuation currently stands above $20 billion. It has 1,859 employees and countless investors from across the world want to either invest in it or buy the app.

From 1947 to 2007, Pakistan’s total debt stock stood at Rs7 trillion. Did we have any asset worth even a billion dollars? No. Within a decade, our debt has soared by another Rs16 trillion to touch a record Rs23 trillion – notice that this ‘record’ is never mentioned. Of this stratospheric increase within a decade, what asset have we managed to create that is worth even a billion dollars? None. Cwapistan's Total Debt and Liabilities 31-12-2016 is Rupees 23.1430 Trillion and mounting.

Once we begin to understand the difference between the two scenarios, we’ll understand why debt can be good or bad. Between 2007 and 2017, Rs16 trillion of debt could add nothing substantial to the state of Pakistan’s inventory. Its behemoths like the Pakistan Steel Mills – with thousands of employees and billions in accumulated debt (all state-backed) – stand as a vivid testament of the failure of our policymakers and their imagination. Despite their best efforts, not a single buyer is willing to buy it.

Between 2012 and 2016, an idea led to Snapchat, which managed to accumulate a valuation of $20 billion within four years. Between 1994 and 2007, Pakistan’s total debt stock jumped from Rs2 trillion to Rs7 trillion. The addition of an extra Rs5 trillion couldn’t make much of a difference in terms of added value creation. Within this time, Jeff Bezos used his parents’ savings and a paltry amount of $8 million to create something that now exceeds $300 billion in valuation.

The difference is that we see the same infatuation with infrastructure and accumulating debt for either paying off earlier debts – using it for current, non-development expenditures and expending it on building things that have little or no return (in fact, they become a liability after some time). On the other side, we see an investment in ideas that have managed to create spectacular returns and positive implications for the economy and society.

The difference is that in countries like the US, governments at every level incentivise taking on debt so that individuals can invest in an idea and start something of their own. One of the most valuable lessons that governments have learned over time is that if they take on debt themselves, then ultimately most of it will become unproductive in the long run. They do take on debt, as in the aftermath of the Great Recession. But it was taken primarily to avert further catastrophes and help the private sector remain viable and stable. And when governments do take on debt, they usually have a good plan on returning debt.

Pakistan’s debt is a problem. It is a problem because there is little or no investment in ideas that could create value. It is a problem because a majority of debt, except for a small amount, is taken on by the government, which will tax its citizens even more to pay it back. Debt is a problem because it is poorly negotiated, not necessarily needed. State institutions lack the capacity to utilise it properly and productively and spend it disproportionately to meet unproductive expenditures. It is usually spent on projects that later turn out to be a liability.

Debt is accumulated mostly by the government, which often ends up misusing it. Debt is often contracted vaguely and dubiously, without any clear roadmap for repayments. It is also devoid of any calculation of expected and marginal returns of earlier and intended investments and is seldom used on things that could usher future growth and value – human capital is the most prominent example.

And yet, we are taking on an additional $51 billion under CPEC. How exactly will we pay it off? Around $34 billion of this money is being spent on energy projects – which is quiet perplexing since Pakistan’s present installed capacity is enough to meet its demands. Power outages in Pakistan are basically a governance issue rather than an issue of the lack of power-generating capacity. The total installed capacity is rarely utilised because it adds to the circular debt. And yet, we are on our way to add even more power plants. This shows that we take on debt for purposes which really don’t merit taking it on in the first place?

Taking on debt is not always a necessarily bad thing. In fact, today’s environment – characterised by negative real interest rates – provides a wonderful opportunity to accumulate debt. As Dr Nadeemul Haque and others keep reminding us, it is not debt that is the problem, but debt management and its utilisation which are the real concerns.

Cheers Image

Peregrine
BRF Oldie
Posts: 4003
Joined: 11 Aug 2016 06:14

Pakistani Economic Stress Watch

Postby Peregrine » 26 Feb 2017 18:31

X Posted on the STFUP Thread

Power rates - Capital suggestion

February 10, 2017: The Rewa Solar Park, a joint venture of the Solar Energy Corporation of India (SECI) and Madhya Pradesh Urja Vikas Ltd, invited international bids for a 750MW solar park. Solenergi Power of Sweden bid an equivalent of PKR5.19 per kWh. The capital cost of the Rewa Solar Park hovers around $690,000 per MW.

