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Pakistani Economic Stress Watch

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Peregrine
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Pakistani Economic Stress Watch

Postby Peregrine » 02 Jun 2017 14:51

Taking Alms from Peter to pay Paul!

Eurobond debt paid off with Chinese loan

ISLAMABAD: Pakistan on Thursday paid back $750 million Eurobond debt but only after receiving $1 billion loan from China, as the country struggles to sustain the official foreign currency reserves at their current levels amid mounting foreign payments requirements.

Pakistan retired the Eurobond debt of $750 million, said an official of State Bank of Pakistan. However, despite the retirement of debt, Pakistan’s external debt would not reduce, as the country borrowed another $1 billion from China Development Bank to pay back the old debt.

With fresh $1 billion borrowing, Chinese banks have given $2 billion loan to Pakistan during past nine months alone. These loans have been obtained on an interest rate ranging from 4.22 per cent to 4.44 per cent, according to Finance Ministry documents. However, the government waived off all taxes on these loans to show a reasonable cost of borrowing.

In 2007, the Musharraf government had issued 10-year bonds at a 6.875 per cent interest rate. Although, the government contracted the Chinese loans at around 4.4 per cent interest rate, it would increase refinancing risks due to relatively shorter maturity period.

In its second last meeting, the federal cabinet had approved signing the foreign commercial facility agreement of $1 billion with the China Development Bank, according to official documents.

The central bank on Thursday also revealed the official foreign currency reserves position till May 26. It said that the total liquid foreign reserves held by the country stood at US$21.77 billion. Foreign reserves held by the State Bank of Pakistan increased to $16.921 billion on back of $1 billion Chinese loan. The net foreign reserves held by commercial banks stood at $4.848 billion.

During the week ending May 26, SBP’s reserves increased by US$709 million to US$16.922 billion, due to official inflows, according to an official handout issued by the SBP. The $16.9 billion reserves include $1 billion Chinese loan. In its next weekly statement, the central bank would reflect the impact of $750 million repayment.

From July through March of the current fiscal year, Pakistan’s external debt servicing – including interest payments – consumed $3.9 billion, according to the Economic Survey of Pakistan. The nine-month debt servicing ate up 24.2 per cent of our export receipts – the highest figure during the past 14 years, suggesting worsening of the external debt indicators.

FRDL Amendment

The Senate Standing Committee on Finance recommended amending the public debt definition –backed by the PML-N’s Senator Ayesha Raza Farooq. The amendment says that the public debt should be reported net of the government’s deposits placed in banking system.

If parliament approves the amendment, it will further camouflage the real debt situation after last year’s amendments introduced in Fiscal Responsibility and Debt Limitation Act of 2005.

Due to growing public criticism, Finance Minister Ishaq Dar has started emphasising upon the net public debt – the public debt minus deposits of the government. Senator Ayesha has proposed that this should be given legal cover by amending the debt definition.

“The debt to GDP ratio is now correctly being shown in net terms rather than gross terms”, said Senator Ayesha during the committee meeting.

The Ministry of Finance’s Director General Debt Office supported Senator Ayesha’s proposal, although Ministry of Law official said that this amendment can only be made with the prior approval of federal cabinet.

If the Parliament approves the proposed amendment, the net public debt would come down by Rs2 trillion. As of March 2017, the country’s public debt was Rs20.872 trillion or 65.5 per cent of GDP, according to Finance Ministry. As per Ishaq Dar innovation and backed by Senator Ayesha, the net public debt would come down to Rs18.892 trillion or 59.3 per cent of the GDP.

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Pakistani Economic Stress Watch

Postby Peregrine » 04 Jun 2017 21:45

X Posted on the STFUP Thread

Cement exports continue to slump, this time down 45%

LAHORE: Sales of cement in the domestic market accelerated 10.90% in May 2017 while exports continued to plague overall performance of the industry as shipments to overseas markets plunged 44.58% in the month.

It was the fourth massive decline in exports, which dipped 45.69% in February, 60.39% in March and 50.75% in April.

This dismal export performance has overshadowed handsome sales of cement in the domestic market.

According to data released by the All Pakistan Cement Manufacturers Association, sales in the domestic market totalled 3.399 million tons in May 2017 compared with 3.065 million tons in the corresponding month of previous year, registering a healthy spike of 10.90% and indicating a continued growth momentum.

Exports, however, fell sharply in the month, standing at 0.309 million tons compared with 0.558 million tons in May 2016.

Total sales were recorded at 3.708 million tons compared with 3.623 million tons in the same month of previous year, up only 2.36%.

In the first 11 months (July-May) of the current financial year, domestic cement consumption rose a healthy 10.76% to 37.589 million tons against 35.523 million tons in the corresponding period of last year.

Exports during the 11 months fell 21.27% to only 4.319 million tons against 5.486 million tons in the same period of previous year. Since hitting a peak at 10.8 million tons in financial year 2008-09, exports have been on a constant decline.

In May 2017, exports to Afghanistan slumped 53.03% at 0.097 million tons compared with 0.206 million tons in May 2016.

Exports to India also registered a decline, going down 15.22% from 0.135 million tons in May 2016 to 0.114 million tons in May this year. Shipments to the neighbouring country go mainly through the Wagah border and southern coast of India.

In a statement, a spokesman for the cement manufacturers association aired concern over the falling shipments to Afghanistan that came down 31.24% in July-May FY17. Exports to India, however, registered an increase of 34.61% in the 11-month period.

The spokesman decried that the government had slapped additional taxes on the cement industry. The tax burden may hurt growth of the industry that has been making healthy progress over the past 18 months.

He said sales growth had remained subdued in the past two months at 0.70% in April and 2.36% in May. “This … came despite the fact that domestic consumption of cement rose 23.09% in March, 9.53% in April and 10.58% in May,” he said.

He feared some decline in domestic demand as well in the wake of duties slapped on the construction industry.

Industry experts have appealed to the government to take steps to boost the housing sector as currently the cement industry is mostly banking on infrastructure projects.

They argue that a sustained growth in housing construction is essential to absorb the additional capacities that will come on stream in the next two years. They urge the government to avoid disruptive policies that impact the growth in construction in the country.

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Re: Pakistani Economic Stress Watch

Postby A_Gupta » 11 Jun 2017 18:24

https://tribune.com.pk/story/1426646/nu ... ic-shield/
Not surprisingly after four years of multiple billion dollar investment in power plants the Pakistan Economic Survey shows that power production dropped to 85,206 GWh in March to July 2017 from 101,970 GWh during March to July 2016. That is why we are seeing record shortfalls and unprecedented load-shedding in Ramazan. Numbers are good for accounting templates, press conferences, and Power point presentations but they cannot indefinitely hide the truth. In fact, the more you hide it, the more viciously it will make its presence felt when it breaks through the figure-fudging veneer.

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Re: Pakistani Economic Stress Watch

Postby A_Gupta » 13 Jun 2017 00:21

Pakistan Stocks Fall Most Globally as Sharif to Appear for Probe
https://www.bloomberg.com/news/articles ... e-j3ts0voj
The political turmoil is the latest hit to the nation’s stock market, which was upgraded to emerging markets status by MSCI Inc. this month. Instead of flocking to Pakistani equities, foreign investors have continued dumping stocks worth $372 million this year, more than the entire amount of $334 million offloaded last year, according to data compiled by Bloomberg.

