Pakistani Economic Stress Watch

Brad Goodman · Post by **Brad Goodman** » 31 Mar 2013 19:56

In total 7.5m Pakistanis are working in various countries, which is four per cent of the total population. About 3.5m, i.e. 52% of the Pakistanis employed overseas, are in the Middle East, of which 1.5m are working in Saudi Arabia, 1.2m in Kuwait, 1.03m in UAE, 90,000 in Bahrain and 87,000 in Qatar.

In the developed countries, 1.2m Pakistanis are in the UK, 70,000 in Germany, 90,000 in Greece, 70,000 in France, 90,222 in Italy, 65,000 in Thailand {what are they doing in Thailand? Massage or Jihad?}and 41,830 in Malaysia; whereas 900,000 Pakistanis are working in the US followed by 300,000 in Canada.

According to the figures compiled by the Bureau of Emigration and Overseas Employment, during the last five years (2008-2012) around 2.3m people left the country for employment because of the downslide in the domestic economy. The people who emigrated include 38,020 highly qualified people, 75,303 highly skilled, 959,377 skilled people and 189,342 semi-skilled people. The highest numbers were of unskilled workers, which stood at 1,030,184.

anupmisra · Post by **anupmisra** » 01 Apr 2013 06:23

Jobs creation in pa'astan.

The will to work

With daunting economic performance of Pakistan in recent indicators, the country’s economy is dwindling towards new abysmal lows. Much has been speculated and researched on the underlying causes of Pakistan’s recent upsurge in unemployment, and domestic political turmoil and energy insecurity coupled with pressure on the labour market due to rising population have been cited as central reasons.

The shrinking job market

Youth unemployment and under employment has risen steeply during the last five years on the back of a slowing economy, which is not creating enough jobs to cater to an (unofficially) estimated 1.3 -1.5 million new entrants into the job market every year.

The other option

In total 7.5m Pakistanis are working in various countries, which is four per cent of the total population.

According to the figures compiled by the Bureau of Emigration and Overseas Employment, during the last five years (2008-2012) around 2.3m people left the country for employment because of the downslide in the domestic economy.

pankajs · Post by **pankajs** » 10 Apr 2013 11:33

The usual baki fart
No, Prime Minister, the economy is not collapsing

KARACHI: The next prime minister of Pakistan inherits an economy on the cusp of a recovery.

We will let that sentence sink in for a couple of minutes. The largely economically illiterate media has been portraying a vision of doom to be inherited by whoever becomes the next prime minister. But in our special report this week, The Express Tribune lays out the evidence that while some headline numbers are indeed rotten, the economy is far from being on the verge of collapse.

Quite the opposite, the next prime minister will get to take credit for his or her predecessors’ efforts. All they have to do is not panic, not screw up, and not try to reinvent the wheel.

Followed by another fart
The only way is up: Inheriting an opportunity, not a lemon

KARACHI: Traditionally, incoming governments have always started off by saying that they have been handed an economy that is in tatters, on its last legs and that the country is on the verge of default and that they will need a few years just to get things back on track before any recovery can be expected.

It is an argument that successive governments use whenever they are asked why things are not getting better. Usually there is no solid economic rationale behind this, mostly political rhetoric and populist jingoism. It’s pretty much like telling the people to not expect anything, and then it becomes a self-fulfilling prophecy.

But while the economy is not doing great and we are not about to become the next Asian tiger, it is not exactly in danger of collapsing either. And if the next government is smart, it can actually use this as an opportunity instead of continuing to whine that it inherited a lemon.

And then the reality catches up
Sinking like a rock: Slim chances of recovery for Pakistan’s directionless economy, says ADB

ISLAMABAD:Amid deep-rooted concerns over a “directionless” economy due to failure of the previous government and inability of the caretaker setup to take immediate meaningful steps, the Asian Development Bank has warned that Pakistan’s current growth model is unsustainable that also undermines future prospects.

In its Asian Development Outlook, the Manila-based lending agency has painted an extremely bleak picture of Pakistan’s economy that is “directionless” and immediate recovery chances are almost nil amid a worsening balance of payments position.

A missing link in the ADB’s analysis of political failures is the role of bureaucrats in running the affairs of the government who often do not disclose actual extent of problems to the leadership.

Highlighting flaws in the growth model, the ADB said private consumption expenditure expanded by 11.6% in the last fiscal year that provided nearly all GDP growth. The consumption benefited from rising remittances and government salary increases.

The shift to consumption-based growth was because of a constant fall in fixed investment that fell for the fourth year in a row to 10.9% of GDP, the lowest since 1974 and the lowest among major Asian countries, the ADB said.

“The steady decline in investment, coupled with reliance on consumption for growth, is unsustainable and undermines future growth prospects,” the lending agency warned. In just one year, the declining investment shaved off 1.4 percentage points from growth.

According to the ADB, last year was the fifth consecutive year of low growth, falling investment, excessive fiscal deficits, high inflation and a deteriorating external position that weighed heavily on the economy.

The analysis seems a report card on the economic performance of the previous government, which completed its tenure on March 16 and changed five finance ministers during its rule.

On the back of low capital inflows and heavy debt repayments, the ADB assessed significant downside risks to future outlook. Low foreign reserves, which covered less than two months of imports in February this year, spark concern over sustainability of the external sector.