March 19, 2015: the National Electric Power Regulatory Authority (Nepra), Islamic Republic of Pakistan, approved a levelised tariff of PKR14.85 per kWh for Quaid-e-Azam Solar Power (Private) Limited. The capital cost of the Quaid-e-Azam Solar Power Project stands at around $1.5 million per MW.

January 18, 2017: Nepra adjusted the tariff for Quaid-e-Azam Solar Power (Private) Limited on account of US CPI, local CPI, KIBOR and exchange rate variations. For the record, Nepra raised the tariff for the January-March 2017 quarter to PKR19.33 per kWh.

Something must be terribly wrong here: A Swedish company is willing to sell solar energy to Indians at an equivalent of PKR5.19 per kWh while a Chinese company is selling the same to Pakistanis for PKR14.85 per kWh.

Something must be terribly wrong here: The capital cost at the Rewa Solar Park in Madhya Pradesh is around $690,000 per MW while the same for Quaid-e-Azam Solar in Bahawalpur is $1.5 million per MW.

August 10, 2015: Nepra’s decision on Hawa Energy (Private) Limited’s wind power project was a levelised tariff of PKR10.60 per kWh. Amazingly, for years 1-10, Hawa Energy will be paid PKR12.47 per kWh.

March 4, 2016: The Maharashtra Electricity Regulatory Commission fixed the levelised tariff for new wind energy projects from April 1, 2016 to March 31, 2017. For the record, the net levelised tariff was fixed at an equivalent of PKR5.33 per kWh (Zone 4).

March 31, 2016: The Tamil Nadu Electricity Regulatory Commission determined that the “wind mills commissioned from September 19, 2008 to July 31, 2012 shall be eligible for a tariff of IRS3.39 per unit” or an equivalent of PKR5.33 per unit.

Something must be terribly wrong here: Pakistan is willing to pay Hawa Energy PKR10.60 per kWh while the Maharashtra Electricity Regulatory Commission has fixed a levelised tariff of an equivalent of PKR5.33 per kWh.

February 13, 2017: The Hindu, the Chennai-based English-language Indian daily newspaper, reported: “In another barrier-breaking development, the auctioned price of solar photovoltaic (SPV) power per kilowatt hour has dropped below IRS3 to IRS2.97 in Madhya Pradesh, providing a clear pointer to the future course of renewable energy”.

February 23, 2017: The Times of India, the Mumbai-based third-largest newspaper in India, reported: “After a sharp drop in solar tariff to IRS2.97 per unit, the wind power rates may also touch a new low and fall below the IRS4 per unit mark in an ongoing auction for 1,000 MW capacity”.

February 26, 2017: On 30 May 2014, PM Nawaz Sharif laid the foundation stone for a coal-based power project in Sahiwal. The plant will burn around 12,000 tonnes of coal per day and emit around 6 million tonnes of carbon dioxide per year plus “60 different hazardous air pollutants … a variety of toxic metals, organic compounds, acid gases, sulphur, nitrogen and particulate matter”.

Imagine, acid rain will soon be raining down from the skies on Sahiwal’s Niliravi buffalos and fertile fields of grain and sugar cane. And Sahiwal’s human residents will face elevated death rates from cancer of the colon, breast and ovaries as well as lung diseases.

Lo and behold, we shall be buying coal-based electricity from China’s state-owned Huaneng Shandong at the rate of PKR8.90 per unit. Remember, Indians will be buying clean solar power from a Swedish company at the equivalent of PKR5.19 per unit. Remember, Indians will be buying clean wind power at the equivalent of PKR5.33 per unit.
Cheers Image

Peregrine
BRF Oldie
Posts: 4003
Joined: 11 Aug 2016 06:14

Pakistani Economic Stress Watch

Postby Peregrine » 27 Feb 2017 05:40

X Posted on the STFUP Thread

Pakistan may lose claim over grant pledged by donors
ISLAMABAD: Pakistan may lose its claim over a grant worth millions of dollars committed by foreign donors for the rehabilitation of people affected by Operation Zarb-e-Azb because of bureaucratic bickering.
The additional financing for Fata Rural Livelihoods and Community Infrastructure Project could lapse by the end of next month, because of the delay by Fata Secretariat in getting the project’s PC-1 approved even after eight months, said sources in the World Bank.
The original cost of this project was $12 million and the multi-donor trust fund committed an additional $8.1 million. However, swift action is needed for securing additional funds, said the sources.
Cheers Image