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Pakistani Economic Stress Watch

Postby Peregrine » 13 Jun 2017 14:53

X Posted on the STFUP Thread

Pakistan's trade deficit widens to record $ 30 billion

ISLAMABAD: Pakistan's trade deficit ballooned by 42 per cent year-on-year to an all-time high of $30 billion in the first 11 months of the current fiscal year on the back of falling exports and a sharp increase in the import bill, a media report said today.

The high deficit came weeks after the government claimed that it has turned around the economy by achieving 5.3 per cent GDP growth.

Pakistan's annual trade deficit was $20.435 billion when the PML-N came to power in 2013. It has been on the rise since then due to rising imports and falling exports, the Dawn reported.

Trade deficit stood at $3.465 billion in May, a rise of nearly 61 per cent compared to the same month a year ago, according to the data released by the Pakistan Bureau of Statistics yesterday.

Two reasons explain the trade deficit: rising import bill of capital goods, petroleum products, and food products; and a steep fall in exports despite prime minister's support package to boost exports. The trade deficit is said to be posing a serious threat to external balance of payment.

In July-May, the overall import bill rose 20.6 per cent year-on-year to $48.54 billion. In May alone, it increased 28 per cent to $5.09 billion.

In the year 2012-13, the import bill was at $44.950 billion. It is expected to reach over $53 billion this fiscal year.

Exports fell 11 per cent year-on-year to $1.627 billion in May after witnessing paltry growths in the previous two months. Export proceeds grew 5 per cent in April and 3 per cent in March.

Exports are in decline despite government claims of providing the industry with round-the-clock power supply since November 2014. Similarly, the government was also providing Rs 3 per unit concession in electricity tariff since 2016 to export-oriented industries.

In the 11 months through May, the export proceeds fell to $18.54 billion from $19.14 billion a year ago.

Under a three-year Strategic Trade Policy unveiled last year, the government set an annual export target of $35 billion by 2018. To boost exports, the prime minister announced a subsidy package of Rs180 billion for textile, clothing, sports, surgical, leather and carpet sectors. The impact of this package on exports has yet to be seen.

The government has recently removed the commerce secretary, Azmat Ali Ranjha, for failing to promptly implement the trade policy. He was replaced by Younis Dagha, who was shunted out from the Ministry of Water and Power for his alleged failure to manage power load-shedding issues.

Under the Strategic Trade Policy 2015-18, the Ministry of Commerce notified five cash support schemes to improve product design, encourage innovation, facilitate branding and certification, upgrade technology for new machinery and plants, provide cash support for plant and machinery for agro-processing and give duty drawbacks on local taxes.

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Pakistani Economic Stress Watch

Postby Peregrine » 14 Jun 2017 13:52

Pakistan shelves $2b LNG project

ISLAMABAD: As Saudi Arabia adopts an aggressive policy in the Middle East by cutting ties with Qatar, the PML-N-led government has shelved the $2 billion Gwadar-Nawabshah pipeline project, an alternative plan to implement Iran-Pakistan (IP) gas pipeline project following US sanctions against Tehran, in a move that will likely intensify row between Islamabad and Tehran on the gas pipeline project.

Qatar and Iran had been competing to provide gas to Pakistan.

The United States (US) had been pushing Pakistan to shelve the IP gas pipeline project and asking it to sign an LNG deal.

Pakistan had followed this policy and signed an LNG contract with Qatar where majority shareholders were US, Japanese and EU companies.

In a new development, Qatar started laying LNG gas pipeline in Pakistan. The proposal was taken up during the visit of Emir of Qatar Sheikh Tamim bin Hamad bin Khalifa al Thani in January this year.

This will not be a setback to Tehran but it would be a blow to China who had been denied this project.

Pakistan and China had signed a framework agreement on April 20, 2015 to award LNG Gwadar-Nawabshah pipeline and LNG terminal contract without a bidding process.

In addition, Pakistan had given a firm commitment to Tehran that it had started a LNG Gwadar pipeline contract, an alternative plan of implementing IP gas pipeline project and informed it that this pipeline would be connected with the Iran border once sanctions have been lifted.

Pakistan was bound to get gas from Iran from January 2015 and could face $3 million per day penalty for failing to receive gas under sales purchase agreement (GSPA). But Tehran had not pressed Pakistan and did not sue it in international court after Pakistan had held out assurance that it was going to start work on the LNG Gwadar pipeline project and that the remaining portion of 80 kilometers would be connected with the Iranian border once sanctions are lifted against Tehran.

The decision was taken in a high-level meeting chaired by Prime Minister Nawaz Sharif in the first week of this month. During the meeting, ministry of petroleum was directed to drop the Gwadar-Nawabshah LNG terminal and pipeline project and to immediately start work for setting up a new LNG terminal at Port Qasim, Karachi.

The project had been dropped on the pretext of higher cost despite the fact that the Executive Committee of National Economic Council (ECNEC) had approved this project after detailed cost examination.

An official of petroleum ministry pointed out that the Price Negotiating Committee, constituted by the ECC, had finalised the contract cost and the Executive Committee of National Economic Council (Ecnec) had also accorded its approval.

The committee has agreed on a cost of $30.70 per inch metre for the purchase of pipeline material and construction contract compared to $31.2 at which Sui gas companies have laid pipelines.

“This will result in savings of $200 million per annum,” the official said, adding that the price committee had set steel cost in talks with the Chinese company at Rs75,000 per ton one year ago. Sui gas companies had purchased steel at 100 per cent higher rates.

Ecnec has approved the project at a cost of $48.32 per inch metre. The cost includes purchase of pipeline material, its construction, engineering and other facilities and non-EPC work including right of way, land acquisition, consultancy and auxiliary costs.

Exim Bank of China will provide funds at London Interbank Offered Rate (Libor) plus two per cent. During initial negotiations, the tolling fee for the Gwadar LNG terminal was estimated at 30 to 32 cents per million British thermal units (mmbtu) against 60 cents per mmbtu for Engro Terminal and 41 cents per mmbtu for second LNG terminal being set up in Karachi.

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Re: Pakistani Economic Stress Watch

Postby chola » 14 Jun 2017 15:24

This should help the Paki economy a wee bit.

TFTA at PDF are going gaga and claiming they will share profit in their fighter with their tallest and deepest (pockets) pork-eating friends.

Newly printed Burmese JF-17:

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Hate to say it but the Blunder does look nice in that livery.

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Re: Pakistani Economic Stress Watch

Postby Gagan » 14 Jun 2017 20:09

The IAF walas will get a very good Dekko at this once it arrives in Burma.
Hope the Pakis have put in the same chinese radar on it and it has the same frequencies and modes that the Pakistani Fizzaiya has
India can then fine tune its jammers

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Pakistani Economic Stress Watch

Postby Peregrine » 15 Jun 2017 02:54

X Posted on the STFUP Thread

Pakistan debt servicing cost balloons to Rs15 trillion

ISLAMABAD: The federal government has sought approval of National Assembly to borrow over Rs15 trillion in new financial year to service its maturing public debt, which will be the highest ever borrowing and 44 per cent more than the outgoing year, underscoring Pakistan’s heavy indebtedness.

