Pakistani Economic Stress Watch

Peregrine · Post by **Peregrine** » 20 May 2019 15:04

X Posted on the 2019 General Elections News and Discussion Thread :

menon s wrote:KSE 100-----700 POINTS DOWN.

menon s Ji :

Markets soar in afternoon trade : Sensex zooms past 39,000 mark, rallies over 1,100 points]

Will Post "Closing Report" at 1600 I S T.
Cheers

Peregrine · Post by **Peregrine** » 20 May 2019 16:31

X Posted on the 2019 General Elections News and Discussion Thread

S&P BSE SENSEX - Closing

Index Current : 39,352.67 - Pt. Change : +1,421.90 - % Change : +3.75%

Market Capitalization of BSE Listed Co. (Rs.Cr.) : 1,51,85,506.61 - $ 1 / 69.7625

Market Capitalization of BSE Listed Co. (U S $..) : 2,176.74 Billion

Cheers

Peregrine · Post by **Peregrine** » 20 May 2019 17:35

X Posted on the 2019 General Elections News and Discussion Thread

Investor wealth soars Rs 5.33 lakh crore as exit polls predict return of NDA govt – PTI

MUMBAI: Investor wealth soared by more than Rs 5.33 lakh crore as the benchmark BSE Sensex sprinted more than 1,422 points on Monday after exit polls predicted a return of the NDA government led by the BJP.

Tracking the sharp uptrend in equities, the market capitalisation of BSE-listed companies jumped by Rs 5,33,463.04 crore Monday.

At the end of Monday's trading session, the market capitalisation of BSE-listed companies stood at Rs 1,51,86,312.05 crore against Rs 1,46,58,709.68 crore on Friday.

This is the third consecutive session of gain for domestic stocks and in these three trading sessions the market capitalisation of BSE-listed companies has jumped by Rs 7.48 lakh crore.

BSE Sensex zoomed past the 39,300 mark, over 1,422 points and NSE Nifty reclaimed 11,800 level Monday as investors cheered the outcome of exit polls that predicted a clear majority for the ruling NDA in recent general elections.

Barring Bajaj Auto and Infosys, all the index scrips settled with gains.

"The exit polls would be seen as a modest positive for the Indian stock market as the market was largely factoring in the return of the BJP-led NDA government," Kotak Institutional Equities said in a research note.

The report noted that market is largely factoring in return of BJP-led government. "We could see a small rally post May 23 election results if the results are in line with the market's expectations," it noted.

Meanwhile, in the forex market, the rupee strengthened and was trading higher by 58 paise
to 69.65 against the dollar.

Cheers

menon s · Post by **menon s** » 20 May 2019 17:43

SBP Monetary Policy Announcement: Interest rates increased by 150 basis points to stand at 12.25%.

Courtsey: Prior action IMF.

MeshaVishwas · Post by **MeshaVishwas** » 20 May 2019 17:46

The Deep state gov. appointee of the SBP doing what the lender(IMF) demanded.

#SBP #policy rate increased by 150 bps to 12.25% effective from May 21, 2019. For complete statement: #monetary #finance #economy #Pakistan
English: https://t.co/Pwm0E19Suy
Urdu: https://t.co/rMpkYbWMZ4
Monetary Policy Information Compendium: https://t.co/UVDxtuZjJh https://t.co/iM9k7MFe1F

https://twitter.com/StateBank_Pak/statu ... 66624?s=19
Happy borrowings Terroristanis!

Edit: Menon Saar beat me to this joyous announcement.

sudhan · Post by **sudhan** » 20 May 2019 18:05

Peregrine wrote:X Posted on the 2019 General Elections News and Discussion Thread

Investor wealth soars Rs 5.33 lakh crore as exit polls predict return of NDA govt – PTI

Cheers

Peregrine ji, Am I correct in assuming that the recent gain in BSE added more wealth in one day than the entire market cap of KSE?