“Pressure on reserves is expected to continue, with an additional $1.7 billion due to the IMF before the end of fiscal year 2013 and $3.2 billion payments during the next fiscal year 2014,” the ADB said. The exchange rate will remain under pressure also in the next fiscal year.

abhijitm · Post by **abhijitm** » 10 Apr 2013 23:46

[url=xxxhttp://dawn.com/2013/04/10/pakistans-booming-market-no-black-and-white-matter/]bakistan's booming market[/url]

Karachi, one of Pakistan’s chaotic financial heart, is home to 18 million people, Taliban bombers, contract killers – and one of the world’s most successful stock markets.
With 49 per cent returns in 2012, the Karachi Stock Exchange (KSE) was one of the five best performing markets in the world. Now it is seeking a foreign partner to buy a stake and take over management of a market that has risen three-fold over the past four years.

These loonies can boast about anything. You take out 5m $ out of the market and the index fluctuates dramatically. And then the reality...

The Karachi market’s small size and lack of liquidity make it vulnerable to manipulation. Market capitalization is only $41.5 billion – the Bombay stock market’s capitalisation is more than 10 times higher at $578 billion. LIAR LIAR. BSE market cap is 1 trillion USD and also what it fails to mention is that combined market capital of NSE and BSE, both Mumbai based, is over 2 trillion USD
Only a quarter of the shares are freely floated – about 30 per cent of that is held by foreign funds and investors, including Franklin Templeton, Invesco Ltd, Goldman Sachs Asset Management and Mackenzie Financial Corporation.

Since only 60 of KSE’s 600 listed companies trade regularly, small trades can rapidly make a big difference in a company’s share price.

Boosting volumes on the exchange was one of the intentions behind Pakistani President Asif Ali Zardari’s decree last April turning black money into white.

It said no questions could be asked by the Federal Board of Revenue about the source of funds invested in stocks till July 2014. The investments become legally legitimate.

The pool of such funds is potentially huge. A report by the United Nations Office on Drug and Crime projected the size of Pakistan’s informal or “black” economy at $34 billion in 2010-11, one-fifth of the formal economy.

The Paris-based Financial Action Task Force, which monitors money laundering, said the decree did not contravene Pakistan’s existing anti-money laundering legislation. But anecdotal evidence suggests controls are lax.

In one case shown to Reuters by a lawyer, a man invested $10 million buying stocks in a single transaction. His address: a Karachi slum notorious for Taliban infiltration.

Suraj · Post by **Suraj** » 11 Apr 2013 01:13

The reported 'data' for BSE is off by a lot. Market capitalization at BSE is more than $1,300 billion, not $570B . In addition, the national stock exchange also has a market cap of $1300 billion, though several stocks are crosslisted. Both BSE and NSE rank among the 10 biggest stock exchanges in the world, with peak capitalizations in excess of $2 trillion each. Overall capitalization of equity exchanges in Mumbai would be north of $2 trillion today, with even more in the commodities exchanges - the MCX (Multi Commodity Exchange) in Mumbai is one of the 5 biggest commodity exchanges in the world.

The KSE is chickenfeed in comparison. Even the Manila stock exchange has a market cap of $250 billion. All data available on World Federation of Exchanges reports.

harbans · Post by **harbans** » 11 Apr 2013 01:24

If India and Pakistan combine, the stock market capitalization in South Asia will be amongst the worlds biggest!!

Katju hat on..

Prem · Post by **Prem** » 11 Apr 2013 01:47

harbans wrote:If India and Pakistan combine, the stock market capitalization in South Asia will be amongst the worlds biggest!!

Katju hat on..

And Mizzile Plus Musharraf too .

abhijitm · Post by **abhijitm** » 11 Apr 2013 02:06

It is also talking about dus percenty scheme of making black money white. You just have to invest your black money in stock market and it becomes white. No questions ask. So basically if I have 1m usd in black then first I will go short by borrowing, sell like there is no tomorrow. This will crash the stock on KSE and then buy back with my black money.
"Great success"

ramana · Post by **ramana** » 11 Apr 2013 05:06

You mean Dus Percenti is making the TFTA Mard-e-MominGhaziruffs evil banyans?

Gagan · Post by **Gagan** » 11 Apr 2013 06:06

abhijitm wrote:[url=xxxhttp://dawn.com/2013/04/10/pakistans-booming-market-no-black-and-white-matter/]bakistan's booming market[/url]
In one case shown to Reuters by a lawyer, a man invested $10 million buying stocks in a single transaction. His address: a Karachi slum notorious for Taliban infiltration.

Dawood bhai is alive and kicking in Karachi.

abhijitm · Post by **abhijitm** » 11 Apr 2013 20:04

bakistan is running a ghost economy. There is no reliable source on any figure. I am not sure this 41b $ market cap of KSE is true. I regularly visit paki sites for business, economy information but nothing substantial is available in public domain. I cant give 2 cent value of what paki gov claims. Any idea who audits paki finmin books? Considering this how S&P or Moody rate them is a mistery. Probably CIA tells them - give them B- , so there you go.