Finance Minister Ishaq Dar on Tuesday placed various demands before National Assembly for borrowing the huge sum amid his desperate efforts to downplay the country’s total debt and its implications for the economy. The loans will be obtained during the fiscal year 2017-18, starting from July 1.

Independent economists have been warning about a ‘debt trap’ but all these warning are falling on deaf ears.

Over Rs15 trillion worth demands were placed before the National Assembly under Article 82 (I) of the Constitution as the Charged Expenditures. In case of ‘Charged Expenditure’, the National Assembly can only debate but cannot veto the spending bill.

The Rs15 trillion debt servicing related spending bill is Rs4.6 trillion or 44 per cent higher than the borrowing in the outgoing fiscal year.

Except for roughly Rs1.4 trillion that will be part of the federal budget, the rest of the amounts will not be booked in the budget and will be directly borrowed from domestic and foreign markets to repay and service the loans obtained in the past.

As against Rs8.38 trillion borrowing in the outgoing fiscal year, the finance minister sought Rs13.16 trillion for repayment of the domestic debt in the next fiscal year, which is over 57 per cent more than the previous year. The finance minister has placed another demand for Rs1.23 trillion to service the domestic debt.

For the next fiscal year 2017-18, the federal government has projected its budget deficit at Rs1.826 trillion, which is equivalent to 4.7 per cent of Gross Domestic Product. The federal government will bridge this gap by borrowing Rs968 billion from the domestic market, Rs511 billion from foreign countries and Rs347 billion as provincial cash surpluses.

To repay the foreign loans, the Finance Minister has sought Rs286 billion in the new fiscal year, which will be obtained from abroad. However, their interest cost will be booked in the budget. The minister has sought another Rs132 billion to pay interest on the foreign loans.

In addition to that, the finance minister has placed Rs39.7 billion demand before the National Assembly to repay the short-term foreign loans.

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Re: Pakistani Economic Stress Watch

Postby Gagan » 16 Jun 2017 03:14

Pakis crying that people drink too much tea and import expensive cellphones and their import bill has risen due to this :rotfl:

https://youtu.be/qxGXRJFohiU

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Re: Pakistani Economic Stress Watch

Postby Gagan » 16 Jun 2017 04:47

Pakistani budget discussion: Slightly dated video

https://youtu.be/8vQP1N5qOXc

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Re: Pakistani Economic Stress Watch

Postby Manish_P » 16 Jun 2017 12:44

Gagan wrote:The IAF walas will get a very good Dekko at this once it arrives in Burma.
Hope the Pakis have put in the same chinese radar on it and it has the same frequencies and modes that the Pakistani Fizzaiya has
India can then fine tune its jammers


Perhaps, Gagan ji

But IMHO it's better than us gifting money to Bangladesh to buy fighters from Russia

(if the reports are true)

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Re: Pakistani Economic Stress Watch

Postby Gagan » 16 Jun 2017 17:27

These are ALL missed opportunities for the LCA

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Pakistani Economic Stress Watch

Postby Peregrine » 21 Jun 2017 02:41

X Posted on the STFUP Thread

X Posted on The PESW Thread

IMF data bloats Pakistan forex reserves by $3bn

ISLAMABAD: The International Monetary Fund (IMF) has overstated Pakistan’s foreign currency reserves by a whopping $3 billion for outgoing fiscal year, denting its credibility, which has already come under criticism because of huge variations between its projections and actual results.

However, the IMF’s data released late last week suggested that Pakistan’s external financing requirements would rise to $17 billion in the next fiscal year, but the global lender did not show any negative implication on the official forex reserves.

On June 16, the IMF issued a communiqué after concluding Article IV consultations, showing official foreign currency reserves to be at $18.5 billion by the end of this fiscal year. However, the figure appeared totally off the mark.

Global lender warns of risks to Pakistan’s economic stability

As of June 9, forex reserves held by the State Bank of Pakistan (SBP) stood at $15.3 billion, the central bank’s data showed.

It is highly unlikely that the country will be able to increase the reserves level to $18.5 billion over the next two weeks, particularly at a time when the reserves have come under massive pressure because of rising trade deficit.

The $15.3 billion foreign currency reserves are also $5.5 billion less than what the IMF had projected in its 12th review report on Pakistan’s economy, released in October last year.

PML-N will not need another IMF bailout, says Dar

Independent experts and sources in the Finance Ministry said that such huge variations in projections demonstrated that Pakistan’s external account was deteriorating at a much rapid pace than projected by both the IMF and Pakistan government.

Instead of addressing structural issues, which would have attracted non-debt creating inflows, the Finance Ministry preferred to obtain expensive foreign loans for inflating its reserves, they said, adding that this practice was now proving to be costly.

“Projections were made in the context of Article IV discussions in early April based on current account trends and expected financing at that time,” said an IMF spokesman in response to a query.

Hefty tax breaks result in whopping Rs415.8b dent

The overstatement of official foreign currency reserves was not an isolated incident.

During the three-year period of the $6.2 billion IMF programme, the global lender struggled to project near-reality picture of exports, imports, external debt and current account deficit. The huge gap between its projections and end-year results exposed the country to many risks.

For the outgoing fiscal year 2016-17, the IMF had originally projected the current account deficit at 1.5 per cent of Gross Domestic Product (GDP) or equivalent to $4.5 billion. However, now it has revised the deficit projection to over $9 billion, which is double than the original projection, bringing the foreign currency reserves under pressure.

Reliance on borrowing: Cost of public debt eats up 45% of revenues

At the beginning of the fiscal year, independent economists said that current account deficit would be close to $8 billion by the end of the fiscal year 2016-17 but Finance Minister Ishaq Dar dismissed their projections.

New fiscal year’s projections

For the new fiscal year, IMF’s detailed note suggests that Pakistan’s external financing requirements would touch an unprecedented $17 billion. In its June 16 note, IMF had stated that Pakistan’s current account deficit would be 3.2 per cent of GDP, or $10.6 billion.

However, in its Annual Plan 2017-18, the federal government put the current account deficit at $8.6 billion, or $2 billion lower than IMF’s projections and $4.4 billion lower than the projections of independent economists.

Moreover, external debt repayments for the new fiscal year have been projected at $6 billion, bringing the total financing requirements to $17 billion.
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Pakistani Economic Stress Watch

Postby Peregrine » 22 Jun 2017 14:29

X Posted on the STFUP Thread

https://www.youtube.com/watch?v=BJJNOhDRdZ0



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Pakistani Economic Stress Watch

Postby Peregrine » 22 Jun 2017 23:39

X Posted on the STFUP Thread

Current account deficit widens 178%, stands at $8.93b
KARACHI: Pakistan’s current account deficit (CAD) widened by a massive 178% in the first 11 months (July-May) of the outgoing fiscal year, standing at $8.93 billion compared to $3.22 billion in the same period of previous year, according to data released by the State Bank of Pakistan (SBP) on Thursday.
The enormous increase in the deficit suggests that the government has been unable to manage its balance of payments position over the 11-month period.
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Re: Pakistani Economic Stress Watch

Postby anupmisra » 23 Jun 2017 03:59


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Re: Pakistani Economic Stress Watch

Postby anupmisra » 23 Jun 2017 04:01


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Re: Pakistani Economic Stress Watch

Postby anupmisra » 23 Jun 2017 04:09

Whiny-Nasali motor-mama and clueless abduls discuss the air corridor between India and Afghanistan



https://www.youtube.com/watch?v=SARmLqEdUs4

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Pakistani Economic Stress Watch

Postby Peregrine » 23 Jun 2017 14:38

X Posted on the STFUP Thread

Clapistan’s Exports and Imports of Goods & Services

Goods and Services Balance - July 2016 to May 2017 : US$ -25.440 Billion

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Re: Pakistani Economic Stress Watch

Postby arun » 01 Jul 2017 09:44

From The Economist.