KSE market cap ~ $55 billion
BSE net gain 5.33 L crores (@1 $ =69.9 INR) ~ $76 billion

CalvinH · Post by **CalvinH** » 20 May 2019 18:09

K Mehta wrote:The only thing that can save Pakistan is a war between US and Iran. Similar to the war on terror in Afghanistan.

How? Did US-Iraq war benefitted Pakistan. It may lead to completely opposite of what you mention. Oil prices will go through the roof leading to more pressure on Paki economy. with Saudi backing US and Pakistan backing Saudis Paki will see more internal conflicts between Shia and Sunni.

Plus if US is able to have a favorable government in Iran they won’t need Pakistan to manage AFG.

Peregrine · Post by **Peregrine** » 20 May 2019 18:31

Peregrine wrote:X Posted on the 2019 General Elections News and Discussion Thread

Investor wealth soars Rs 5.33 lakh crore as exit polls predict return of NDA govt – PTI

Cheers

sudhan wrote:Peregrine ji, Am I correct in assuming that the recent gain in BSE added more wealth in one day than the entire market cap of KSE?

KSE market cap ~ $55 billion
BSE net gain 5.33 L crores (@1 $ =69.9 INR) ~ $76 billion

sudhan Ji :
You are being "COY"!

HOW COULD YOU BE WRONG!

Yes - Indeed. As usual YOU ARE RIGHT!

Cheers

Peregrine · Post by **Peregrine** » 20 May 2019 22:23

Rupee hits all-time low of 149.65 in inter-bank market

KARACHI: The rupee maintained its downturn on the third successive working day, as it weakened by another 1.20% to close at a new all-time low of Rs149.65 to the US dollar in the inter-bank market on Monday, according to the State Bank of Pakistan (SBP).

Before the day closure, rupee hit 151.50 to the greenback for the first time in history, it was learnt.

Cumulatively in the three days, the local currency has lost 5.84%, or Rs8.26, from Wednesday’s close of Rs141.39 under the new round of depreciation.

Cheers

sanjaykumar · Post by **sanjaykumar** » 20 May 2019 22:25

nachiket · Post by **nachiket** » 21 May 2019 01:39

The great khan might have a date with a lamp post if things go on like this.

A_Gupta · Post by **A_Gupta** » 21 May 2019 01:53

nachiket wrote:The great khan might have a date with a lamp post if things go on like this.

Pakistan has lamp posts still?

Prem · Post by **Prem** » 21 May 2019 05:14

Pakistani central bank lifts key interest rate to 12.25%
https://finance.yahoo.com/news/pakistan ... 56166.html

SLAMABAD, May 20 (Reuters) - Pakistan's central bank raised its key interest rate by 150 basis points to 12.25% on Monday, warning that soaring inflation was set to rise further on higher oil prices and reforms required for a bailout from the International Monetary Fund.The increase follows a preliminary agreement last week with the IMF for a $6 billion loan that is expected to come with tough conditions, including raising more tax revenues and putting up gas and power prices.With economic growth set to slow to 2.9% this year from 5.2% last year, according to IMF forecasts, the rate rise adds to pressure on Prime Minister Imran Khan, who came to power last year facing a balance of payments crisis that has now forced his government to turn to the IMF.Noting average headline inflation rose to 7% in the July-April period from 3.8 percent a year earlier, the central bank said recent rises in domestic oil prices and the cost of food suggested that "inflationary pressures are likely to continue for some time".It said the fiscal deficit was likely to have been "considerably higher" during the July-March period against the same period a year earlier due to shortfalls in revenue collection, higher interest payments and security costs.Despite some improvements, financing the current account deficit remained "challenging" and foreign exchange reserves were below standard adequacy levels at less than the equivalent of three months of imports.The central bank said it was watching foreign exchange markets closely and was prepared to take action to curb "unwarranted" volatility, after the sharp fall in the rupee over recent days that saw the currency touch a record low of 150 against the U.S. dollar.Details of what Pakistan will be required to do under the IMF agreement, which must still be approved by the Fund's board, have not been announced but already opposition parties are planning protests

Peregrine · Post by **Peregrine** » 21 May 2019 14:30

Rupee hits 151.50 in inter-bank market - Salman Siddiqui

KARACHI: The rupee failed to find bottom in the inter-bank market on Tuesday, as it lost another Rs1.85 reaching a new low of Rs151.50 to the US dollar on the fourth consecutive day.

