Pakistani Economic Stress Watch

[CalvinH]

In Pakistan the short term savings get better rates than long term savings?

[yensoy]

In Pakistan the short term savings get better rates than long term savings?

True in India and the US too, and possibly many other places from time to time. It's the "yield curve inversion" when market feels the short term interest rate squeeze will ease over the longer term.

[eklavya]

Interesting series of tweets by Professor Atif Mian of Princeton University on the Pakistan economy. This was the economist who was nominated to Pakistan’s economic advisory council in 2018 and then removed (after a week) for being an Ahmadiyya.

https://twitter.com/AtifRMian

Pakistan's economy is in a tailspin, going from crisis to catastrophe

The system is coming unhinged

We can see this in the increasing stagflationary forces: growth is rapidly falling, and prices are rapidly rising

These are very worrying signs

In effect, inflation is not only being fueled by large deficits and money printing, but foolish policy choices that have seriously impacted the productive capacity of the economy.

I gave one example of poor policy choice back in January, and explained how it might lead to a contraction in the economy ... more recent data suggests that has indeed happened

But the bigger worry now is that the entire system is getting unhinged

We are witnessing the kind of uncertainty that results in flight of both capital and humans - pushing further downward pressure on supply

Judiciary, politicians, and generals - the last couple of years have witnessed a level of chaos, infighting, and jostling for selfish power grabs that has brought the country to this catastrophe

First, exports ... there was a global surge in exports post-covid, but around 2nd quarter 2022, Pak exports drop off relative to India and Bang - the gap is now over 20%
1/

This happened despite the large currency devaluation and all "efforts" to boost exports given the severe balance of payment issue

What's going on? The export drop likely reflects serious supply-side disruptions in the economy
2/

Most notably the inability to get into an IMF agreement due to extreme gov mismanagement

I've spoken in the past about PTI's role in bringing the country to this situation
https://twitter.com/AtifRMian/status/15 ... 57056?s=20

But what the PDM gov has done is on another level
3/

It removed CB governor with no plan in mind, started in-fighting against it own FM, and ultimately replaced him with a close relative of the PM - competence be damned

What followed has eroded any remaining confidence in the system
4/

Think of gov messaging and policy as reserves were going to zero and exchange rate toward 300 to a $:

"we can prove ER is 200" (really!?),

import controls that make it difficult for businesses to plan ahead,
5/

repeatedly claiming that IMF agreement will be signed "next week" .... and then crickets ...

This is how a country loses credibility, a feeling that either no body is in charge, or those in power have no idea what they are doing
6/

All this has led to a negative supply shock in the midst of a full blown currency crisis

When both demand and supply shrink, it's not a pretty dynamic ... and this is what Pakistan is witnessing today, the drop in exports highlights the negative supply-side shock
7/

Imports also show the same pattern - now you want some import compression due to bop pressure (like Bangladesh), but not so drastic and not at the expense of exports (again, thanks to those who designed the import controls)
8/

All this shows up ultimately as rapidly rising inflation - see Pakistan's price level below relative to Ind/Bang

It is off the charts, and extremely dangerous ... millions are falling back into poverty

Large deficits and constricting supply is a recipe for hyper inflation
9/

The exchange rate will naturally mirror the price level - it's a law of nature: you cannot "control" the exchange rate, at least not with this level of incompetence
10/

One of the most important aspects of policy-making is to provide confidence in the system - that people can invest in the long-term for a better future

That confidence is now missing
11/

I've said before that Pakistan's *nervous system* is fundamentally broken -

that combination of administrative and political structures that guarantee a certain level of confidence in the economy

The country must begin to build a functioning nervous system ... somehow
end/

[vimal]

^^ For someone who is considered a heretic and wajib up qatal he does care for Pakistan too much

[Manish_P]

^^ For someone who is considered a heretic and wajib up qatal he does care for Pakistan too much

Fanatical Ahmediyas were at the forefront of the demand and creation of Pakistan.