Pakistan’s old economic vulnerabilities persist: Massive Chinese projects actually exacerbate some of them

THE IMF, claims Pakistan’s government, is surplus to requirements. Ministers in its business-minded ruling party, the Pakistan Muslim League-Nawaz (PML-N), boast of a record that means the country can pay its own bills. “We will not go back to the IMF programme,” declared Ishaq Dar, the finance minister, in May, almost a year after the completion of Pakistan’s most recent, $6.6bn bail-out. In a country that mistrusts Western assistance and where protesters portray the IMF as a bloodthirsty crocodile, such words have a heady appeal. But they ring hollow.

On June 16th the IMF warned of re-emerging “vulnerabilities” in Pakistan’s economy. It praised GDP growth of above 5% a year, but noted missed fiscal targets and a ballooning current-account deficit. The fund’s own projections a year ago for the fiscal year ending this June underestimated this deficit by about half the final total of $9bn. And based on trends in early April it overestimated the fiscal-year-end foreign-exchange reserves by $3bn.

Independent economists point out that, many times before, collapse has come on the heels of an IMF programme’s conclusion. Sakib Sherani, a former government economist, says that to avoid “egg on its face” for cheerleading Pakistan’s economic recovery just months ago, the IMF is slowly changing its story. By the end of 2018, many predict, Pakistan will come begging again. The fund responds that it is “too early to speculate”.

Some of Pakistan’s faltering can be blamed on bad luck, such as a fall in remittances from workers in the Middle East. But mostly it was, as usual, bad policy. Like its predecessors, the PML-N has failed to enact the structural reforms needed to break Pakistan free of its cycle of crises. Barely any goals of the IMF’s programme were met. Bloated, underperforming or, in the case of Pakistan Steel Mills, closed-down publicly-owned enterprises drain millions from the government each month. “Circular” debt, caused by delayed payments along the electricity-generation chain, is swamping the energy sector once more. ………………………



The IMF has long been accused of going soft on Pakistan, mindful of its nuclear weapons, boisterous jihadis and proximity to war-torn Afghanistan. Successive Pakistani governments have exploited the sense that their country is too dangerous to fail. They have taken out 12 IMF loans since 1988. The result, argues Ehtisham Ahmad of the London School of Economics, is that aid money plays the role resource riches do in some other countries, encouraging spendthrift government.

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Pakistani Economic Stress Watch

Postby Peregrine » 01 Jul 2017 21:56

X Posted on the STFUP Thread

Chinese investors likely interested in taking majority stake in PSX

KARACHI: Chinese investors are eager to increase their stake in the Pakistan Stock Exchange (PSX) beyond their current 30% shareholding whereas the bourse itself is taking measures to step up its earnings, a former chairman of the exchange disclosed on Friday.

“The Securities and Exchange Commission of Pakistan (SECP) should scrap the condition that prevents foreign strategic investors from taking their shareholding beyond 30% in the three years (since the acquisition of the stake),” Arif Habib, former PSX chairman, said while addressing the audience gathered to mark the self-listing of PSX.

“The lifting of the restriction will allow Chinese investors to increase their stake to the maximum 51%. This will attract additional foreign inflows and help increase market’s depth,” he emphasised.

Rumours about Chinese interest in taking a larger stake had been doing rounds in the market before they acquired the 30% stake in January 2017.

They (China Financial Futures Exchange Company Limited, Shanghai Stock Exchange and Shenzhen Stock Exchange) acquired the shareholding as part of a consortium, led by them, that took a total of 40% stake in PSX.

The remaining 10% stake was acquired by two local financial institutions – Pak-China Investment Company and Habib Bank Limited, which were part of the consortium.

Unblocking brokers’ stake

PSX, which was owned by 200 brokers, has so far sold its 60% stake (480 million shares at Rs28 per share) to the Chinese consortium, high net-worth individuals, institutional and retail investors through competitive bidding and book building.

Habib added the 200 brokers still owned 40% stake (320 million shares) in PSX. However, the shares are useless to them as they are kept in a blocked account of the Central Depository Company (CDC).

“The SECP should ask the CDC to unblock the account…SECP should endorse the shares as BMC (base minimum capital) shares so that brokers may deposit them as collateral with banks and acquire financing against them. This may increase liquidity in the market,” he said.

Allow foreigners to trade

PSX Divestment Committee Chairman Shahzad Chamdia said PSX had become self-listed and its shares were available for trade at the exchange from Thursday.

However, foreign investors are ineligible to trade PSX shares since they have acquired the maximum 30% stake.

The SECP should lift the ban on trade in PSX shares by the foreigners as “it will allow PSX shares to discover their true price”, he said.

PSX shares, which opened trade at Rs28 per share, hit the lower limit of 5% and closed at Rs26.60 with a volume of 2.6 million shares on Thursday. They lost another 3.46% to Rs25.68 with trading in 6.5 million shares on Friday.

Public offer

The PSX share price has continued to drop after the bourse held its Initial Public Offering (IPO) and offered shares to high net-worth individuals, institutional and retail investors recently.

PSX extended the book building three times to attract the required number of investors. Moreover, PSX share price did not increase beyond its opening price of Rs28 in the five-day IPO.

“The IPO flopped for two reasons – non-tax return filers were not allowed to participate in the book-building process. Secondly, the minimum investment limit per participant was set at Rs3 million against Rs1 million in other book buildings,” Chamdia said.

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Pakistani Economic Stress Watch

Postby Peregrine » 02 Jul 2017 15:40

X Posted on the STFUP Thread

Foreign loans component exceeds budgetary limit set under PSDP

ISLAMABAD: The federal government is in a catch-22 after foreign loans for the federal Public Sector Development Programme exceeded the budgetary limit by Rs112 billion, limiting its option to either cut spending of locally funded projects or let the deficit slip to Rs1.6 trillion.

Foreign aid for PSDP exceeded the budgetary limit in the recently-concluded fiscal year 2016-17 due to increased Chinese lending for China-Pakistan Economic Corridor (CPEC) projects, according to officials of the Finance Ministry and Ministry of Planning.

After the Rs112 billion excess, total foreign funding for PSDP would touch Rs255 billion – over one third of the now downward revised PSDP of Rs715 billion. At the time of approval of the budget in June last year, the federal government had anticipated Rs143 billion foreign loans to finance the federal PSDP, which was 17.8% of the Rs800 billion PSDP.

The unparallel foreign financing for PSDP projects has now created severe problems for the federal government to manage its books, according to officials of the Finance Ministry. Due to an increase in the share of foreign loans in the overall PSDP budget of Rs800 billion, the government had to squeeze development spending for projects it was financing from its own resources -known as the rupee component of the PSDP.

This has been done to ensure that the budget deficit does not explode, although it has already crossed the parliament-approved limit of 3.8% of the GDP or Rs1.210 trillion.