Prem · Post by **Prem** » 17 Apr 2013 03:32

Pakistan need to Stop giving Foreign Aid to America,Asia and

Enough is enough!
Dr Assh-faque H Khan

Economic experts within and outside Pakistan unanimously agree that the country’s economy has never been in such a bad shape as it is today. Five years of economic mismanagement and poor governance by the previous regime have not only destroyed the economy of Pakistan but also severely weakened the key institutions of the country.Let me dwell on what is in store for the country. The foreign exchange reserves of the SBP are depleting fast and have already plummeted to a dangerously low level. In the last ten months (since July 2012), the SBP has lost $4.1 billion in its reserves and $1.164 billion only in the last five weeks, that is, it is down from $7.861 billion on March 1 to $6.697 billion on April 5. The country will have to retire $0.838 billion of IMF loans during the period until June 30.
With little or no chance of sufficient external inflows in the absence of the IMF programme, the SBP’s reserves are likely to fall further to $5.859 billion by end-June 2013. We must not forget that the SBP has borrowed $2.325 billion from commercial banks in the forward market. Adjusting for this purchase, the SBP’s reserves would stand at $3.534 billion by end-June – sufficient to trigger a crisis of confidence.Where are we taking this country? Why is everybody a silent spectator? Is this the way we want to take this 180 million people strong nuclear power forward? No sir! Enough is enough. Brotherly and friendly countries including the international financial institutions are nervously watching our decay. Many of them have expressed their views in recent weeks. No one will come forward to bail us out until we realise that we are in a deep crisis and make efforts to set our house in order.The SBP is bent upon misguiding the people by releasing dated reports. It has released two quarterly reports simultaneously in mid-April 2013, covering the period of July-December 2012. Much water has passed under the bridge during the last four months.
The external balance of payments is in a highly precarious condition today than it was some four months ago. Reading the report, ordinary people will get a not-so-frightening message but those who follow the economy of Pakistan will consider the reports as a deliberate attempt to misguide the people at large and those who matter in particular.The SBP’s reserves are at a dangerously low level and in the absence of substantial inflows, they will reach a point by end-June 2013 when Pakistan will face serious difficulties in honouring its external debt obligations. What will happen then?Second, if Pakistan defaults in its single debt payment the chances of which are strong, its L/C (letter of credit) will not be honoured. It will be able to import only to the extent that it has cash dollar to pay for. We may expect substantial cuts in imports including POL products. In turn, massive cuts in imports will adversely affect economic activity.Third, a slowdown in economic activity and massive cut in imports will reduce tax collection. Expenditure will have to be cut down drastically to keep the budget deficit at a manageable level. If we fail to drastically cut expenditure, budget deficit will be high and its financing would come from domestic sources alone – perhaps mostly from the SBP, with all its inflationary consequences. As the common man experiences the adverse economic consequences of these events, there is sure to be social unrest.The country will be forced to impose exchange control and will not allow foreign exchange to go out of the country. A crisis of confidence will be set in motion. All this is likely to happen soon, particularly at a time when the country is in the grip of election campaigns and there is no credible economic team in place.
Enough is enough. This is not the way a country can be governed. This is nothing but a mockery of the country. My recommendations are as follows. Put in place a credible finance minister and a professional economic team without wasting time. Take the economy seriously before it is too late. Immediately start negotiations with the IMF for a bailout programme. Appoint an ‘educated’ Begging minister to lead the Pakistani delegation at the spring meeting of the IMF-World Bank. Add some professional Lotanomists in the team to assist the finance minister in his parley with the IMF. We are in a crisis. No one will come forward to bail us out unless we become serious on the economic front.

Sushupti · Post by **Sushupti** » 20 May 2013 00:19

After Decades of Neglect, Pakistan Rusts in Its Tracks
In a Journey on a Crumbling Railway, a Picture of a Nation’s Troubles

http://www.nytimes.com/2013/05/19/world ... 65OfXKyPuw

Peregrine · Post by **Peregrine** » 20 May 2013 02:02

.
Is the Black economy all that black?

Cheers

partha · Post by **partha** » 22 May 2013 12:33

http://www.thenews.com.pk/Todays-News-3 ... operations

Johnson & Johnson to ‘wrap up’ Pakistan operations

LAHORE: Johnson & Johnson Pakistan (Pvt) Limited has decided to wrap up its operations in Pakistan, according to industry sources. However, the company has refused to comment on the issue as yet.

The American pharmaceutical giant listed on the New York Stock Exchange is the fifth pharmaceutical multinational to decide to end the operations of its subsidiary in Pakistan in the past few years.

A pharmaceutical company executive described the move as “a real challenge for the new PML-N government.”

Other pharmaceuticals multinationals who have ended their operations in Pakistan include Bristol-Myers Squibb, Merck Sharp & Dohme Limited (MSD), Searle Pharmaceuticals, and Organon.

The reason is Pakistan’s poor economic conditions and absence of a functional regulatory setup.

Nikhil T · Post by **Nikhil T** » 24 May 2013 09:53

Munna getting bheekh from papa Saudi. Typical.

Good news for Pakistan: Saudi to extend $15 bn bailout package to Pakistan

Pakistan’s key ally Saudi Arabia is expected to extend $ 15-billion bailout package to Pakistan’s highly indebted energy sector to help the nation overcome power crisis.

Islamabad, May 23/Nationalturk – In what could signal return of good days for Pakistan, country’s key ally Saudi Arabia is expected to extend $ 15-billion bailout package to Pakistan’s highly indebted energy sector to help the nation overcome power crisis.

“The Saudis are taking reasonable interest in helping out the incoming PML-N government led by Nawaz Sharif to overcome power crisis. The country is planning to extend bail-out package for Pakistan’s highly indebted energy sector by supplying crude and furnace oil on deferred payment to enable it to resolve the chronic circular debt issue,” a senior government official was quoted as saying by Pakistan’s newspaper, The Dawn.