[Aditya_V]

Ahmadiyas also arranged the Furqan force which they paid for arming, salary etc from thier financesto join the Paki army to attack Kashmir

[eklavya]

Pakistan’s economic crisis puts healthcare costs out of reach

Pakistan’s economic crisis puts healthcare costs out of reach
Soaring inflation and falling foreign currency reserves are creating shortages of imported drugs

Nafees Jan, a 50-year-old taxi driver in Pakistan’s capital, Islamabad, recently made what he called “the most difficult choice” of his life: whether to pay for treatment for his 10-year-old son for diabetes or to continue sending his four children to school.

Facing an “almost life and death situation”, Jan decided to pull his children out of their modest fee-paying school in order to afford medicine and lab tests. “I had to opt for saving my son’s life,” he said.

Jan’s agonising dilemma was one tragic consequence of a mounting economic crisis in Pakistan, where galloping inflation — which hit 35 per cent in March — has put the cost of essentials beyond the reach of many.

Pakistan’s downward economic spiral is sparking a public health crisis. Rising inflation has driven the price of treatment to unaffordable levels, forcing many families to choose between healthcare and other necessities, while shrinking foreign currency reserves have caused shortages of imported drugs and medical equipment.

Meanwhile, devastating floods last year have pushed millions of Pakistanis into hunger and exposed them to greater risk of disease.

Pakistan’s economic misery was “threatening the health and wellbeing of millions of already vulnerable communities”, Unicef said. “No one should be forced into poverty, or be kept in poverty, to pay for the healthcare they need. However, this is the grim reality for many families in Pakistan.”

Analysts warn that the country is at risk of following nearby Sri Lanka into default. Its foreign reserves have fallen to $4.2bn, not enough to cover one month’s worth of imports, leaving businesses struggling to operate.

The government of Prime Minister Shehbaz Sharif has been locked in negotiations with the IMF to revive a multibillion-dollar lending programme. But the sides have been unable to agree on the conditions to unlock the latest $1.1bn tranche, which include raising taxes and cutting energy subsidies. While the Fund argues such austerity measures are necessary, Islamabad says they will exacerbate the economic pain.

Pakistan’s central bank last week raised its benchmark interest rate by 100 basis points to 21 per cent, the highest level in Asia.

Sharif is also embroiled in a bitter dispute with arch-rival Imran Khan, who has capitalised on Pakistan’s economic anguish in a campaign to return to the top office, from which he was ousted a year ago. The prime minister’s allies fear that acquiescing to the IMF’s terms will squander their chances in elections due this year.

Pakistan has long struggled with poor healthcare. Forty per cent of children are stunted, or short for their age because of malnutrition, according to Unicef, a condition that can inflict life-long physical and cognitive damage. More than half of medical spending is out of pocket, as severely underfunded public hospitals often leave patients with little choice but to pay for treatment.

But the strain has intensified over the past year. Amid surging inflation and a sharp drop in the value of the rupee, authorities imposed import restrictions to protect remaining foreign reserves, a move that exacerbated shortages of medical equipment and raw materials for drugs.

“There is a huge gap in medicine supply,” said Shabnam Baloch, Pakistan director at the International Rescue Committee. In recent months, “either the manufacturer was not able to import the raw material or they were just leaving the country due to the shortage of foreign currency”.

The head of one major pharmaceutical company in Pakistan, who asked to remain anonymous, bemoaned government controls on drug prices, which have not kept up with inflation or the rupee’s devaluation. “How do you do business and still remain profitable in this environment?” they said.

Late last year, GlaxoSmithKline’s Pakistan unit stopped producing painkiller Panadol, saying that higher material prices were incurring “heavy financial losses”.

Qazi Saleem, an Islamabad-based specialist in the procurement of healthcare supplies, said import costs had risen between 70 and 120 per cent in the past year. “It has become harder to get stents and lenses,” Saleem added. “This has made it harder for patients . . . as they can’t predict the expected cost.”

Atif Munir, an endocrinologist in Lahore who treats diabetes patients, said insulin, which in Pakistan is overwhelmingly imported, had become more expensive and harder to obtain, forcing him to find more affordable supplies.

Pakistan’s precarious position was worsened by flooding last year, which caused an estimated $30bn in damage and economic losses, displaced millions and wiped out swaths of vital crops such as rice.