There was speculation in the market that the rupee may drop to 165-170 to the US dollar under the current cycle of depreciation.

Cheers

Peregrine · Post by **Peregrine** » 21 May 2019 14:45

Total debt getting close to size of economy - Shahabaz Rana

ISLAMABAD: Pakistan’s debt and liabilities have risen steeply to Rs35.1 trillion or 91.2% of size of the economy, further deepening concerns over debt trap that has started limiting the government’s policy options.

The statistics released by the State Bank of Pakistan (SBP) at the weekend showed that only from July through March of this fiscal year, there was a net addition of Rs5.2 trillion in the country’s total debt and liabilities, showing 17.4% growth over the debt level of June 2018.

Cheers

Aditya_V · Post by **Aditya_V** » 21 May 2019 14:53

Does this means that CPEC loans given Chinese Banks for Chinese companies to bring their Chinese personal and Chinese equipment to build infrastructure in Pakistan at above 6.5 Interest were borrowed at 95 PKR to the Dollar have to be repaid at 150 or even 170-180 to the Dollar with Interest- NICE, Talla than the Highest Mountain, deeper than the deepest Ocean Friendship eh

Peregrine · Post by **Peregrine** » 21 May 2019 15:05

Desperate for oil – Editorial

The 18th attempt to find oil off the coast of Karachi in Kekra-1 has failed and with it, the hopes of the public too. Data from each of the previous 17 attempts were promising and had attracted some of the biggest names in offshore drilling. Such companies do not venture to pour in millions of dollars if there is no concrete data and a fairly good chance to strike a well successfully. Officials say that even in the best of times, the success rate for successfully spudding a well is one in five, and that the latest failure does not mean there is no oil or other hydrocarbon reserves there rather it just means that it will take a little more searching to find the right pocket. Whose pocket - IMF, WB, ADB, IsDB or Chinese or Persian Gulf Arabs?

The main issue, though, is not that oil was not found in the latest four-month-long on the ground — or over water — effort. The issue is the immense political hype and the expectations attached to successfully spudding the well. Given the current economic condition of the country, the public is desperate for some good news on that front. This was thoroughly cashed in by politicos who used it as a mark of their own success. It is unclear as to what extent they know about the success rates of these things and about the decade-long history of this particular area. But if they did know about it, and they willingly hyped it, then they are to be blamed for the massive disappointment that the public feels, for making the economic abyss appear even deeper and darker.

Unfortunately, this is turning out to be a repetitive pattern with the PTI government. From its proclamations of breaking the begging bowl and retrieving money stashed abroad. Promises unfulfilled.

What the party needs to realise is that this game of smoke and mirrors to whip up a public frenzy around it will sooner or later start to cut the other way as well.

Cheers

yensoy · Post by **yensoy** » 21 May 2019 15:30

Interesting discussion regarding Paki state of economy/military/geopolitics on RSTV. While the speakers do present a moderate-to-tough stance, I think the newer generation is going to be a lot more hawkish towards Pak.

menon s · Post by **menon s** » 21 May 2019 17:26

Pakistani rupee plunges to Rs153 against US dollar
https://www.thenews.com.pk/latest/47438 ... -us-dollar

alhamhodillah, barkatullah.......? shukraan jazilaan.

"To make up for the currency shortfall, Pakistan may be obliged to double or triple its main export of donkeys, which could lead to a lot of lonely Pakistani men" lawrence Selin...........

souravB · Post by **souravB** » 21 May 2019 18:06

BDT vs PKR

Cheers

sudhan · Post by **sudhan** » 21 May 2019 18:26

sudhan Ji :
You are being "COY"!

HOW COULD YOU BE WRONG!

Yes - Indeed. As usual YOU ARE RIGHT!

Cheers

You are one of the primary resident rakshaks of this dhaga, sir

Getting your approval is only appropriate..