The officials said that the provisional results showed the foreign loan component has already increased to Rs255 billion, which has now created serious problems for the government to keep development spending at the downward revised target of Rs715 billion.

The federal government has decided to cut the PSDP by Rs85 billion due to its uncontrollable current expenditures and steep shortfall in both tax and non-tax revenues. The Finance Ministry was pushing the FBR to collect over Rs3.4 trillion so that it may neutralise the adverse impacts of excess in the foreign-aid component of the PSDP.

The officials said that the Finance Ministry could not anticipate Rs112 billion excess development spending against the foreign aid component. Now, they are squeezing expenditures of Temporarily Displaced Persons, the security establishment, Gas Infrastructure Development Cess and federally-funded Special Development Programme. Against Rs100 billion TDPs allocations, only Rs61.3 billion were sanctioned till June 16, 2017.

The development expenditures of Higher Education Commission are also facing a cut, officials confirmed.

They said that the other option was that the government should let the overall budget deficit slip to 5% of Gross Domestic Product or roughly Rs1.6 trillion.

The government has been trying to keep the budget deficit at 4.5% of the GDP for FY17 just to make sure that it was not higher than preceding fiscal year’s deficit of 4.6%.

The federal government also took a hit of about Rs250 billion or 0.8% of the GDP after missing the annual tax collection target of the FBR.

The Planning Ministry officials said that the federal government did not have control over releases made by the foreign lenders against CPEC-funded infrastructure projects. The rupee component releases for the federal development projects were under control of the finance ministry.

Out of $55 billion CPEC financing, $15 billion were far infrastructure projects including Railways.

The foreign financing component of the PSDP exceeded budgetary limits despite the Finance Ministry’s move to shift many mega projects from the PSDP purview. It has already excluded the Karachi Nuclear Power Plant project having total cost of Rs1 trillion from PSDP’s scope. These nuclear power plants are also funded by China with over Rs600 billion as foreign loans.

For the new fiscal year 2017-18 that began on Saturday the federal government has shown foreign financing of the PSDP projects at Rs162 billion or 16% of the total size of Rs1.001 trillion.

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Pakistani Economic Stress Watch

Postby Peregrine » 03 Jul 2017 15:20

X Posted on the STFUP Thread

Bloodbath strikes PSX: index sheds over 1,870 points during intraday trading
A bloodbath hit the Pakistan Stock Exchange (PSX) on Monday with the benchmark KSE-100 Index shedding a hefty 1,872 points during intraday trading.
The benchmark plunged almost 4.02 per cent to touch the day's low at 44693 points during the trading session.
It was a one-way street, as the market's open at 46,565 remained the day's high.
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Re: Pakistani Economic Stress Watch

Postby DrRatnadip » 03 Jul 2017 15:51

https://www.dawn.com/news/1342921/house ... -to-tumble

House of cards tumbles:

Tax collectors and the business community in Pakistan have a long history of a ‘mutually beneficial’ association.

It is a patron-client relationship that has helped the latter deceive the government with the connivance of the former by concealing exact income and value of wealth in return for cash.

However, this relationship is showing signs of strain of late in the wake of raids made by the tax authorities on business premises’ and attachment of bank accounts of businesspeople, especially in Lahore.

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Re: Pakistani Economic Stress Watch

Postby DrRatnadip » 05 Jul 2017 12:14

https://www.dawn.com/news/1343316/under ... riat-asked

Under what law was cricket team rewarded, PM Secretariat asked


ISLAMABAD: The Islamabad High Court (IHC) on Tuesday sought comments from the Prime Minister’s Secretariat regarding a petition filed against the announcement of a reward of Rs10 million each for players on the Pakistan cricket team for winning the ICC Champions Trophy 2017

Bhikaris :rotfl: :rotfl:

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Re: Pakistani Economic Stress Watch

Postby Falijee » 06 Jul 2017 03:50

X Posted from STFUP


Free- Fall For The Paki Rupee :roll:

Pakistan Says Rupee's Biggest Drop in Nine Years Is ‘Artificial’ :lol:

Pakistan’s rupee plunged the most in nine years, prompting the government to say that it was concerned by the “artificial” weakness in the currency. What is the meaning of "articial" ; Is George Soros speculating on the Paki Rupee :twisted:
The rupee tumbled 3.1 percent to 108.095 per dollar at close of trading Wednesday, the lowest level since December 2013. Analysts including Karachi-based Topline Securities Ltd., BMA Capital Management Ltd. and BMI Research said the nation had devalued its currency. I.O.W the Market has made an "correction". And the Market did not accept the Sialkoti Statistics and the Lahori Logic of the Isloo mandarins :twisted:
The International Monetary Fund last year pointed out that the currency -- which operates under a managed float regime -- was overvalued by as much as 20 percent and hurting its exports. In an interview last month, Pakistan’s Commerce Minister Khurram Dastgir Khan said he was trying to persuade Finance Minister Ishaq Dar to adjust the rupee’s value after the weakening of currencies by nations including China, Turkey and Thailand gave them an edge over Pakistan. :roll: Dastigar should know that the fundamentals of these other nations are based on "solid foundations" , while Pakistan State Bank ( Reserve Bank ) is still showing on their books 70 year old Accounts Receivable From India, which they should have written off a long time ago . IMO, Pakistan, as a " nation" is living on "daily wages". Not sure where the next meal is coming from :twisted:
Dar in a statement issued Wednesday evening said certain individuals, lenders and entities were “exploiting the current political situation,” a reference to a team probing corruption allegations against Prime Minister Nawaz Sharif and his family. The nation’s stocks dropped the most globally on Monday as Sharif’s son appeared before the team. No amount of PR - giri is going to make things turn around :mrgreen:
The “State Bank of Pakistan will continue to closely monitor the developments in the foreign exchange markets and stands ready to ensure stability in the financial markets,” the central bank said. :((

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Pakistani Economic Stress Watch

Postby Peregrine » 16 Jul 2017 01:43

X Posted on the STFUP Thread

Badheeyan Ji Badhaiyan, CPEC Ko Badhaiyan, Cheen Ko Badhaiyan Aur Clapistan Ko Badhaiyan!

Pakistan import bill reaches record level at $53bn; trade deficit sharply widens by 36.32pc to US$ 32.58 Billion in 2016/2017

ISLAMABAD: Pakistan’s import bill has reached to a historic level of $53 billion and posted record trade deficit of $32.58 billion in fiscal year 2016/2017, according to data released by Pakistan Bureau Statistics (PBS) on Tuesday.