Peregrine
BRF Oldie
Posts: 4003
Joined: 11 Aug 2016 06:14

Pakistani Economic Stress Watch

Postby Peregrine » 28 Feb 2017 05:26

X Posted on the STFUP Thread

Get your house in order…the Chinese are coming

KARACHI: The Pakistan Stock Exchange (PSX) has been talk of the town for both good and bad reasons. In a nutshell, it had been booming, before news of fraud, scams and negative investor sentiment cast a shadow on the bullish run.

The PSX was upgraded to the MSCI Emerging Market Index after being in the Frontier Markets one for a while. The actual reclassification will take place this year.

Developments on macro and microeconomic levels are also supporting the upward trajectory. To top it off, it was declared the top performing Asian market in 2016.

Simultaneously, regulatory authorities concerned have come into action, as they have detected default of brokerage firms, unearthed scams of misuse of investors’ funds by owners, caught an official on the charges of being an inside informer, suspended an official of PSX on charges of having failed to timely detect default of a brokerage firm.

Complaints about the prohibited in-house financing (badla) at some of the brokerage houses have also surfaced and regulators have also noted existence of single-member brokerage firms.

Questions arise as to why a couple of brokerage firms have defaulted if the market is booming. The Joint Action Committee, which has detected the defaults, has existed since 2015. Then why has it suddenly started detecting the defaults in 2017?


Why did it not detect any default in 2015 when the market performed comparatively at a slower pace (the benchmark KSE 100-Index increased only 5% in 2015 as compared to around 40% in 2016)?

In-house financing has been prohibited since the 2008 crash. Then how did the brokerage houses continue using the prohibited product?

The answer to these questions is transformation of the PSX from a local market to a regional player. A strategic Chinese consortium won 40% stake in the PSX and is expected to take over control of the management anytime.

The regulators have tasked themselves to conduct a clean-up operation ahead the handover. Also, they have conveyed that lethargic attitude in this regard will not be tolerated. The suspension of PSX official is an example.

Secondly, the level of defaults and change in regulations are not as big as they are being projected.

To be noted, the defaults have taken place at the brokerage firm in Lahore and Islamabad, which earlier were not being monitored as closely as brokerage firms in Karachi were.

PSX-Chairman Munir Kamal said the other day that fundamentals of the market remain strong and intact and fraud committed by a handful of brokers should not be construed as a sign of weakness in the market.

Shahzad Chamdia, chairman of the stock market’s divestment committee, said the winning Chinese consortium is a good synergy between PSX and Chinese stock and future markets, which are part of the consortium.

The strategic partners are aimed at introducing new value products (including CPEC-bonds and derivatives/options), upgrading technology, facilitate cross-border listing and attract many more foreign investors from across the world, including China.

“The PSX would become a prominent regional market in the next two-three years. We, in partnership with the consortium, are aiming to increase the size of market capitalisation which stands at around $100 billion at present,” he said.

The size of the market capitalisation in India stands at $1.5 trillion and this is around $3-3.5 trillion in China. “This is the size of market cap, which makes it big or small,” he said.

The PSX has made necessary amendments to welcome four nominee directors of the Chinese consortium on the board. And they would have right to make nominees for the posts of chief executive, chief financial officer and chief regulatory officer at PSX, he said.

Another broker recalled that such defaults, detection of wrongdoing and massive amendments in regulations were last made at the PSX (formerly known as Karachi Stock Exchange) in 2008-2009 after the crash.

“This time regulators have not made massive changes in regulations. But their efforts are more in the way of getting the existing regulations implemented,” he said.

Guidance : MARKET CAPITALIZATION January 2017 - World Federation of Exchanges

BSE India Ltd : US$ 1,663,722.5 Million = US$ 1.6637225 Trillion

National Stock Exchange India Ltd : US$ 1,632,829.3 Million = US$ 1.632 8293 Trillion
Cheers Image

Peregrine
BRF Oldie
Posts: 4003
Joined: 11 Aug 2016 06:14

Pakistani Economic Stress Watch

Postby Peregrine » 01 Mar 2017 19:38

X Posted on the STFUP Thread

‘Fright syndrome’ hits dollar holdings

Stored old dollar bills worth $500m surfaced in the first two months of 2017 as panic stricken savers and hoarders rushed to exchange them at any price. Market sources confirmed a sizeable amount was traded at sub-market rates.