The IRC said that 20mn people continued to need humanitarian assistance, and nearly half of them were experiencing extreme food insecurity. Contaminated and stagnant water had led to outbreaks of waterborne diseases including cholera, as well as malaria, the group added.

“The most vulnerable communities and particularly those impacted by the floods have either lost all their assets or sell whatever little they have to meet part of healthcare needs,” Unicef said.

This includes Naimat Khan, 60, a father of seven who had brought his elderly mother from their village to the hospital in Rawalpindi for kidney treatment. Last month, he had to sell two of his seven goats to afford her care, fetching a much lower price than he intended.

“The cost of the visits to the doctor became more expensive each month,” Khan said. “Finally, I had no choice.”

[CalvinH]

From the article above:

50 year old who drives taxi has 5 school going kids.

60 year old with 7 kids who he has to look after…

It’s hard to define what is the real tragedy in Pakistan.

[sanjaykumar]

But their foreign minister was smirking around New York wearing $3000 boots. Careful bud….your people may eat them boots off yer feet.

Nearly half the population stunted. And with recessive alleles amok in the population. Indians need to cut Pakistanis some slack. They perhaps can’t help it.

[eklavya]

^^^^
It’s because they don’t educate their girls (or boys, for that matter). Educating girls is at the heart of social and economic development. Their elites have bled the country dry, left it with humongous debts, an uneducated and unskilled workforce, a poor business / investment environment, dysfunctional political and bureaucratic structures, etc. Their terrorism sponsoring genocidal thieving army is of course the prime culprit. Until now they always got bailed out. Now they have been forsaken by just about everyone.

[la.khan]

^^ For someone who is considered a heretic and wajib up qatal he does care for Pakistan too much

^^ For someone who is considered a heretic and wajib up qatal he does care for Pakistan too much

Fanatical Ahmediyas were at the forefront of the demand and creation of Pakistan.

Ahmadiyas also arranged the Furqan force which they paid for arming, salary etc from thier financesto join the Paki army to attack Kashmir

True. Ahmediyas were at forefront of the demand for p@kil*nd, and also contributed to the raiders to attack J&K. But that was in 1940s when these dudes were all excited about a separate homeland for mu$1!ms but did not know what awaited them in their promised land.
But in 2023, 75 years after partition/independence, the p@ki dude out of Princeton should know better. And yet, cares for that pig$ty of a country

[Neela]

^^^^
It’s because they don’t educate their girls (or boys, for that matter). Educating girls is at the heart of social and economic development. Their elites have bled the country dry, left it with humongous debts, an uneducated and unskilled workforce, a poor business / investment environment, dysfunctional political and bureaucratic structures, etc. Their terrorism sponsoring genocidal thieving army is of course the prime culprit. Until now they always got bailed out. Now they have been forsaken by just about everyone.

Sirji…I think the country was doomed right from the beginning. Imagine a morally corrupt, genocidal maniac, lazy scum with massive bluster getting a huge swathe of land on a platter. Everything after seems to be then about exploiting fissures and fault lines and the outcome is expected to yield big rewards. This is what Pakis thought. Until their decades old smart play made everyone wary .


Trust me….Pakistan will be the worst example of failed states. Famine, death and destruction is yet to manifest fully.
And if you feel sympathy growing with their predicament , just think of it Ma Kali.s retribution and she needs her blood to avenge n 800 yr old cultural devastation

[Deans]

Pakistan’s economic crisis puts healthcare costs out of reach

They could always buy from India, but in a self-goal, they banned all imports from India, just as their crisis started.

[Neela]

8,000 flour bags stolen during Ramzan amid severe economic crisis in Pakistan, four government officials booked
https://www.opindia.com/2023/04/pakista ... ic-crisis/

[Manish_P]

^^^^
It’s because they don’t educate their girls (or boys, for that matter). Educating girls is at the heart of social and economic development...

They are careful not to do it as it at would peel off all the layers of power (mullahs, mard-e-momeens) and unravel the very core of their beliefs.

It's unsaid blasphemy.

[Manish_P]

Pakistan’s economic crisis puts healthcare costs out of reach

They could always buy from India, but in a self-goal, they banned all imports from India, just as their crisis started.