The trade deficit ballooned to record 32.58 billion during July – June 2016/2017, widened by 36.32 percent when compared with the deficit of $23.89 billion in the preceding fiscal year.
The primary reason for sharp increase in deficit is mammoth rise in imports, which were at $53.026 billion during the last fiscal year as compared with $44.685 billion in the preceding fiscal year, showing 18.67 percent increase.
Analysts said that significant increase in CPEC related imports and machinery imports pushed the import bill.
On the other hand, exports eased by 1.63 percent $20.448 billion in 2016/2017 as compared with $20.787 billion in the preceding year
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Re: Pakistani Economic Stress Watch

Postby ArjunPandit » 16 Jul 2017 03:34

^^ghaas kha lenge, bum bana lenge..bum to bana liya ab ghaas khane ka time aane wala hai
For those that dont understand hindi: We'll eat grass, but make bomb. They've made bomb, now time to eat grass

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Pakistani Economic Stress Watch

Postby Peregrine » 16 Jul 2017 15:10

X Posted on the STFUP Thread

Govt borrowed Rs2tr to finance budget deficit in 2016-17
ISLAMABAD: The federal government borrowed Rs2 trillion for budget deficit financing in the last fiscal year, suggesting that the fiscal performance in the fourth year of the PML-N was equally worse as the performance of the PPP regime in its last year.
During fiscal year 2012-13, which was the last year of the PPP government, the country had recorded a budget deficit equal to Rs1.833 trillion including Rs480 billion circular debt payments. In contrast, the PML-N government borrowed Rs2 trillion as of June 23, and it did not include circular debt related obligations.
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Re: Pakistani Economic Stress Watch

Postby DrRatnadip » 16 Jul 2017 17:28

ArjunPandit wrote:^^ghaas kha lenge, bum bana lenge..bum to bana liya ab ghaas khane ka time aane wala hai
For those that dont understand hindi: We'll eat grass, but make bomb. They've made bomb, now time to eat grass


+108.. :rotfl: :rotfl: :rotfl: Taller than mountain friend is going to supply them yellow yellow tasty tasty grass..

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Re: Pakistani Economic Stress Watch

Postby Chinmayanand » 16 Jul 2017 23:59



Chinese lives and investment in CPEC will all go invain.
Shooting match between taller than the mountain porkis & deepel than the ocean hans will be a popcorn moment coming soon.

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Pakistani Economic Stress Watch

Postby Peregrine » 17 Jul 2017 21:33

X Posted on the STFUP Thread

Pakistan’s failing trade strategy

ISLAMABAD: According to a recent press report, the government of Pakistan has finally realised that its 3-year Strategic Trade Policy Framework (STPF) implemented in 2016 has failed and it needs to be discarded and recalibrated.

When the policy was being implemented in 2015, some of us had pointed out that the framework was likely to face the same fate as its predecessor 2012-15 policy. Now that we are nearing June 2018, our target date for achieving $35 billion, it is being realised that we never had the right policies in place.

Our poor export performance means we will continue to be a laggard in the South Asian region. Although our economy is now growing at about 5%, faster than any time in the last ten years, it is still one of the slowest in the region. India is expected to grow by 7.4% in 2017 and further to 7.6% the year after. Bangladesh is expected to grow at 6.9% in 2017 and 2018. Bhutan is estimated to grow at 8.2% in 2017 and 9.9% in 2018 through focusing on hydroelectric projects. Even the earthquake-devastated Nepal’s growth is at 5.6% in 2017 and 5.4% in 2018; ahead of us as we are forecasted to grow at 5.2% in 2017 and 5.5% in 2018.

What our policymakers have to realise is that Pakistan is out of tune with the rest of the world as far as its trade policy is concerned. Unless our exports start growing at 14 to 15% as they did during the early 2000s (2001 to 2006), we will continue to lose our trade share, which has been falling by 1.45% per year for the last 10 years.

The global trading patterns have changed. Almost 70% of global trade is now conducted through global supply chains (GVCs). Around 30% of total trade consists of re-exports of intermediate inputs. Pakistan is not a part of these emerging trends because of its high taxes on international trade and cumbersome trade procedures.

A recent study by the World Bank showed that Pakistan’s tariff are in general twice as high as the world’s average and three time more than South East Asia. On top of high tariffs, there are regulatory duties on a large number of goods. Thus we have isolated ourselves from the global markets. Although the intention of regulatory duties is to collect more taxes and restrict imports none of these objectives are being achieved. No extra revenue is being earned through regulatory duties as items subject to such duties have moved to the smuggling route. In fact, the net revenue of has diminished because legal trade has given way to smuggling.

Not only has the government failed to carry out any tariff and trade policy reforms, it has gone in the opposite direction. During the last four years, customs tariff rates have been considerably enhanced on the pretext of removing discretionary SROs, through levying a minimum tax on all imports including essential raw materials and restricting import of “luxury” goods through regulatory duties. Thus, anti-export bias has considerably increased since the current government came into power.

Besides the tariffs, Pakistan’s trade facilitation processes have become amongst the most inefficient in the world. According to the Doing Business report issued by the World Bank in 2016, Pakistan ranks at 169 out of 189 economies in terms of Trading across Borders. This ranking has continuously worsened over the last decade.

We could cut the cost of exporting our goods by up to 15% if we fully accept the recently concluded WTO Agreement on Trade Facilitation. But so far, Pakistan has adopted a very negative attitude. First, we were unwilling to accede to the agreement, and finally when we did accede, we delayed most reforms to a future date till we get technical assistance from donors.

Unless Pakistan opens up its trade regime and reforms its trade facilitation procedures, its overall trade and economic wellbeing is likely to keep going down.

Since Pakistan has not done any domestic reforms as a follow-up to its Free Trade Agreements (FTAs), these agreements are not working in our favour. The lack of reforms means that Pakistan is subsidising exports of its FTA partner countries through substantial reduction in customs duties for a particular source.

Most developing countries have abandoned import substitution policies in favour of export-led growth. Pakistan is still enforcing such policies. Pakistan’s auto industry is one such example. As a result, the industry has shown no growth where in the case of our competitors including India, the production of cars has increased three times.

Considering that our exports are stagnating, it is high time that Pakistan starts integrating its economy with the rest of the world. It needs to undertake serious tariff and trade facilitation reforms to regain its trade share.

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Pakistani Economic Stress Watch

Postby Peregrine » 18 Jul 2017 04:05

x Posted on STFUP Thread

A check needed on govt’s money-printing frenzy

KARACHI: Inflation refers to an increase in the general price level. There are several causes of inflation: a rise in demand-demand pull inflation and a rise in cost-cost push inflation etc. But the most dangerous of these is the inflation caused by printing money in the view of monetarist which is a distinguished school of thought among economists.

Pakistan, like other economies, is largely suffering from this evil. It has been reported that the government has added Rs 127billion in March-April this year which is too much and should raise some red flags.

Let me explain this problem in detail

Previously, the world used to follow the gold-backed currency mechanism. In this mechanism, a country could issue only the amount of currency notes for which it has gold reserves backing the same. Hence, the value of paper currency was in some multiple related to the price of gold. This mechanism kept the money printing activity in check

The US for the first time broke this convention when President Nixon abolished this convention in 1971. He apparently was giving ear to a long given advice by John Maynard Keynes, founder of the Keynesian School of thought, that “government can also spend the money it doesn’t have”. Bear in mind that Keynes was only concerned about the short run (he used to say that we are all dead in the long run so why care for it) and he ignored long-run inflation from such government spending.

This action by the US president for the first time gave authority to the government and to the followers to print and spend money without any bounds. Henceforth, the government didn’t need to earn money or amass gold reserves. It could simply print new currency with ease to finance anything it required.

This means that currency in circulation increased without increase in assets in the economy thus bringing in a decline in value of the currency.

For a lay man I believe it is difficult to understand how printing money can have an impact on prices. After all the prices of cars, houses and vegetables etc are set by the people who don’t have any idea about this complicated mechanism. They set the price they like and that’s about it. To illustrate the impact of printing money on prices, let’s go through an extreme example.