Saudi envoy sought details of oil requirements

He said after Nawaz Sharif’s PML-N emerged as the single largest party in May 11 general elections, the Saudi envoy in Islamabad sought a briefing on the country’s oil requirements from the foreign ministry before calling on prime minister-designate Nawaz Sharif in Raiwind, Lahore.

The official said the Saudi envoy was immediately provided a position paper.

“Pakistan expects about 100,000 barrels of crude oil and about 15,000 tons of furnace oil per day from Saudi Arabia on deferred payment for three years. The amount involved works out at about $12-15bn. The facility can be utilised to reduce load-shedding in the short term and provide an opportunity in the medium term to restructure the power sector by minimising subsidies, eliminating circular debt, ensuring recovery from the public sector and reducing system losses to bring it to a self-sustainable level,” he said.

Bail out package can help Nawaz govt to overcome energy crisis

The official said bailout package can help Pakistan’s new government to be headed by Nawaz Sharif to resolve country’s electricity crisis and develop hydropower projects through a combination of public and private investments and bagasse-based power production by the sugar industry.

“The arrangement for oil supplies on deferred payments could be further discussed during Nawaz Sharif’s first visit to Saudi Arabia soon after assuming the office of prime minister early next month,” he said.

Pakistan’s total crude oil import is about 400,000 barrels per day and 30,000 tons of furnace oil. Its total oil import bill stands at about $15bn per annum.

“The breathing space provided by the likely Saudi package could also be used for renegotiating gas price with Iran for the Iran-Pakistan gas pipeline to bring it down to a sustainable level,” the official said.

Under the gas sales and purchase price agreement, any party may seek revision of the rates in view of the cost of alternative import options one year ahead of the first gas flows scheduled to take place in December 2014.

The newspaper quoting official as saying that Saudi rulers had not taken any interest in the issue earlier because of the chill in their relationship with the PPP government.

Saudi government had extended a similar special package to Pakistan soon after it conducted nuclear tests in 1998 and faced international economic sanctions.

Between 1998 and 2002, Pakistan received $3.5 billion (Rs190 billion at the exchange rate at that time) worth of oil from Saudi Arabia on deferred payment, a major part of which was converted into grant.

Write your comments and thoughts below

Faiz Ahmad / NationalTurk Pakistan News

Theo_Fidel · Post by **Theo_Fidel** » 24 May 2013 22:02

TSP has a long tradition of declaring financial packages after a 'we will see' type statement.
As long as you don't shoot them as they walk up the steps, they always claim that it is 'in the bag'.
We will see what comes of this.

Prem · Post by **Prem** » 24 May 2013 22:16

The Key word is Paki "expect" the financial Poakage. This by no mean done deal.

Rohit_K · Post by **Rohit_K** » 30 May 2013 03:37

abhijitm · Post by **abhijitm** » 06 Jun 2013 15:34

1 sterling pound = 152 paki rupees
1 sterling pound = 153 yens

therefore paki economy is catching up with Japan. India rupee is 87. It has a long way to catch. AoA.

Prem · Post by **Prem** » 10 Jun 2013 02:20

http://www.thenews.com.pk/Todays-News-9 ... s-the-plan
What’s the plan Mian?

Sir, we would have to cough out $10 billion in the following 12 months; the current account gap plus our maturing debts. As of May 24, the SBP had $6.5 billion. Sir, the budget that your finance minister is about to announce will have a trillion rupee hole; that’s Rs1,000,000,000,000.your manifesto maintains that the “PML-N will focus on motorways, dams, housing projects and development of new urban centres and cities.” There is little doubt that we need new drivers of economic growth. Motorways need real money and so do housing projects, development of new urban centres and cities. Sir, where would all that money come from?Sir, your energy plan is about replacing “furnace oil boilers by coal fired boilers. This will cost around $2 billion.” Sir, where would all that money come from? Sir, you have pledged to “generate 10,000 MW of electricity....” That is going to cost $20 billion. Sir, where would all that money come from? Sir, your energy plan promises “Permanent elimination of circular debt.” Our accumulated circular debt is Rs1,000,000,000,000. Sir, where would all that money come from?Sir, you have three choices: go begging to Saudi Arabia; borrow from the likes of the IMF, the Asian Development Bank, the World Bank and the State Bank of Pakistan or generate funds through fiscal consolidation and internal austerity.
Sir, you know it better than anyone else that there ain’t no such thing as a free lunch – neither in Saudi Arabia nor in China. Saudi Arabia gives us money to get what it wants from us – influence over this region along with its agenda. Sir, project financing from China is to promote and safeguard Chinese interests in Pakistan – and the region. As a matter of fact, one of the drivers of state failure is when a state begins to allow interference by other states – be it Saudi Arabia or China. Sir, we can’t simultaneously drink free Saudi oil and go for the Iranian gas pipeline. Then there’s sectarian violence within Pakistan that almost always follows truckloads of free dates. Will the Saudi-American combine tolerate the Gwadar-Khunjerab-Kashgar rail network? China, as a matter of principle, finances neither budgetary deficit nor provides funds for balance of payment crisis.Sir, are you serious about tax reforms? Let us begin with Punjab. Sir, the tax-to-GDP ratio for the federal government is 9.1 percent. Imagine: the tax-to-GDP ratio for the Punjab government is 0.2 percent. Imagine: the Punjab Revenue Authority, with a population of 97 million, has received a total of 300 tax returns. Sir, do you commit to abide by the Fiscal Responsibility and Debt Limitation Law of 2005 (the law caps public debt at 60 percent of GDP)?