Sir, i think it is not a self-goal. There are the import lobbies in Pak for whom it is even more profitable if they can import Indian things via the Gulf rather than directly from India.

Sort of like arms sales - where there is no profit to be made (by the arms dealers, the importers, the lobbyists) in direct Goverment-to-Goverment deals.

[Dilbu]

Beggars swarm roads of Rawalpindi

RAWALPINDI: The influx of beggars, especially in markets and traffic signals, not only reflects poorly on the working of the administration in the garrison city but also creates problems for citizens.

Scores of beggars have converged at the Committee Chowk underpass creating nuisance for commuters, who find it difficult to navigate through the intersection on one of the busiest roads in Rawalpindi.

The federal capital is also facing a similar situation as toddlers can also be seen begging and sleeping at traffic signals on main roads even past midnight.

“You cannot even walk freely in the markets because beggars would chase you until you snub them,” said a working woman at Rawalpindi’s Saddar.

[Deans]

They could always buy from India, but in a self-goal, they banned all imports from India, just as their crisis started.

Sir, i think it is not a self-goal. There are the import lobbies in Pak for whom it is even more profitable if they can import Indian things via the Gulf rather than directly from India.
Sort of like arms sales - where there is no profit to be made (by the arms dealers, the importers, the lobbyists) in direct Goverment-to-Goverment deals.

That's true. Even 25 years ago, when Pak's economic situation relative to India was far better, there was a huge market for Indian goods via the Gulf route. Some of it goes to Afghanistan (imported duty free) and then smuggled across the border to Pak. Afghan warlords and Pak generals get their cut. However, decades of teaching hatred of India have made Indian branded goods less acceptable. In the old days, D company would smuggle gold or drugs into India in exchange for consumer goods going to Pak, but today its probably hard currency paid in advance from Dubai.

[Manish_P]

...However, decades of teaching hatred of India have made Indian branded goods less acceptable...

Empty stomachs have a way of rerouting brain activity.

The hatred will always be there but a temporary acceptance, citing some historic similarity from the time of the Prophet, will be duly found, as the justification.

In any case sir, the whole of paki industry, with the possible exception of animals and animal hides / leather, is one big import lobby.

[Dilbu]

When chai becomes a luxury

If the country shares a single all-consuming addition, it is the morning cup of chai. But many do not have the willpower to, or even the luxury of, limit intake to a single cup given the necessary sugar and caffeine hit required to sustain momentum throughout the day.

Thus the increase in its price by 3x over the last decade, according to data by the Pakistan Bureau of Statistics, hits wallets harder than people realise.

A humble cup of everyday caffeine costs roughly Rs50. If a person consumes three cups a day, every day, the number multiplies to Rs4,500 a month. In a country where the minimum wage is Rs15,000, tea drinking can consume a whopping 30pc of income.

The largest importer of tea in the world, Pakistan’s annual imports are roughly half a billion dollars. To put things in perspective, if the entire country forwent drinking tea for two years, the amount saved would be roughly equal to the last tranche of the International Monetary Fund loan that the country is desperately trying for. No wonder Minister Ahsan Iqbal made the meme-worthy comment about decreasing tea consumption last year.

Instead of importing using borrowed money, Pakistan’s agrarian economy should consider growing local tea. There was a time when Pakistan was a bulk producer and exporter of tea, but the country’s split in 1971 left the country perpetually dependent on imports for its caffeine addiction.

[Aditya_V]

Why bring cup of tea here are you mocking them that they cannot afford the Block 52 F-16 plus cup of tea Group Captain Abhinandan costed them?

[Dilbu]

Finance: Pauperising the people

The World Bank recently said Pakistan’s economy might grow just 0.4 per cent during this fiscal year ending in June and projected only 2pc growth for the next fiscal year. It said poverty is projected to increase to 37.2pc this year pushing an additional 3.9m people into poverty as compared to last fiscal year.

In the last fiscal year (under the PTI government), Pakistan’s GDP grew 6pc, but it started a nosedive right from the beginning of this fiscal year (under the PML-N-led coalition government). Estimates vary for this year’s economic growth, with the World Bank projecting 0.4pc and the government forecasting 1pc plus.