Suppose, in a hypothetical closed economy, we have currency notes of Rs1,000 and we have nothing else but a car. Since these currency notes can only be used to buy this car in the economy (nothing else is there to buy), the value of this car is Rs1,000. Simple isn’t it? If the government in the post-Nixon-decision scenario prints notes of Rs500, increasing the total circulation in the economy to Rs1,500, whereas no other asset has been added, what will be the worth of this car now? It will be worth Rs1,500. The price of car increased by Rs500 not because of demand or cost, but by the increase in the amount of currency in circulation. This is how printing new currency causes the most dangerous and irreversible inflation.

Due to this excessive money printing, the rupee is losing value and we are becoming poorer each passing day. Several statistics can be presented in this respect. For example, in the 1950s 10 gram of gold was worth PKR 50/60 whereas now the same quantity amounts to Rs50,000. Rupee has lost its value almost a thousand times. Similar is the case with real estate. Every asset has multiplied in rupee terms and one of the main reasons, if not the only reason, is the uncontrolled printing of money by the government. This is the gravest reality of inflation. On the other hand, wages have not kept pace hence living standards or purchasing power of the people has been compromised.

There has to be a check on this money printing exercise and if we have checks in place they must be real. If this is not done, everyone who lives here in Pakistan, whose wealth is not increasing with the increase in rate of money printing, would be a net loser in this dirty game. Our future generations will be much poorer than us.

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Pakistani Economic Stress Watch

Postby Peregrine » 19 Jul 2017 04:10

Fully Posted on the PESW Thread

A Dar-ing move to understate Pakistan’s budget deficit

ISLAMABAD: Desperate to [b]understate the budget deficit, the government has included the same amount of Rs64 billion as ‘non tax revenue’ in 2016-17 after it already booked the money as part of its earnings from the Saudi Arabian ‘gift’ of $1.5 billion two years ago.

This has raised suspicions of figure fudging which, if proven, may invite penalties from the International Monetary Fund, as a single item cannot be booked twice. The IMF had also imposed penalties on Pakistan after coming to know of fudged fiscal accounts during the second year of the PML-N government.

To camouflage the whole exercise, the Finance Ministry has shown the Rs64 billion as sale proceeds of the government-owned LNG-based power plants being set up in Punjab, said sources in the Finance Ministry. However, this has been done in such haste that the owner of these plants – the Ministry of Water and Power – does not even know the modalities.

The government has taken out Rs64 billion from the Pakistan Development Fund Limited (PDFL) and shown it as its non-tax revenues for fiscal year 2016-17 that ended on June 30, sources in Ministry of Finance told The Express Tribune.

Saudi Arabia had ‘gifted’ $1.5 billion to Pakistan in 2014 to help Islamabad in its time of economic distress. The Pakistan Development Fund was set up with Saudi Arabia’s assistance in early 2014 and the government parked the whole amount in the PDF by showing it in the accounts of fiscal year 2014-15.

This can be verified from the accounts of 2014-15 that show a Rs177-billion statistical discrepancy. By taking into account $1.5 billion or Rs177 billion, the budget deficit in that year came down to 5.3% of Gross Domestic Product or Rs1.456 trillion. Had the Saudi gift not been booked in 2014-15, the budget deficit in that year would have touched 6% of GDP or Rs1.633 trillion.

A top official of the Finance Ministry confirmed to The Express Tribune that Rs64 billion has been taken out of the PDF. But he said that the amount has been utilised to purchase two assets -the Haveli Bahudur Shah LNG plant and Baloki power plant. These two plants have been set up with Rs190-billion investment from the Public Sector Development Programme.

The sale proceeds of these two federal government owned power plants have been booked as non-tax revenues for fiscal year 2016-17, said the official. He said that these were the first two assets created by the money utilised from the Pakistan Development Fund Limited (PDFL).

The government also sold the Pakistan Security Printing Corporation for Rs100 billion to the central bank to control budget deficit for fiscal year 2016-17.

There is a clear violation of accounting manuals, as the PDFL was incorporated as a limited company set up under the Companies Ordinance of 1984, said the sources. They said that the federal government can only book the profits of the PDFL as its non-tax revenue while the asset cannot be shown as non-tax revenue. The spokesman of the Finance Ministry did not officially respond to the questions raised by The Express Tribune.

All creative accounting is being done to understate the budget deficit which, from the financing side, has already gone up to 6.3% of GDP. However, the Ministry of Finance is trying to bring it down to 5.3% of GDP by applying such tactics.

Even at 5.3% of GDP or Rs1.7 trillion, this will be the first time in the last four years when budget deficit will be higher than the preceding year. The government closed fiscal year 2015-16 at a budget deficit equal to 4.6% of GDP.

The government had set up the PDFL as an independent development finance institution (DFI) to be operated on commercial basis. It is not clear what mechanism has been followed to evaluate the two power plants and whether any exemption was claimed from the Public Procurement Regulatory Authority.

In June last year, Dar had invited the Asian Development Bank to join the PDFL as an equity partner. The latest development may hurt the ADB’s plans to invest in the PDFL.

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Pakistani Economic Stress Watch

Postby Peregrine » 21 Jul 2017 17:48

X Posted on the STFUP Thread

Pakistan loses textile export share in world market by 23pc

ISLAMABAD: In a mammoth blow to exports, Pakistan has lost its textile export share in global market by 23 percent from 2.2 percent to 1.7 percent raising questions on economic and trade policies of government functionaries, unfolds the latest presentation on restoration of viability and growth of textile industry prepared by Aptma.

“The investment in textile and clothing massively declined by 44 percent in 2016-17 on account of which, the country’s textile production capacity has got impaired by 30-35 percent owing to which 150 industrial units have become non-functional resulting in 30 percent unemployment. More shockingly, the textile industry of Pakistan lost 15 percent technological edge advantage over competitors.”

Following the non-performance of the textile sector on account of highest cost of doing business in the region, Pakistan is now facing the highest ever trade deficit of $35.609 billion and external deficit has swelled to $16.305 billion. The Aptma presentation also mentions as to how the other competitive countries have performed far more better than Pakistan showing that Vietnam is the country that ranked first showing 107 percent in growth in textile and clothing exports followed by Bangladesh with growth of 64 percent in exports of the said items, India with 31 percent, Sri Lanka 20 percent growth whereas Pakistanstayed in the red zone with negative growth of 11 percent. Never mind. CPEC - the Game Changer will also become the "Cure All"

Aptma also came down heavily on the government saying that the bilateral trade agreements meaning by that free trade agreements (FTAs) finalized with various countries are faulty and failed to provide the level playing field to the real stake holders, export- oriented industrial sector. The country's perception stagmatised with law and order situation owing to which the militants activities has resulted in barring the investors from traveling to Pakistan through travel adviseries. Though the situation has improved on account of military operations against militants, but there is a need to launch the drive on part of the government to change the country’s perception so that the existing reluctance between the buyers and investors.

The presentation also reveals that prime minister’s export led growth package has got reversed as despite the shortage of cotton-- 3.8 million bales, 4 percent customs duty and 5 percent sales tax has been re-imposed. It also mentions that energy cost is more than 30 percent of the total conversion cost in spinning, weaving and processing industries. And the industrial gas tariff of Pakistan is 100 percent whereas electricity tariff is 50 percent higher than the regional competitors. More importantly, gas is burdened with various add-ons, including (GIDC, UFG and cost of supply) and textile industry cannot pass system inefficiencies to its international buyers.