( Paki ought Replace GDP with MDP=Mush Deapth Parameter)

Theo_Fidel · Post by **Theo_Fidel** » 07 Jul 2013 01:29

Oh! 'appy day.

PKR has crosses 100 mark to the dollar. Take that you kaffirs. We have more zero''s than you.

Code: Select all

http://www.brecorder.com/top-stories/0/1207175/

neeraj · Post by **neeraj** » 21 Jul 2013 04:32

Sindh’s tax revenue declines

Sindh suffered a loss of Rs1.76 billion in tax revenue in the fiscal year 2012-13 due to bad law and order situation and non-realisation of bank guarantees furnished against the infrastructure cess.

Pakistan Steel suffers Rs140m losses in 48 hours

The Pakistan Steel Mills (PSM) has suffered production losses of Rs140million in 48 hours after disconnection of power to its plants by the Karachi Electric Supply Corporation (KESC) on Wednesday due to non payment of bills.

Peregrine · Post by **Peregrine** » 28 Jul 2013 02:55

Passenger cars market shrinks by 23% in FY13

KARACHI : Local market of passenger cars, including locally assembled and imported, dwindled by 23 percent in fiscal year 2012-13 to 164,208 units as compared to 213,028 units in FY 2011-12 due to poor economic and security conditions, auto dealers said on Saturday.

Cheers

sanjaykumar · Post by **sanjaykumar** » 28 Jul 2013 03:44

2,031,306 units. Car sales in India 2011. Pakis are keeping the 10:1 ratio, but now it is inverse.

RCase · Post by **RCase** » 28 Jul 2013 05:33

^^^
Keeping in line with Lahori Logic:

1 TFTA car == 10 SDRE cars.

Q. With all the car bombs, wouldn't the demand for cars go up in TSP?

Prem · Post by **Prem** » 16 Aug 2013 01:46

PoaqnomicalBegeronomy
Retards under pressure: Pakistan repays another $145m to IMF today

ISLAM BAD:
As promised assistance from the Islamic Development Bank could not arrive on Thursday, Pakistan’s low foreign currency reserves will drop further as it returns today (Friday) another tranche of $145.4 million to the International Monetary Fund.This will be the 18th tranche to repay an IMF loan taken in November 2008. On August 26, Pakistan will pay back another $258.5 million SDR or about $393 million to the IMF.With these two big payments of about $538 million, gross foreign currency reserves held by the State Bank of Pakistan will fall below $4.5 billion until some assistance comes from abroad.On August 2, the gross reserves stood at $5.2 billion. By excluding forward contract liabilities of over $3 billion, net reserves of the SBP remain at around $2.2 billion, sufficient only for half a month of imports.As uncertainty prevails over whether the IMF will make quarterly releases of the anticipated $7.3 billion loan before implementation of conditions or after implementation of quarterly performance criteria, Pakistan has approached other multilateral lenders for some financial relief.So far, the IMF has indicated that it could give $6.6 billion against Pakistan’s request for $7.3 billion, according to finance ministry officials. The IMF is not yet ready to give the loan in advance as Islamabad wants to use the same amount to return the previous IMF loan to ease pressure on the reserves. The IMF will take up the loan request in early September.
During his visit to Saudi Arabia early this month, Finance Minister Ishaq Dar met with the Islamic Development Bank president, seeking €750 million in short-term loan.According to a statement issued by the finance ministry on August 3, the IDB president agreed to extend the loan and release the first tranche before August 15.Pakistan was expecting up to €200 million before repayment to the IMF. However, the promised aid could not arrive on Thursday, according to officials of the finance ministry and the State Bank of Pakistan. But they hoped that the amount may come anytime soon.After taking over, Dar had written a letter to the IDB president and sought €750 million. In response, the IDB sought guarantees from the central bank which the SBP did not extend until Dar intervened, the officials added.Had the governor timely approved the guarantees, the IDB loan would have arrived by now, they added.With fresh repayment of $145.4 million, Pakistan will return a total of $4.7 billion to the IMF out of $7.8 billion it borrowed under the bailout programme. Islamabad will return over $3 billion this fiscal year.
The repayments to the IMF have taken a heavy toll on foreign currency reserves with foreign investment staying negligible.

Vipul · Post by **Vipul** » 16 Aug 2013 02:46

In a TV talk show on current affairs program one of the Paki "expert" has said if pakistan cannot get finance on favourable terms from IMF and ADB then it can get help from Saudi by buying oil on deferred payements term and ask its good friend China to give a fraction from its 2.5 Trillion $ reserves to pakistan

.He also said that pakistan should convey to the rest of the world that its economy has suffered for being a frontline state in the war against terrorism and that the world owes pakistan for the $60 billion losses it has suffered.