Peregrine · Post by **Peregrine** » 21 May 2019 18:29

Dollar climbs to Rs152 intraday in inter-bank market

Greenback's value rises to Rs153 in open market.

Cheers

Peregrine · Post by **Peregrine** » 22 May 2019 01:45

Cheers

jash_p · Post by **jash_p** » 22 May 2019 03:24

If Pakis have agreed for 180 RS for 1$ then they should do it at one go on Thursday as Paki anchors and Abduls will be in severe depression due to Modi victory rather than bad news of economy as all will be engaged with Indian election results than looking at news of economy condition.

khan · Post by **khan** » 22 May 2019 04:56

jash_p wrote:If Pakis have agreed for 180 RS for 1$ then they should do it at one go on Thursday as Paki anchors and Abduls will be in severe depression due to Modi victory rather than bad news of economy as all will be engaged with Indian election results than looking at news of economy condition.

As long as the Army is in control (or should I say out of control), there is no bottom to the PKR.

All their wealth will be spent on keeping their Generals, Admirals and Marshall’s happy & well fed.

They will just keep printing money to make payroll, their economy will turn into a hyper-inflationary nightmare. 3.5 friends will give them bailouts to meet their minimal petroleum needs.

Soon, people will lose faith in the PKR and they will be reduced to bartering.

neeraj · Post by **neeraj** » 22 May 2019 06:17

Lets do the madrasa math

1. 50% depreciation in pakistani rupee since last year = debt will increase 50% (for Abduls it means that you have to now pay back 1.5 times more)
2. Economy shrinks 50%
3. 200 billion Pakistani GDP vs 250 billion GDP of Bangladesh (for Abduls 250 is greater than 200)
4. 1 Bangladeshi taka = 1.8 Pakistani rupees

Bart S · Post by **Bart S** » 22 May 2019 06:23

neeraj wrote:Lets do the madrasa math

1. 50% depreciation in pakistani rupee since last year = debt will increase 50% (for Abduls it means that you have to now pay back 1.5 times more)
2. Economy shrinks 50%
3. 200 billion Pakistani GDP vs 250 billion GDP of Bangladesh (for Abduls 250 is greater than 200)
4. 1 Bangladeshi taka = 1.8 Pakistani rupees

Bangladesh is about 275 and Pakistan I think just went under that number. If they are around 270 and they get a 20% devaluation in currency, their nominal GDP in US$ will be around 215-220. This would take their per-capita down to just over $1000 and probably under if you factor in their real population.

yensoy · Post by **yensoy** » 22 May 2019 06:46

Actually in this particular drama that's going on in Pakistan, it's rank incompetence. All the years of inbreeding have borne fruit, as it were.

They are going through a currency crisis, but then again they have gone through 13 or so crises before needing IMF intervention. So what's new here?

The fact that they cannot draw a line in the sand and say, that's it. The point with currency devaluation is to cut early, cut deep and then strongly defend the devalued currency. Shri MMS/NRao did it in 1991. One can't let currency slide indefinitely - that erodes confidence, fuels speculators and dollarizes the economy.

Paki bureaucracy is emasculated. Nobody is sure who is calling the shots. We think it's the Army, but the army itself is incapable for the job given the economic realities (as opposed to the happy days of the past when Army was "bankrolling" the country by bringing in all sorts of foreign aid/ransom). IK is a bumbling idiot. IMF only provides life support, patient needs to lift himself up. China and four fathers are too disunited, each wanting to recover their investments first.

World has geo-political interest in Pakistan due to its location. Same geo-political interest is equally served by a split Pakistan, with relatively friendly Sind/Baluch/KPK states. We need to start presenting an alternative view of Pak, minus Punjab and minus nukes, to the western world and get them to sign up for redrawing their map.

khan · Post by **khan** » 22 May 2019 07:21

yensoy wrote:Actually in this particular drama that's going on in Pakistan, it's rank incompetence. All the years of inbreeding have borne fruit, as it were.