Aptma Chairman Aamir Fayyaz, while talking to this scribe, demanded zero rating of raw materials for the textile industry, reducing cost of doing business, resolving the liquidity problems and filling up the policy-implementation dividing immediately to ensure restoration of the industry’s viability and revival of the export potential of the country.

Fayyaz said the high cost of doing business, shortage of liquidity, the ongoing policy-implementation divide and realisation of only Rs03 billion out of Rs180 billion textile package are a few major concerns of the industry at present. How about the GREATEST Drawback i.e. an uneducated Work Force

He added that the viability of the textile industry has been eroded fast but the government was not able to pay required amount of attention to it. He pointed out that the production capacity worth $4 billion has been closed down all across the textile value chain, besides an potential $12 billion exports through conversion of basic textile into the value added garments. Lagay Rahoo Terroristic Clapistanis!

He said both the earliest revival and growth of textile industry is a must to steer the industry out of a bad shape and contribute to the exports of the country. He capsuled the dreadful state of affairs in the industry by stating that the production capacity has been impaired by 35 percent across the textile value chain. Textile exports have declined by 11 percent, its global market share has reduced by 23 percent, investment in the sector has dropped by 17 percent and 30 percent of the unemployment has already been redundant.

He also pointed out that growth of textile and clothing exports are in negative zone in Pakistan against an exponential growth recorded in the competing countries during 2011 to 2017.

He said the energy cost of industry in Pakistan is highest in the region that has reached to 30 percent of the cost in spinning, weaving and processing sectors. Both electricity and gas tariff are higher by 30 and 60 percent respectively in the region. Meanwhile, an additional burden of Rs3.63 surcharges of various nature has crippled the industry, and it is unable to pass on this cost to the international buyers, he added.

Seeking revival-and-growth-focused measures to enable this industry to increase production, employment and exports in the larger economic interest, he has demanded full realisation of Rs180 billion textile package announced by the prime minister in January this year, duty/tax free import of cotton and polyester staple fiber, liquidation of all outstanding refunds of sales tax, withdrawal of all electricity surcharges, supply of RLNG at Rs400/MMBTU and strengthening of domestic commerce through tariff/non-affiliated measures to counter informal trade and dumped imports.

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Pakistani Economic Stress Watch

Postby Peregrine » 22 Jul 2017 20:55

X Posted on the STFUP Thread

Pakistan’s exports to most regions have plunged

ISLAMABAD: Barring Europe, Australia and New Zealand, Pakistan’s exports plummeted to all other regions of the world during the last fiscal year, highlighting the need to review economic policies and the rationale of keeping huge trade missions.

The State Bank of Pakistan (SBP) on Friday released the export destination-wise receipts data for fiscal year 2016-17 that gives a fair understanding of how the country performed in the last fiscal year. The data showed that except for Europe where the country enjoys duty-free status, the exports sunk in almost all other countries.

Even in the European Union member countries, Pakistan could not fully exploit the duty-free benefit, as its exports marginally grew to $7.28 billion during the last fiscal. These were just $215 million or 3.1% higher than the preceding year, showed the central bank data.

In case of Australia and New Zealand, total exports stood at only $300.4 million. These were $42 million or 16.3% higher than the previous fiscal year. Exports to Southeast Asian region also slightly picked but remained at only $1.1 billion.

Since June 2013 when the PML-N government came into power, Pakistan’s exports have cumulatively decreased by one-fourth to only $20.9 billion. The independent experts and the International Monetary Fund (IMF) blame an overvalued local currency as one of the main reasons behind the slump in exports.

The IMF assessment shows that rupee was overvalued by at least 10% against the US currency, which significantly eroded Pakistan’s competitiveness in the global market. However, the federal finance ministry does not agree to this assessment and has decided to maintain the current exchange rate parity.

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The other reason is the high cost of doing business that has made the industries uncompetitive. In its five budgets, the current government slapped more than Rs1.3 trillion in additional taxes.

The Ministry of Commerce has also set up huge trade formations in various parts of the world with a single motive of enhancing Pakistan’s exports. However, the export data suggests that the trade missions have not lived up to expectations.

Pakistan’s exports to Latin America stood at a mere $33 million in fiscal year 2016-17, lower than the preceding year. The exports to South America stood at a meagre $239.5 million – down by 4.3%. This is despite the fact Pakistan has a trade mission in Sao Paulo, Brazil. In fiscal year 2013-14, Pakistan’s exports to South America were $344.8 million.

The exports to Central American countries amounted to only $125.5 million. Despite having more than half a dozen trade missions in North American countries, Pakistan’s exports to this region remained even below last year’s level. The export receipts from North America stood at $3.9 billion. The exports to United States decreased to $3.7 billion in spite of five trade missions in Chicago, Houston, Los Angles, New York and Washington.

Pakistan’s exports to African continent were also below previous year’s level. The country has trade missions in places like Nairobi, Kenya and Casablanca, Morocco. The receipts from East Africa stood at $646.5 million – down by roughly 3%. From Middle Africa, these amounted to just $57.5 million. To North Africa, the exports stood at $167.7 million – down by 16.5%.

The situation was not different in Asia as well where the country could not gain strong footholds despite signing three Free Trade Agreements; with China, Sri Lanka and Malaysia. The exports to North East Asian countries decreased one-tenth to only $2.36 billion.

Compared with the last four years data, the decline in exports was over 37%. In 2013-14, Pakistan’s exports to East Asian countries stood at $3.8 billion. The exports to China dropped over 14% to only $1.62 billion last year despite Pakistan having four trade missions located in Beijing, Chengdu, Hong Kong and Shanghai.

South Asian region was not an exception where exports decreased 9.3% to just $2.5 billion. Exports to Afghanistan declined by about 9% to $1.12 billion. The exports to Bangladesh also decreased to just $623.3 million.

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Guddu
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Posts: 809
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Re: Pakistani Economic Stress Watch

Postby Guddu » 22 Jul 2017 21:55

Peregrine ji: You have been tracking Bakisatan's demise. Based on falling exports or other data, do you have an estimate as to when Bakisatan goes belly up.

Peregrine
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Re: Pakistani Economic Stress Watch

Postby Peregrine » 22 Jul 2017 22:15

Guddu wrote:Peregrine ji: You have been tracking Bakisatan's demise. Based on falling exports or other data, do you have an estimate as to when Bakisatan goes belly up.
Guddu Ji :
Patience my Dear Sir. Good Things come to those who wait!
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Trikaal
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Posts: 65
Joined: 19 Jul 2017 08:01

Re: Pakistani Economic Stress Watch

Postby Trikaal » 22 Jul 2017 22:57

Peregrine wrote:
Guddu wrote:Peregrine ji: You have been tracking Bakisatan's demise. Based on falling exports or other data, do you have an estimate as to when Bakisatan goes belly up.
Guddu Ji :
Patience my Dear Sir. Good Things come to those who wait!
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No matter how good it will feel, can we actually afford a failed Pakistan? Unless we are contemplating military action to occupy it, I don't think India can afford an Afghanistan like state next door. Allah only knows who will have the control of nukes. Ideal scenario is a Pakistan kept on the brink. A failing Pakistan which is never actually allowed to go over the edge.


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