Even if we assume that the economic growth this year will be 1pc (down from 6pc last year), the five percentage points loss of growth means job losses of no less than 2.5m.

This means by June this year, about 9.5m employable Pakistanis will be without a job since, at the end of last fiscal year, the total number of employable but jobless citizens stood around 7m.

Imagine what is going to happen with so many people having no jobs (though some of them will have low-paid jobs in the informal economy).

Imagine what may happen with an additional 3.9m people being trapped in poverty and the poverty rate hitting 37.2pc. It doesn’t take a genius to figure out how all this can feed extremism and terrorism in the country, necessitating the allocation of even greater resources from the national exchequer to fight the twin menace.

Economic growth has stalled, forex reserves of the central bank are not enough to cover imports of even a month, inflation is skyrocketing, factories are closing, farms are not producing enough to feed 225 million Pakistanis, people continue to lose jobs and poverty has become so widespread and acute that men and women are losing lives just to get a sack of free wheat flour, distributed by the government.

These are extraordinary circumstances. And they point to serious gaps in governance and administration. Nothing conventional will work under these circumstances.

In Pakistan, not only fiscal discipline remains missing, but the informal economy also keeps growing while governance and administration continue to weaken. How can the local administration crack down on smugglers and hoarders if it cannot ensure the smooth distribution of free flour?

And how can a civilian government ensure the maintenance of law and order — so vital for economic growth — if it permanently needs a paramilitary force in Karachi, the economic hub of Pakistan, to do that?

[vimal]

^^ This must the only country that produces terrorist at the rate proportional to poverty. Who will the new peacefuls fight against without basic needs like food.

[Neela]

https://www.dawn.com/news/1747026/remit ... l-to-205bn
Remittances fall to $20.5bn

“With the cumulative inflow of $20.5bn during the first nine months of FY23, the remittances recorded a decline of $2.491bn when compared with $23.018bn remitted during the same period last year,” the central bank data showed

The currency experts had been warning the government to remove the unreal dollar cap as the grey market was offering Rs30-40 per dollar higher prices than the interbank and open markets rates. The financial market believes this wide rate gap encouraged the diversion of $2.5bn remittances to illegal channels.

Are foreign remittances are factor in IMF discussions ? If they are, even here Pakis have a problem with a declining trend.

[Neela]

https://mobile.twitter.com/DesiGump/sta ... 4589048837

[Anujan]

Pakistan has lost $7 trillion due to India.

[Dilbu]

IMF slashes Pakistan’s growth outlook to 0.5pc

ISLAMABAD: Hinting at entre­nched high inflation, the International Monetary Fund (IMF) on Tuesday lowered its forecast for Pakistan’s economic growth rate for the current fiscal year to just 0.5 per cent, with inflation going beyond 27pc and the unemployment rate increasing to 7pc.

This showed an unambiguous deterioration of economic fundamentals over the last six months since October when the Fund forecast the country’s gross domestic product to grow by 3.5pc against 6pc for 2022 ago and inflation at 20pc against 12.1pc last year amid a slowdown in the global economy and devastating effects of floods.

[pravula]

So an effective 26.5% contraction? Am I reading that right?

[Dilbu]

Nutrition emergency

Pakistan has always been a country with a high level of food insecurity — according to the 2018 National Nutrition Survey (NNS), nearly 37 per cent of households are food insecure in the country, with Balochistan and KP’s newly merged districts even worse (50.3pc and 54.6pc respectively). Official inflation figures stand around 31pc, but according to economist Steve Hanke, a leading authority on hyper-inflation, this figure is nearer 65pc.

In real terms this means many households will have to forego necessities and make painful choices — imagine making a choice between sending your children to school or giving them a proper meal. I saw two young ragpickers recently running to a mosque where food was being distributed. But they were too late — and were turned back empty handed. The boys were already painfully thin and their experience of food scarcity and hunger will have increased in the current scenario. Hunger, malnutrition, food insecurity — these are betrayals of the promise that we as a polity must be able to address.