They are going through a currency crisis, but then again they have gone through 13 or so crises before needing IMF intervention. So what's new here?

The fact that they cannot draw a line in the sand and say, that's it. The point with currency devaluation is to cut early, cut deep and then strongly defend the devalued currency. Shri MMS/NRao did it in 1991. One can't let currency slide indefinitely - that erodes confidence, fuels speculators and dollarizes the economy.

Paki bureaucracy is emasculated. Nobody is sure who is calling the shots. We think it's the Army, but the army itself is incapable for the job given the economic realities (as opposed to the happy days of the past when Army was "bankrolling" the country by bringing in all sorts of foreign aid/ransom). IK is a bumbling idiot. IMF only provides life support, patient needs to lift himself up. China and four fathers are too disunited, each wanting to recover their investments first.

World has geo-political interest in Pakistan due to its location. Same geo-political interest is equally served by a split Pakistan, with relatively friendly Sind/Baluch/KPK states. We need to start presenting an alternative view of Pak, minus Punjab and minus nukes, to the western world and get them to sign up for redrawing their map.

Yes, but after you cut fast, deep, hard... (sounds like a po.rno flick

), you need fiscal discipline. There is no chance of that with the "Armed forces" taking whatever the hell they want whenever they want it. So whether the depreciation is fast or slow, doesn't matter, ultimately, the end game is a worthless currency unless they fix underlying issue - which is defense expenditure - everything else has been cut to the bone.

menon s · Post by **menon s** » 22 May 2019 11:25

IED Theory.
Isolate, Emasculate (nukes) and Divide Pakistan.
this is the only way out.

With the NFC award and the 18th amendment they have already opened the floodgates to division, on ethnic lines.
A deteriorating economy and growing population, will add to the flux.

Peregrine · Post by **Peregrine** » 22 May 2019 17:00

Budget deficit hits 11-year high at 5% of GDP - Shahbaz Rana

ISLAMABAD: The budget deficit hit an 11-year high at Rs1.92 trillion, or 5% of the size of national economy, for the nine-month period ended March 2019 due to continued double-digit growth in defence and debt spending, and sinking revenues.

In terms of revenues of the federal government, the debt and defence spending consumed 77.7% of the total federal government’s revenues in the Jul-Mar FY19 period.

Cheers

yensoy · Post by **yensoy** » 22 May 2019 18:04

Evidently KSE saw a 3.6% gain today https://www.dawn.com/news/1483868/stock ... peculation because

The rise was linked to reports that a market support fund is being considered for stabilisation of the Pakistan Stock Exchange by the government.

That's right. The government is beyond broke, is taking loans to pay off creditors, severely burdened by military spending, has cut development expenses down to the bone and is now squeezing provinces. And this is exactly the time that they will create a slush fund to bail out stock investors

The delusion is mind-blowing. Even if they had the intent to do so, name one person in the Paki govt who has the wherewithal to pull it off.

I wish I could short KSE.

menon s · Post by **menon s** » 22 May 2019 18:38

Deficit calculation doesnt take to consideration, the circular debt of 1400 billion pkr ( 10 bn usd), this has been hidden.
add this 10 bn to it, and the defecit becomes: 8.5% of GDP?

Bart S · Post by **Bart S** » 22 May 2019 18:49

khan wrote: Yes, but after you cut fast, deep, hard... (sounds like a po.rno flick ), you need fiscal discipline. There is no chance of that with the "Armed forces" taking whatever the hell they want whenever they want it. So whether the depreciation is fast or slow, doesn't matter, ultimately, the end game is a worthless currency unless they fix underlying issue - which is defense expenditure - everything else has been cut to the bone.

Yes, that is probably one of the main reasons as to why they don't seem to have competent politicians and bureaucrats. If you lived in a country where regardless of what you do, the mullahs and military set the agenda and corner all the money, why try to govern or set policy in the first place. Just make the right noises and skim as much as you can for personal gain, from the system.

khan · Post by **khan** » 22 May 2019 21:01

menon s wrote:Deficit calculation doesnt take to consideration, the circular debt of 1400 billion pkr ( 10 bn usd), this has been hidden.
add this 10 bn to it, and the defecit becomes: 8.5% of GDP?