Prem · Post by **Prem** » 18 Sep 2013 07:44

The balance of payments outlook

World's Best Begger's Balance Sheet

The foreign exchange reserves of the State Bank of Pakistan (SBP) had dwindled down to about $5.2 billion by the end of July, 2013 and repayments due to be made to the IMF alone were of the order of over $4 billion in the remainder of the calendar year 2013 and in 2014. The net position of the financial account of the balance of payments had also turned negative implying that further draw down of reserves would have been needed to repay foreign debts other than that of the IMF. In addition, the current account was running a deficit of about $2 billion on an annual basis. There is, therefore, no doubt that Pakistan needed a plan to finance its current account deficit, meet its external debt payment obligations and reverse the trend in foreign exchange reserves in FY14. The sensible short-term solution was of course to negotiate a bailout package with the IMF, which the present government did without wasting time.The IMF programme is anchored on building up the gross reserves of the SBP to $9.6 billion by June 30, 2014, after financing the trade deficit, and meeting debt-servicing liabilities and foreign debt repayment obligations. The quarterly projections show that the gross reserves of the SBP will go up to $7.2 billion at the end of March, 2014 and further to $ 9.6 billion at the end of June, 2014. These are very ambitious targets. It may be made clear that net inflows from the IMF will play no part in boosting foreign exchange reserves. In fact, on a net basis, the IMF would need to be paid back about $911 million during FY14 even if all the quarterly IMF disbursements under the EFF are made on time. The above targets of gross reserves of the SBP for FY14 are, therefore, predicated on an improvement in the current account of the balance of payments and certain key assumptions about inflows from various sources other than the IMF.
Direct foreign investment ( Drug Money )i is expected to increase to $2.3 billion in FY14 from $1.5 billion in FY13. It includes privatisation proceeds in foreign exchange of $800 million. Moreover, disbursement of foreign loans, other than that from the IMF, is to increase by about $1.4 billion from $2.1 billion in FY13 to $3.5 billion in FY14.Some of the policy assumptions for projections relating to the current account outcome are worth noting. A substantial expansion of exports in foreign exchange terms would crucially depend on generation of exportable surplus and increased price competitiveness of exports. With the growth rate expected to actually decline to 2.5 percent in FY14, generation of exportable surplus would depend on some switch from domestic consumption to exports through appropriate policy measures. With the domestic rate of inflation projected to go up to double digit again in FY14, it would require a substantial depreciation of the exchange rate.
Indeed the IMF has an explicit projection of depreciation of the real effective exchange rate of 7.7 percent built into its programme for FY14. It contradicts the finance minister’s claim that there was no discussion with the IMF on the depreciation of the nominal exchange rate. One thing or the other will have to give in. Either the projected improvement in exports will not take place or the exchange rate would have to be allowed to depreciate as assumed by the IMF.

The writer is a former Thumbsucking Chimpion of Pakistan.

Prem · Post by **Prem** » 24 Oct 2013 08:25

url=http://tribune.com.pk/story/621669/dism ... s-to-1-2b/]Dismal State: Pakistan’s current account deficit widens to $1.2b[/url]

KARACHI:
Pakistan’s current account deficit as opposed to a surplus of $439 million in the corresponding three-month period of last year, widened to $1.2 billion in the first quarter of fiscal 2014 (July-September), according to data released by the State Bank of Pakistan on Wednesday.
The data shows that the current account deficit in September alone was $608 million, up 7% compared to $569 million in August.Talking to The Express Tribune, Standard Chartered Bank Senior Economist, Sayem Ali said that the cause of the widening current account deficit is increasing imports although a considerable pick-up was recorded in exports and remittances over the same period.Compared to the corresponding period last year, Pakistan’s exports of goods amounted to $6.2 billion, up 1.3% in the first quarter of fiscal 2014. In contrast, Pakistan’s imports of goods increased 8.9% to $10.6 billion over the same period. “This is driven primarily by higher oil prices and rising energy demand in peak summer months that led to an inflated import bill,” said Ali.The year-on-year increase in workers’ remittances was 9.1%, which remained $3.9 billion in July-September. The International Monetary Fund (IMF) had projected the current account deficit for fiscal 2014 at $1.6 billion in its September report, but the first-quarter figure indicates that the current account deficit will be significantly higher, Ali noted.
Although the government sought IMF assistance to forestall a balance-of-payments crisis, a widening current account deficit and large debt repayments have led to a sharp drawdown of the State Bank’s foreign exchange reserves.
“Besides this sharp decline, markets are concerned about the growing risk of rising global oil prices and Pakistan’s large external debt repayments on the horizon,” Ali added, saying that the rupee is under pressure due to depleting foreign exchange reserves.Even after the release of the first tranche of the IMF loan, the SBP’s foreign exchange reserves remain weak at $3.9 billion as on October 10. “This is barely enough to cover one month of import payments,” he said, noting that it is the lowest level of reserves since the 2008 balance-of-payments crisis.As on October 23, the rupee has declined 11% to Rs106.4 a dollar year-to-date. Ali said that the delay in the release of the next IMF tranche due in December will have serious implications for the balance of payments and the overall rupee outlook.

Aditya_V · Post by **Aditya_V** » 24 Oct 2013 10:36

Well since Pakis get so much backsheesh anyway, they should consider shutting down Industries, PR . Electricity saved can be given to households. Rape enclaves with continuous shooting of Mango abduls trying to get in is a template to follow in the next 5 years.