Bangladesh has made significant progress in reducing the proportion of children under five who are stunted, from 55pc in 1997 to 36pc in 2014. {There goes echaandee} This is due to improved food security and dietary diversity, improvements in maternal and reproductive health, improved water and sanitation, and food fortification programmes. The government’s focus on education and women’s empowerment indirectly supported these improvements. Bangladesh is fortifying rice and wheat to ensure essential micronutrients for the entire population.

As we mull over our future, we need to realise that the threat of hunger is fast becoming a reality for millions of our fellow citizens. The government needs to take action now. Immediate solutions need to be coupled with longer-term policy reforms. Wheat and edible oils fortification provides a population-wide approach to addressing the nutrition crisis. Punjab is the only province that has not legally mandated wheat fortification, yet most of the flour mills are based in Punjab. Moving towards fortified wheat can be a critical contributor towards preventing the nutrition crisis from worsening.

[yensoy]

So an effective 26.5% contraction? Am I reading that right?

No, it's in USD terms. It is a 2% contraction in per capita given their population growth rate is about 2.5%.

Today open market is at 295. 300 is tantalizingly close.

[Deans]

So an effective 26.5% contraction? Am I reading that right?

No, GDP growth is net of inflation. As Yensoy says, its 2% drop per capita.
Given that the top 1% generate a third of all income and their incomes after inflation will not fall, its probably a 3% drop for the rest of Pak.
This is a provisional estimate, I don't see actuals being better.

[Manish_P]

H&D compliant headline -

Yawn - IMF official expresses confidence in reaching staff-level agreement 'soon'

International Monetary Fund (IMF) Middle East and Central Asia Director Jihad Azour on Wednesday expressed his confidence that the staff-level agreement between Pakistan and the international money lender would be signed "soon" following the board's approval.

"He (Azour) hoped that Pakistan would continue towards its progress on the reforms in various sectors and complete the IMF Programme in time, and IMF will play its positive role in bringing economic stability in Pakistan," the press release said.

Reality -

Depress Tribune - IMF sticks to its guns on staff-level deal

Pakistan emphatically requested the International Monetary Fund (IMF) on Wednesday to show some flexibility and sign the staff-level agreement, however, it could not get a date despite Islamabad’s growing concerns about the fallout of a worsening economic crisis.

The request was made by Finance Minister Ishaq Dar in a virtual meeting with Jihad Azour, the IMF’s director for the Middle East and Central Asia Department. However, the minister could not get the desired result, as the IMF once again raised the issue of petrol subsidy and possible fiscal leakages as a result of the implementation of the subsidy plan.

[chetak]

H&D compliant headline -

Yawn - IMF official expresses confidence in reaching staff-level agreement 'soon'

International Monetary Fund (IMF) Middle East and Central Asia Director Jihad Azour on Wednesday expressed his confidence that the staff-level agreement between Pakistan and the international money lender would be signed "soon" following the board's approval.

"He (Azour) hoped that Pakistan would continue towards its progress on the reforms in various sectors and complete the IMF Programme in time, and IMF will play its positive role in bringing economic stability in Pakistan," the press release said.

Reality -

Depress Tribune - IMF sticks to its guns on staff-level deal

Pakistan emphatically requested the International Monetary Fund (IMF) on Wednesday to show some flexibility and sign the staff-level agreement, however, it could not get a date despite Islamabad’s growing concerns about the fallout of a worsening economic crisis.

The request was made by Finance Minister Ishaq Dar in a virtual meeting with Jihad Azour, the IMF’s director for the Middle East and Central Asia Department. However, the minister could not get the desired result, as the IMF once again raised the issue of petrol subsidy and possible fiscal leakages as a result of the implementation of the subsidy plan.

the fakers are hoping to leverage the loans into a victory in the coming elections, in spite of the goras telling this govt to get out in so many words

they goras want to destroy the paki polity, break the hard hold of the uniformed jehadis, and rebuild the paki schitthole in an image that suits them

but before that, they want im the dim fixed and politically neutered

[vera_k]

I again wonder why China is not helping more here.

Is the PRC also headed towards bankruptcy? Might be the case given the beating that economies have taken over the past few years. Or perhaps they are waiting for a Pak bankruptcy to be able to swoop in and buy up assets on the cheap.

[chetak]

I again wonder why China is not helping more here.

