What's new

Budget deficit financing: Country turns again to IMF after a decade

Protest_again

BANNED
May 19, 2019
4,675
-60
4,050
Country
India
Location
India
Umm... what is the link between external debt and reserves? Whilst i assume your reference to $570bn is govt debt that india carries... the $600bn reserves in its bank are not the governments money. It can not just use it without letting out hyperinflation, without junking your bond market and collapsing your economy.

Your understanding of how things are connected is inaccurate. In terms of indebtedness of countries the following graphic may assist you. Debt to reserves are meaningless... its debt to GDP that counts. Srilanka ran out of reserves because its GDP collapsed due to lack of tourism, very silly agricultural reforms and huge debt.

Lack of reserves is a symptom not the cause of srilankas problem. India is far closer to Srilanka than BD.

View attachment 857852
lol. How dense are you guys? India's sovereign (public) external debt is very low at $106 billion, rest is corporate debt (serviced by corporates). This is the loan the govt will be servicing with its revenue which is quite high (22 times Bango revenue).

Bangladesh services $62 billion of public debt with its 22 times lower revenue. India is quite better off also because interest rates on India's loans are quite lower relative to Bangladesh, owing to its better credit rating.

Relevance to reserves come as debt is serviced with dollars (both govt and corporate). Higher the reserves, lower the pressure in servicing these debts. This is where exactly Srilanka and Pakistan is struggling and where Bangladesh is heading. Already external debt to reserves ratio has fallen below 50% in case of Bangladesh.
 

PadmaBridge

FULL MEMBER
Jun 26, 2022
247
0
298
Country
Canada
Location
Canada
lol. How dense are you guys? India's sovereign (public) external debt is very low at $106 billion, rest is corporate debt (serviced by corporates). This is the loan the govt will be servicing with its revenue which is quite high (22 times Bango revenue).

Bangladesh services $62 billion of public debt with its 22 times lower revenue. India is quite better off also because interest rates on India's loans are quite lower relative to Bangladesh, owing to its better credit rating.

Relevance to reserves come as debt is serviced with dollars (both govt and corporate). Higher the reserves, lower the pressure in servicing these debts. This is where exactly Srilanka and Pakistan is struggling and where Bangladesh is heading. Already external debt to reserves ratio has fallen below 50% in case of Bangladesh.
An Indian illiterate calling others illiterate lol

Never heard any economist ever compare tax revenue to debt!

It’s GDP to debt ratio that matters you buffoon!

India is a socialist country and many of its states are run by communists!

Bangladesh by contrast is a capitalist country - after Mujib’s disastrous experiment with socialism.

The stark differences in subsidies, between BD and India, illustrates this perfectly.

The addiction to subsidies is why India cannot sign any meaningful trade deals. Even one with Bangladesh has been stalling for a long time.

INDIA NEEDS HIGH TAXES TO FUND ITS ADDICTION TO SUBSIDIES!!!

Bangladesh doesn’t need high taxes because BD industry is not addicted to subsidies!
 

Protest_again

BANNED
May 19, 2019
4,675
-60
4,050
Country
India
Location
India
An Indian illiterate calling others illiterate lol

Never heard any economist ever compare tax revenue to debt!

It’s GDP to debt ratio that matters you buffoon!

India is a socialist country and many of its states are run by communists!

Bangladesh by contrast is a capitalist country - after Mujib’s disastrous experiment with socialism.

The stark differences in subsidies, between BD and India, illustrates this perfectly.

The addiction to subsidies is why India cannot sign any meaningful trade deals. Even one with Bangladesh has been stalling for a long time.

INDIA NEEDS HIGH TAXES TO FUND ITS ADDICTION TO SUBSIDIES!!!

Bangladesh doesn’t need high taxes because BD industry is not addicted to subsidies!
Do you pay back debt with GDP or revenue? Why are Bangos so dumb?
 

PadmaBridge

FULL MEMBER
Jun 26, 2022
247
0
298
Country
Canada
Location
Canada
Do you pay back debt with GDP or revenue? Why are Bangos so dumb?

That’s not how sovereign debt service works you buffoon!

E.g. why would current revenue bear any relation to loans that are not payable for another 10 years!!!

Find me one economist who makes a connection between tax revenue and debt!!!
 

ShoroterAkash

MEMBER

New Recruit

Jun 29, 2022
19
0
29
Country
Bangladesh
Location
United States
This is expected.

Bd fx reserves will continue go down as import bills go up. Export and remittance will go down further. Export going down because bd has only garments to Export which is non essential item during inflation. And remittance will go down thanks to hundi and bd central bank flip flop on fx rates. Ukraine war might last for years meaning high commodity..metal...oil...grain prices in coming years.