Prem · Post by **Prem** » 29 Oct 2013 04:54

$6.7 billion programme: Pakistan Give concessions to IMF
Paki Dekhonomoney Strategic Leverage

Amid persistent problems in building foreign currency reserves, Pakistan has demanded some concessions from the International Monetary Fund (IMF) such as increasing loan amount and lowering reserves targets.An IMF team, led by its Washington-based mission chief Jeffery Franks, on Monday began discussions with State Bank of Pakistan officials in Karachi. The two sides would review the possibility of relaxing targets on the external front in addition to evaluating progress on the first quarter’s targets, sources told The Express Tribune.As Pakistan passed through the first quarter of the current fiscal year, there was a growing realisation on both sides that the quantitative targets of net foreign exchange reserves and ceiling on net foreign currency swaps assigned to the SBP were stringent, sources said.The IMF realised that the balance of payments projections were over-ambitious, if not unrealistic. The current account deficit during the first quarter of the current fiscal year remained at $1.23 billion – slightly less than what the IMF had projected for the whole financial year.The SBP managed to meet most of the targets for the first quarter but it unnerved the markets when it started purchasing dollars from the sport market, which put the rupee under pressure, resulting in over 7% devaluation in just three months.
However, the SBP failed to meet the projection of having $5.6 billion reserves by end September. Despite being in the IMF programme, the gross foreign exchange reserves depleted to $4.8 billion by end September, which further melted down to $4.086 billion by October 14 – less than even one month import bill cover.The situation has brought both sides to a point where they will have to make adjustments in the macroeconomic framework just after less than two months of the approval of a $6.7 billion programme, sources said. The other option would be massive rupee depreciation, if the county tries to achieve the unachievable targets.Pakistan has sought an increase in disbursements, as it would receive only $2.2 billion from the IMF this year as against repayments of the previous loan to the tune of over $3 billion, showing a gap of about a billion dollar, sources said. However, the Fund was not immediately ready to give this relaxation and asked Islamabad to first successfully complete first two reviews of the programme.
The area where the IMF has indicated showing leniency is reviewing the requirements of purchasing dollars from the market.The flaw in the original framework was that the IMF had hoped that the rupee depreciation would make the country’s exports more competitive – an assessment that underestimated global economic conditions. The SBP’s ill-preparedness for the July negotiations was also the reason behind setting the overambitious targets.
The relaxation in the condition of building reserves may give a comfort to the SBP but would not soothe the market, which is closely monitoring the fast depleting reserves, according to an independent economist who wished nonymity.However, according to finance ministry officials, there are problems in the short term but the situation is expected to turn around in March next year. From March, the economic managers hope to receive big payments from the Asian Development Bank and World Bank, floating a $650 million Euro bond and receiving some bilateral assistance, said the officials.

Peregrine · Post by **Peregrine** » 30 Oct 2013 01:11

IMF loan will cost Pakistan 1.2 million jobs : Asad Umar

LAHORE : The fresh loan agreement between Pakistan and the International Monetary Fund (IMF) will result in the dismissal of 1.2 million people from their jobs, further rupee devaluation, and increasing inflation, unemployment and create a mess overall for the economy of Pakistan, said Pakistan Tehreek-i-Insaf (PTI) leader Asad Umar.

The IMF’s technical analysis reveals that the Pakistani rupee is overvalued by 6%, and needs more depreciation for reforms, so in actuality they told the government that rupee devaluation was necessary for the agreement, said Umar. In addition it told the State Bank of Pakistan to purchase some million dollars as they were aware that once SBP started purchasing dollars, the rupee would collapse as the Pakistan foreign exchange market hardly has any depth, he said.

But we were told by the government that Pakistan will further receive loan installments from other banks which would add around $10 billion in our reserves at the end of the year. We are unable to understand that if $10 billion will add in our reserves then why must the SBP purchase dollars, he asked.

“On one side, unemployment and inflation is increasing and the rupee is devaluing due to the government’s policy while on the other our stock market is making new highs but only billionaires are benefiting from it and minting money. Both things are connected,” said Umar.

Cheers

Brad Goodman · Post by **Brad Goodman** » 06 Nov 2013 15:48

letter in dawn
Declining Pakistani currency

MUTTON price has gone up to Rs720 while vegetables like tomatoes, onions and potatoes are selling at about Rs80 a kilo. Fruits like bananas are selling at Rs80 a dozen, Kabuli pomegranates at Rs220 a kilo. And yogurt sells at Rs110 a kilo.

As a result of high prices of essential commodities, the fixed income group people are in real soup.

Moreover, the electricity tariff is expected to go up to Rs18 a unit and over and above this the government wants to levy 0.5 per cent wealth tax on all moveable assets of the regular registered taxpayers.

Moreover, petrol price has gone up to Rs113, the highest in the region.

The US dollar has gone up to Rs106 while it is equivalent to 78 Bangladeshi takas and 62 Indian rupees. It seems that Pakistan is the worst of the lot in the region.

RAZA ALI DOSSA

Karachi

meanwhile some more good news
Rupee slips in a jittery market

KARACHI: The local currency is once again losing position, with the rupee shedding Rs1.50 against the dollar in the past three weeks.

On Tuesday, dollar was traded at Rs107.23 in the inter-bank market and at Rs107.85 in the open market. In September, the dollar had hit Rs112 in the open market and Rs110 in the inter-bank.

Peregrine · Post by **Peregrine** » 08 Nov 2013 03:28

Rapidly rising debt

Government debt reaching new heights is not a particularly unusual event, but the news on November 5 that the national debt had climbed by Rs1 trillion was alarming nonetheless. The amount itself, though terrifyingly high, was not the only cause of concern. What was troubling was the fact that this rise took an astonishingly short three months to occur. Even more worrying is the fact that the Rs15 trillion figure for government debt does not include the new debt taken on as part of the International Monetary Fund’s bailout package. The figures for Pakistan’s national debt have grown with such regularity that journalists have almost entirely given up trying to draw attention to them anymore. Even the State Bank of Pakistan has been provoked to start using unflattering epithets to describe the finance ministry’s behaviour.