The ‘fright syndrome’ contributed to the sudden surge in dollar flow which eased pressure on greenback supply in the open market, observed market watchers.

The shrinking of the demand-supply gap helped bring relative stability in the value of a slipping rupee. The rupee recovered to 107 after crossing 109 to a dollar some time back.

The warning by the regulator on Feb 20 halted the trading of old dollar bills at sub market rates and further stabilised the situation. The State Bank of Pakistan directed commercial banks and money changers to accept old dollar bills of all designs and denominations at the market rate. It warned that those found flouting the said order would be penalised.


The duality of the exchange rate for old and new dollar bills was highlighted by the media in January. Asked what took the regulator so long to act, a written response e-mailed is reproduced below:

“The SBP has been aware of this recent phenomenon since its beginning and has been dealing with banks/exchange companies individually against whom complaints were made.


Nervous citizens took the preference of commercial banks for new dollar bills as a signal of the old ones going out of circulation

“With the growing number of incidences, the SBP has taken cognisance of the issue at a broader level and made clear to banks that there is no room for quoting different exchange rates for old and new design US dollar currency notes. In case of violation, the SBP may take strict regulatory action against the involved bank or exchange company”.

It is hard to say what triggered the cycle or when but in late Dec 2016 amid heightened dollar demand and post Trump victory in the US, rumours about redundancy of the old design $100 notes started circulating.

Nervous citizens took the preference of commercial banks for new dollar bills as a signal of the old ones going out of circulation. This led to a run on money changers who started ramping up the selling rate for the new dollar bill and pulling down the buying rate for the old design $100 notes.

The depressed exchange rate for old dollar notes has hurt ordinary households who exchanged them for local currency. Many middle class Pakistani households store some savings in dollars to maintain a baseline value against rupee depreciation. The worst impact, however, was borne quietly by dollar hoarders of ill-gotten wealth.

They tried secretly to salvage the value of wades of $100 bills and accepted the loss as a fait accompli. According to an estimate this segment lost, on an average, about 10pc of the value of old design dollars owing to market manipulation.

“Initially I was enraged at the price of the dollar quoted by my currency agent. Soon I realised that it would be wise to endure some loss to avoid a bigger one later. I managed to exchange all of my old notes but after I accepted the rate (Rs100 to a dollar) quoted”, a retired income tax officer from Lahore said.

According to anecdotal evidence money changers pocketed 10-20pc of the market value of old design dollar notes that reached them during the episode.

The margin of the individual dealer depended on his assessment of the degree of vulnerability of the client approaching them with requests, a stock broker also dealing in currency said.

“Money changers, particularly unlicensed ones, made the most out of this. There is no evidence to implicate the government in the old/new dollar episode but it did save them the embarrassment of rupee depreciation”, commented a mutual fund operator.

Most bankers contacted were reluctant to comment.

“In a parallel economy as big as ours it is not easy to accurately trace factors behind market volatility. Sometimes rumours trigger a cycle of reaction leading to market aberrations”, said a senior banker. Cwapistani is trying to state that Cwapistani TOTAL Economy is possibly DOUBLE the Official Economy.

Malik Bostan, Chairman, Exchange Companies Association, blamed commercial banks for the fiasco. “How can they refuse a legal tender? But they do all the time. We are intermediaries and pass notes that we receive”.

“We do export foreign currency stocks to Dubai to our sister companies there but only after authorisation from the State Bank. The operation involves physical cost and time”, Bostan said justifying the spread between the official and market rates for currencies.

He insisted that licensed companies operate within legal confines and suspected unlicensed operators of mischief. “In January, according to our estimates, the demand for dollar in the kerb market was of $5-8m against the supply of $2-3m. How can our members be blamed if the dollar rate started climbing?” he defended his sector.

A respected retired banker was caught unawares when reached over phone for his comment.

He said, “the US had not demonetised any currency note in over 100 years. It did introduce advance security in a new series. People who park savings in dollars ought to know this”.