But hey dont worry...u have walton...already Exported 11 million dollars..maybe next year it will be 22 million lol..and ola! Probelm solved.

Bitter truth.
Also, I have a faint suspicion that there is some "Shuvonkorer faki".... so, the govt had to push the panic button.
 

bluesky

BANNED
Jun 14, 2016
14,156
0
15,614
Country
Bangladesh
Location
Japan
Do you pay back debt with GDP or revenue? Why are Bangos so dumb?
Yes, it is the revenue money that comes from the bridge tolls in Taka that will be paid back to the GoB.

In my personal estimate, the bridge authority will earn 600 crore Taka net per year from the bridge tolls. So, it is not difficult to recoup the expenses in 20 to 30 years.
 

my2cents

SENIOR MEMBER
Apr 8, 2011
4,406
-5
2,295
Country
United States
Location
India
Problem is your “private debt” is mainly corporate debt.

These corporations have taken huge loans from state banks.

If external debts are called by the external lender - it will have a massive ripple affect on your state owned banks.

Resulting in the same or worse outcome.
Only external debt of $256 billion is due this year.
 
Last edited:

PadmaBridge

FULL MEMBER
Jun 26, 2022
247
0
298
Country
Canada
Location
Canada
Corporate debt does not have the same effect as sovereign debt. If the sovereign debt is unserviceable, the country will not be able to raise new capital to finance imports as required. Corporate debt on the other hand will lead to insolvency of the corporation only. While the bad loans (issued by state banks) can lead to fiscal problems in the country, it is not something that India is new to. This past decade, there have been quite a few bad loans (from state run banks) and the effects on Indian economy are not the same as what we see in countries that default on external loans (Sri Lanka).

Corporate debt doesn’t have the same affect as sovereign debt?

No, it has much worse affect!

Lehmen broke the US treasury.

And Northern Rock broke the U.K. treasury.

Neither country has recovered even after a decade!
 

Wood

SENIOR MEMBER
Mar 30, 2013
4,335
-10
3,635
Country
India
Location
Canada
Corporate debt doesn’t have the same affect as sovereign debt?

No, it has much worse affect!

Lehmen broke the US treasury.

And Northern Rock broke the U.K. treasury.

Neither country has recovered even after a decade!
Indian state run banks have already dealt with a number of bad loans this decade. There was a slow down in economic growth rate, but no problems like Sri Lanka :pop:
 

Cheepek

FULL MEMBER
Jan 17, 2021
740
-5
1,100
Country
India
Location
India
Umm... what is the link between external debt and reserves? Whilst i assume your reference to $570bn is govt debt that india carries... the $600bn reserves in its bank are not the governments money. It can not just use it without letting out hyperinflation, without junking your bond market and collapsing your economy.

Your understanding of how things are connected is inaccurate. In terms of indebtedness of countries the following graphic may assist you. Debt to reserves are meaningless... its debt to GDP that counts. Srilanka ran out of reserves because its GDP collapsed due to lack of tourism, very silly agricultural reforms and huge debt.

Lack of reserves is a symptom not the cause of srilankas problem. India is far closer to Srilanka than BD.

View attachment 857852
If you are dumb enough to give a blanket statement that India holds X amount of debt without going into nature and profile of debt, then you sure are dumb enough to accept our foreign reserves can easily cover external debt.
The foreign reserves RBI holds can theoretically be used to clear all outstanding debt within the next minute.

"India is far closer to SL than BD"
Let's check the veracity of this statement with facts-
1) Which country has stopped foreign tours of it's employees?
2) Which country has deferred "less important" projects as they may increase imports?
3) Which country recently removed source declaration requirement for remittances greater than 500k Tk?
4) Which country recently imposed additional duty on 68+ "non essential/luxury" items?
5) Which country has ~5 months imports worth foreign reserves left with their Central Bank?
6) Which country did IMF point out for artificially inflating foreign reserve figures?
7) Which country is back to IMF's door after a decade for budgetary support?
8) Which country has asked their businesses to close shops post 8pm to save power?

Proof of pudding is in the eating, so which country is closer to SL? 🤔
 

PadmaBridge

FULL MEMBER
Jun 26, 2022
247
0
298
Country
Canada
Location
Canada
Indian state run banks have already dealt with a number of bad loans this decade. There was a slow down in economic growth rate, but no problems like Sri Lanka :pop:

Both BD and India are fiscally in good shape.

It’s your Indian trolls who keep trolling SL.
 

Users Who Are Viewing This Thread (Total: 1, Members: 0, Guests: 1)


Top Bottom