So addicted is the government to borrowed money that it has virtually sucked the life out of the private sector’s ability to borrow. After the banks are done lending to the government, there is nothing left to lend out to businesses and entrepreneurs to invest, create jobs and lift people out of poverty. The vicious cycle of inflation driving more and more people into poverty continues. The only way out of this crisis is for the government to simultaneously reduce its expenses and raise tax revenues. But alas, the current administration appears to have taken action on neither front. It has been repeated ad nauseum, but it is worth saying again: the government of Pakistan has done a woefully inadequate job of trying to tax the country’s wealthy, a point that has been made bluntly and loudly by virtually every observer of the nation’s finances. The IMF recently took to calling upon the government to remove the privileges, both de jure and those that exist in practice, that benefit the wealthiest of our citizens. It really should not take a lender based in Washington for Islamabad to figure out that the rich in Pakistan are not pulling their weight when it comes to paying taxes.

Cheers

Peregrine · Post by **Peregrine** » 12 Nov 2013 02:15

The Pakistaning of Pakistan Steel Mills :

1. Waiting for rescue

KARACHI : Pakistan Steel Mills (PSM), the biggest and only integrated steel mill in Pakistan, is going through its worst financial and production crisis in its history of three decades.

The mill has not only accumulated huge losses, especially in the last five years, it is also running at an embarrassingly low production capacity of just 3% – the lowest capacity utilisation in 31 years.: Pakistan Steel Mills needs huge money injection to stay afloat.

2. A look back at history of PSM

KARACHI : For many people, Pakistan Steel Mills (PSM) is a financial black hole, but for others the industrial complex has repaid most of what the government has invested and can still do wonders because of its size and importance.

3. Pakistan Steel privatisation looks even more difficult than last attempt

KARACHI : When the Supreme Court of Pakistan objected to its privatisation in 2006, Pakistan Steel Mills (PSM) had over Rs9 billion lying in bank accounts. It had closed previous fiscal year with a profit of Rs6.7 billion. It was churning out 979,000 tons of steel products and had raw material sufficient for several months.

Today, the plant is literally shut. With long-term debt of over Rs40 billion, it is caught up in a vortex where it borrows money every year to pay off past debt. Whatever little is left goes towards meeting cost of running coke oven batteries, furnaces and paying salaries, leaving nothing for coal and iron ore.

Cheers

Peregrine · Post by **Peregrine** » 18 Nov 2013 00:23

IMF goes native

Editorial

Having spent years arguing back and forth with the denizens of Q Block, it appears that the International Monetary Fund (IMF) has gone native, resorting to the same sort of pressure tactics and manipulation of numbers that were once the hallmark of the finance ministry’s budgetary strategy. We understand why the finance ministry wants to hide the truth and not confront the numbers. We find ourselves astounded as to why the Washington-based lender has decided to go along with the charade. Having first pressured the State Bank of Pakistan to lower its projections of the current account deficit, we now learn that the IMF has been forced to confront reality and is now revising its own estimations. As a result, the IMF appears to be quietly lowering the hurdles required for the next few tranches of its bailout package.

We recognise that Pakistan needs a faster disbursal of the bailout money, and we welcome the result, but are very deeply disturbed by the process. By resorting to such tactics, the IMF has effectively surrendered on the notion of trying to pressure the finance ministry to raise more tax revenue. Yes, we still occasionally get the statements from the international lender supporting the idea, but its actions speak otherwise. It is, of course, not the job of the IMF to motivate the finance ministry to act in a rational manner. But if borrowed money is the narcotic, and the finance ministry is the addict, then in this particular case, the IMF is playing the role of the drug dealer. It is time to separate the dealer from the addict.

The most disappointing aspect of this whole situation is the fact that, six months after coming into office, the Nawaz Administration has still not articulated a clear revenue generation policy that would free the country of such arithmetic shenanigans. Saying that they want to tax the wealthy is not enough. They have to lay out and execute the strategy for making that happen. And while the Prime Minister’s House remains silent, the civil servants in Q Block will continue business as usual, all the while, the country’s financial health withers away.

Cheers

member_27847 · Post by **member_27847** » 23 Nov 2013 11:46

Deleted.

Vivek K · Post by **Vivek K** » 23 Nov 2013 14:13

Care to explain your post? Are you saying that Punjabis cannot manage the economy? Also, what do you mean imported into India? There were Punjabis living in what is today India before partition.

I am reporting your post as being defamatory to one of the many pillars of Indian society.

Peregrine · Post by **Peregrine** » 23 Nov 2013 16:28

Garg wrote:Pakistan is receiving assistance from Saudi Arabia, China, USA, IMF (again indirect help from oil producing cartel), and still not very successful in managing the economy.

It tells a lot about Punjabi culture that has also been imported into India will mass-migration at the time of partition.

Garg Ji :

I would rather blame the Feudal, Armed Forces and Bureaucratic Leaderships in the Land of the Pure and Home of the Terrorists along with the decimation of the Hindu & Sikh Intelligentsia as well as the Hindu & Sikh Trading Community.

Cheers