Three points emerged from the market as key factors for creating the situation: First, the thought that after the sudden demonetisation in India, the same can be repeated by other governments.

Second, an erratic and unpredictable Trump could do anything at will; and third, the low credibility of the government regarding dollars, recalled by the foreign currency account freeze of 1998.

Cheers Image

venug
BRFite
Posts: 114
Joined: 15 Aug 2016 21:39

Re: Pakistani Economic Stress Watch

Postby venug » 01 Mar 2017 19:43

Pakistan hosts 10-nation regional economic summit
slamabad hosted the day-long 10-nation Economic Cooperation Organization summit to finalize a "Vision 2025" plan for expanding trade and prosperity among member nations.

. Turkey, Iran and Pakistan founded ECO in 1985.


So who are the members of this ECO? TSP, Turkey, Iran, Afg, who else are the member of this TSP's "squint eyed" always look west policy...does anyone know?

Peregrine
BRF Oldie
Posts: 4003
Joined: 11 Aug 2016 06:14

Re: Pakistani Economic Stress Watch

Postby Peregrine » 01 Mar 2017 19:58

venug wrote:Pakistan hosts 10-nation regional economic summit
slamabad hosted the day-long 10-nation Economic Cooperation Organization summit to finalize a "Vision 2025" plan for expanding trade and prosperity among member nations.

. Turkey, Iran and Pakistan founded ECO in 1985.


So who are the members of this ECO? TSP, Turkey, Iran, Afg, who else are the member of this TSP's "squint eyed" always look west policy...does anyone know?
venug Ji :

Afghanistan, Azerbaijan, Iran, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Turkey,Turkmenistan and Uzbekistan.
Cheers Image

venug
BRFite
Posts: 114
Joined: 15 Aug 2016 21:39

Re: Pakistani Economic Stress Watch

Postby venug » 01 Mar 2017 20:00

Peregrine ji thank you. All stans in one place :)

Peregrine
BRF Oldie
Posts: 4003
Joined: 11 Aug 2016 06:14

Pakistani Economic Stress Watch

Postby Peregrine » 02 Mar 2017 05:13

X Posted on the STFUP Thread

Falling exports: PTEA terms high energy prices impediment to growth

FAISALABAD: Pakistan Textile Exporters Association (PTEA) Chairman Ajmal Farooq and Vice Chairman Muhammad Naeem said that the extreme cash flow crunch and high energy prices are hampering export growth and adversely impacting the industry.

“Exports are falling consistently both in value and quantities; the government needs to immediately intervene to check the drastic downfall in exports,” said Farooq. They termed a severe liquidity crunch and high energy prices as the major cause of export decline. They appealed to the government to rescue the ailing textile industry.

“Massive working capital of textile exporters has been held in sales tax, custom rebate and income tax refund regime, increasing the financial stress of textile exporters who are unable to enhance their export turnover.”

Cheers Image

ArmenT
BR Mainsite Crew
Posts: 4239
Joined: 10 Sep 2007 05:57
Location: Loud, Proud, Ugly American

Re: Pakistani Economic Stress Watch

Postby ArmenT » 02 Mar 2017 09:59

Peregrine wrote:X Posted on the STFUP Thread

‘Fright syndrome’ hits dollar holdings

Stored old dollar bills worth $500m surfaced in the first two months of 2017 as panic stricken savers and hoarders rushed to exchange them at any price. Market sources confirmed a sizeable amount was traded at sub-market rates.

The ‘fright syndrome’ contributed to the sudden surge in dollar flow which eased pressure on greenback supply in the open market, observed market watchers.

The shrinking of the demand-supply gap helped bring relative stability in the value of a slipping rupee. The rupee recovered to 107 after crossing 109 to a dollar some time back.

The warning by the regulator on Feb 20 halted the trading of old dollar bills at sub market rates and further stabilised the situation. The State Bank of Pakistan directed commercial banks and money changers to accept old dollar bills of all designs and denominations at the market rate. It warned that those found flouting the said order would be penalised.