One of the advantages of depreciation like this is it cuts the dollar value of domestic debt.

So, at 200PKR per USD, that 1400 billion PKR debt is reduced to 7 billion USD, so their USD borrowings will go further towards resolving their domestic debt problems.

All this is just rearranging the deck chairs on the titanic. Unless they fix the root problem or military spending, the future value of PKR is ZERO.

yensoy · Post by **yensoy** » 22 May 2019 21:19

By devaluing the PKR, they are only stiffing themselves, since PKR denominated debt is most likely only held by Pakis. The waderas know better and hold land, factories and foreign properties. Whatever few middle classes there are, govt servants (including lower ranked military), and pensioners will be the ones with fixed income PKR instruments such as FDs and bonds. The smarter ones will see the writing on the wall, pull out their savings and convert them to dollars, as they have in recent days.

It's ok to keep your currency just a little undervalued in terms of fair market value; but getting it into a death spiral is a very Paki thing to do.

Some Paki news channels saying that the fairest of the four fathers, the Saudis, are giving them oil on credit. All along I thought moneylending was haram.

Bart S · Post by **Bart S** » 22 May 2019 22:14

khan wrote:
menon s wrote:Deficit calculation doesnt take to consideration, the circular debt of 1400 billion pkr ( 10 bn usd), this has been hidden.
add this 10 bn to it, and the defecit becomes: 8.5% of GDP?
One of the advantages of depreciation like this is it cuts the dollar value of domestic debt.

So, at 200PKR per USD, that 1400 billion PKR debt is reduced to 7 billion USD, so their USD borrowings will go further towards resolving their domestic debt problems.

All this is just rearranging the deck chairs on the titanic. Unless they fix the root problem or military spending, the future value of PKR is ZERO.

How will that help them? If it were a grant, sure, but they have to pay back the foreign loans in USD with interest.

A_Gupta · Post by **A_Gupta** » 22 May 2019 22:25

Worth a read: https://en.wikipedia.org/wiki/Hyperinfl ... r_Republic
The German Weimar Republic had to pay reparations for WWI in hard currency; Pakistan has to pay back debt denominated in hard currency. That is the parallel. The anti-parallel is that the Weimar Republic did not have 3.5 friends, IMF, etc.

By November 1923, the US dollar was worth 4,210,500,000,000 German marks.

By November 2023, the US dollar was worth ...... PKR.

khan · Post by **khan** » 22 May 2019 23:33

Bart S wrote:How will that help them? If it were a grant, sure, but they have to pay back the foreign loans in USD with interest.

If you operate under the assumption (as I am) that the 3.5 money dollar debt “loaned” to Pakistan isn’t actually a “loan” but is a “donation” - then having hard currency to buy up PKR & retire domestic debt will save them from having to print PKR and pay back domestic debt which is highly inflationary.

That said, it remains to be seen if 3.5 is willing to continually roll over old debt while issuing new debt to keep the band playing - or if 3.5 is willing to see their new “loans” used to pay off anything but their old “loans”.

The bottom line is, the fundamentals are screwed up.

In the absence of them fixing the fundamental issue (military spending), they can either take on external debt to keep inflation down (which they have been doing so far) - but this is highly dependent on creditors willingly loaning them good money after bad (tolerance of which seems to have come down), or they can print more and do something about external debt which IMF is forcing them to do.

My point is, this bailout cycle too, they might take on new loans while lying about fixing the fundamental issue - which is where the USD loans will help them with inflation. It remains to be seen if the IMF controls help prevent that from happening.

khan · Post by **khan** » 22 May 2019 23:42

yensoy wrote: Whatever few middle classes there are, govt servants (including lower ranked military), and pensioners will be the ones with fixed income PKR instruments such as FDs and bonds.

This is a very astute post. These are the people that keep a country running and this is the stuff revolutions are made out of. Even if there is no revolution, the Pakistani State will function even less efficiently after this.