Is the PRC also headed towards bankruptcy? Might be the case given the beating that economies have taken over the past few years. Or perhaps they are waiting for a Pak bankruptcy to be able to swoop in and buy up assets on the cheap.

vera_k ji,

the cheeni have got their evil hooks into the pakis so deep that they simply cannot be displaced or replaced. They have achieved their aim with their initial and large investments and will stay put in pukestan, come what may. Surely the pakis would have repeatedly and privately begged them for aid but the cheenis have swatted aside most of their pleas.

Besides if they help out the pakis, they are obliged to help out all their debt trapped "allies" as well

the debt trap is the raison d'etre for the entire OBOR/CPEC play but due to cheeni's greedy mismanagement and the incompetence of the debt trapped states, the entire edifice is on the verge of collapse leaving the cheeni with no way to enforce recovery of their money or even to somehow exploit the infrastructure already built so far in their debt trapped countries.

no one can get the cheenis out of pukestan, but the cheeni paranoia has been inflamed when they see Modi play his cards so adroitly and without ruffling too many feathers

the paki army's existential fear of being dethroned from their national status and position of primus inter pares (in what they fondly and most delusionally imagine is their entitled status and standing not only in pukestan but also in the entire ummah per se) is protected by the sheer necessity of the cheenis needing them to loot/rule the pakis, afghanistan and seek their help in their games against India) It's a master slave relationship with ingrained elements of fear of the master, as well as, long standing psychological manifestations of the stockholm syndrome which started when ayub khan signed away the shaksgam valley to the cheeni in 1963, under pressure to placate them and continues to this day.

even the ayeshas and abdools know that they are a cheeni vassal state and that must hurt the sharia milk fed politicos, jernails, and also the aam jihadi jantha like hell.

[vimal]

Why fund a defunct state when you can buy it for pennies over dime. China can just take over the railroad and ports and do what it chooses to do.

[Dilbu]

Pliss to note the tone of articles.
Growing frustration

KARACHI: Pakistan is experiencing one of the highest inflation rates in its history. People’s purchasing power has decreased significantly compelling them to pick and choose between basic priorities. Some of the reasons for the high rate of inflation include high external debt, an increase in money supply, shortages of basic items, an increase in production costs, and currency devaluation.

Constant increases in petroleum products have resulted in an increase in the prices of essential items as well as public transport fares. The country’s heavy reliance on imports has not only contributed to price hikes but also resulted in shortages of medicines, lentils, raw materials for industrial activities, etc. Many businesses in different sectors have been forced to cease operations due to losses and low profitability. Others have resorted to downsizing, which is raising unemployment across the country. People are growing increasingly frustrated and agitated with the worsening economic situation and the government’s apathy.

Sinking feeling

IN the last six months since October, we have witnessed an unmistakable deterioration in the country’s economic fundamentals, with gloom overtaking whatever little hope the people had regarding their future.

Global rating agencies have downgraded Pakistan’s credit score further into junk territory, saying Pakistan is hurtling towards sovereign default because of its balance-of-payments crisis and severe dollar crunch.

Indeed, it is surprising that the government has so far dodged default despite the delay in the finalisation of the IMF bailout deal. However, the costs of this economic downturn have been too steep to bear for people and businesses.

Multilateral lenders such as IMF, the World Bank and the Asian Development Bank have also slashed their growth and employment forecasts in recent months.

[Manish_P]

Pliss to note the tone of articles.

Dilbu ji you missed this beauty @yawn

Pakistan is closer than ever to becoming a ‘zombie’ state

[Dilbu]

Pakistan in breach of all fiscal targets

ISLAMABAD: An International Monetary Fund (IMF) report has revealed that Pakistan will miss the fiscal and debt reduction targets of this fiscal year and the situation will become worse in the next fiscal year with a budget deficit peaking at 8.3% of the size of the nation’s economy.

The Fiscal Monitor report, released on the side-lines of the IMF Spring Meetings, showed that Pakistan will miss all targets related to the reduction of the budget deficit, gross public debt, and expenditures and increasing revenues during FY2022-23 and FY2023-24.