Smells like one of three things or a combination thereof:
(a) A lot of it is drug money, some of it the property of serving officers.
(b) They siphoned off a lot of aid money in 70s/80s/90s and they don't want it to come to light.
(c) They printed their own fake USD $100 notes (with help from Iran) which will pass a cursory glance, but not high quality US govt. scanning machines.

arun
BRF Oldie
Posts: 9198
Joined: 28 Nov 2002 12:31

Re: Pakistani Economic Stress Watch

Postby arun » 05 Mar 2017 13:38

X Posted from the STFUP thread.

To solve this external funding problem Pakistan should get Sweeter than Honey Iron Brother PRC to fund a new CSF named CPEC Support Fund. Better still since CPEC is claimed to be a Regional Game Changer, regional countries should also be asked fund this new CSF.

External sector reels under unceasing CSF reliance

Bhurishravas
BRFite
Posts: 680
Joined: 02 Sep 2016 18:25

Re: Pakistani Economic Stress Watch

Postby Bhurishravas » 06 Mar 2017 17:10

Slowly it is dawning on all donors that Pakistani economy stands on fudged figures only.
A German state-owned development bank has questioned the power ministry’s claim of tur­ning around the power sector through efficient generation and effective control, terming it “politically influenced”.

anupmisra
BRF Oldie
Posts: 6118
Joined: 12 Nov 2006 04:16
Location: New York

Re: Pakistani Economic Stress Watch

Postby anupmisra » 06 Mar 2017 17:35

Bhurishravas wrote:Slowly it is dawning on all donors that Pakistani economy stands on fudged figures only.
A German state-owned development bank has questioned the power ministry’s claim of tur­ning around the power sector through efficient generation and effective control, terming it “politically influenced”.


I love to put down the pakis whenever I can. That is the easy part. While the numbers coming out of al bakistan may be fudged to a gooey mess (after all they have al cheen to emulate - big brother and all), India is not that far behind....see the recent unemployment numbers.

Rishi Verma
BRFite
Posts: 1019
Joined: 28 Oct 2016 13:08

Re: Pakistani Economic Stress Watch

Postby Rishi Verma » 06 Mar 2017 17:53

Should there be a list of mofo's fudging efforts?

- size of economy... Trillions and trillions
- size of remittances... 100 billion
- loss due to USA's pressure on terrorism... 30 billion
- growth rate... "whatever India's is, ours is same"
- number of goats por.n out of wedlock "ahem millions"
- range of missiles "whatever North Korea tested less the reduction due to green paint's weight plus the addition due to green paint's smoothness"
- population of wild boars "nil"
- population of terrorists "nil"
- number surrendered in 1971 "nil"

Prem
BRF Oldie
Posts: 20342
Joined: 01 Jul 1999 11:31
Location: Weighing and Waiting 8T Yconomy

Re: Pakistani Economic Stress Watch

Postby Prem » 06 Mar 2017 23:10

Peregrine wrote:
venug wrote:Pakistan hosts 10-nation regional economic summit
Afghanistan, Azerbaijan, Iran, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Turkey,Turkmenistan and Uzbekistan.
Cheers Image


Total annual trade among them is 5.8 billion $ i.e about 2 days worth of India's trade volume. ,

Peregrine
BRF Oldie
Posts: 4003
Joined: 11 Aug 2016 06:14

Pakistani Economic Stress Watch

Postby Peregrine » 07 Mar 2017 04:15

venug wrote:Pakistan hosts 10-nation regional economic summit
So who are the members of this ECO? TSP, Turkey, Iran, Afg, who else are the member of this TSP's "squint eyed" always look west policy...does anyone know?
Peregrine wrote:venug Ji :

Afghanistan, Azerbaijan, Iran, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Turkey,Turkmenistan and Uzbekistan
Cheers Image
Prem wrote:Total annual trade among them is 5.8 billion $ i.e about 2 days worth of India's trade volume. ,
Prem Ji :
Thus India can Trade with Turkey by Sea, Eastern Iran, Afghanistan & Turkmenistan via Chah Bahar and Western Iran & Kazakhstan via Bandar Abbas.

Azerbaijan, Kyrgyzstan, Pakistan, Tajikistan & Uzbekistan can be given a miss until India has chances of doing a couple of Billion US Dollars each.

NO TRADE VIA CWAPISTAN!
Cheers Image


Return to “Strategic Issues & International Relations Forum”

Who is online

Users browsing this forum: g.chaks and 35 guests