Compared to an eight-month-old assessment of booking a budget deficit of 4.7% of the GDP, the Fiscal Monitor report showed that the deficit may widen to as high as 6.8% by June this year. There is a slippage of 2.1% of the GDP or Rs1.8 trillion, underscoring the poor performance of the incumbent government.

This also puts a question mark on the performance of the $6.5 billion Extended Fund Facility whose objectives were fiscal consolidation and putting the country on a sustainable path towards debt reduction.

The IMF report further showed that during FY2023-24, starting from July, the budget deficit can go to as high as 8.3% of the GDP. In August last year, the IMF had projected the budget deficit for the next fiscal year at 4% of the GDP. Within eight months, the IMF has shown massive deterioration in the core budget target.

Under the $6.5 billion bailout package, the IMF had targeted Pakistan achieving a primary budget surplus – a measure that shows that government revenues are higher than its expenditures excluding interest payments. The primary budget surplus had been boasted as a strategy to reduce public debt.

According to the Fiscal Monitor report, however, during the current fiscal year instead of achieving any surplus, Pakistan will have a primary budget deficit equal to at least 0.5% of the GDP. Compared to just eight months ago, there is a deviation of around 0.7% or Rs600 billion at the current projected size of the economy.

During the eight review talks in August last year, the IMF spent a significant time ensuring Pakistan achieves a nominal primary surplus of 0.2% of the GDP. This has not materialised. For FY2023-24, the IMF has projected a primary deficit of 0.4% of the size of the economy compared to its old assessment of having about 0.6% surplus.

Pakistan’s indicators are deteriorating at a time when these core numbers are showing improvement in other countries. The Fiscal Monitor report stated that three years after the outbreak of the Covid-19 pandemic, fiscal policy was returning to normal. After providing extraordinary support simultaneously in 2020, both monetary and fiscal policy tightened in nearly three-quarters of countries in 2022 amid high inflation and the expiration of pandemic-related spending measures. This shift occurred in a highly volatile environment.

The report further stated that following a historic surge in global public debt to nearly 100% of GDP in 2020, as a result of economic contraction and massive government support, fiscal deficits have since declined, as exceptional measures have come to an end. With strong nominal GDP growth in 2021–22, global debt posted the steepest decline in 70 years and stood at about 92% of GDP at the end of 2022, still about eight percentage points above the level at the end of 2019

Primary deficits were also falling rapidly and moving closer to pre-pandemic levels in many countries, but overall deficits have fallen somewhat less owing to rising interest payments. The report showed that Pakistan’s revenue-to-GDP ratio may also remain below the levels assessed earlier. It is now projected at 12.2% of the GDP, which should also be a matter of concern for the IMF that will also miss its programme targets. For the next fiscal year, the IMF has projected revenues at just 12.5% of the GDP.

The Federal Board of Revenue has been struggling to achieve its annual target and has already booked a Rs276 billion shortfall in just nine months of the fiscal year.

Compared to this, expenditures will remain far higher than the old assessments. For the current fiscal year, the IMF has projected expenditures to grow to 19.1% of the GDP, breaching the earlier projection by as much as 2% or Rs1.7 trillion. The situation will not improve in the next fiscal year either, as the report shows the expenses increasing to 20.8% of the GDP – exceeding the earlier estimates by a margin of at least Rs3.4 trillion at the current projected size of the economy.

As a result of these poor indicators, gross public debt is shown at 73.6% of the GDP by end of this fiscal year. At the time of signing of the programme in July 2019, the IMF had projected that Pakistan’s public debt would come down to 65% of the GDP. For the next fiscal year, the IMF has shown a significant reduction in debt by projecting it at 69% of the GDP – an assessment that may again be proved wrong.

The Fiscal Monitor report stated that debt dynamics deteriorated in emerging market economies and low-income developing countries with sizable shares of debt in foreign currency, as currency depreciation and rising interest rates came together with inflation.

In the past year, the Pakistan rupee has devalued by more than 56% – a record fall – while inflation in Pakistan peaked at a 50-year at 35.4% in March.

[chetak]

Why fund a defunct state when you can buy it for pennies over dime. China can just take over the railroad and ports and do what it chooses to do.

they already own the pakis.

No need to throw good money after the bad