• Wednesday, October 17, 2018

Dr Shamshad Akhtar meets Asad Umar : The situation is very bleak!!

Discussion in 'Pakistan Economy' started by SunilM, Aug 10, 2018.

  1. SunilM

    SunilM FULL MEMBER

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    Official indicators point to bleak economic outlook

    ISLAMABAD:

    The incoming Pakistan Tehreek-e-Insaf (PTI) government will have to redouble its efforts to pull the national economy from nose diving, party’s financial guru Asad Umar was cautioned by the Ministry of Finance.


    He was warned that the country’s foreign currency reserves would again fall below $9 billion mark soon and budget deficit trends were also not positive.

    Umar, likely to become the 35th federal minister for finance, held a one-on-one meeting with Caretaker Finance Minister Dr Shamshad Akhtar, who briefed him about the latest developments on the economic front.

    Economic policies and politics to be separated: Asad Umar

    The meeting was held a day after Umar met with the media and described the current state of the economy as “dire”. Before the meeting, he briefly met with all senior officers of the ministry.

    In his media briefing, the corporate executive-turned-politician described Pakistan’s external sector’s performance “far worse than five years ago” but still manageable.

    Umar did not disclose the details of his interaction with Dr Shamshad but said that he “discussed cricket with Dr Shamshad Akhtar”.

    However, sources in the Ministry of Finance said that the interim finance minister gave a detailed briefing on the economic indicators for FY2017-18 and a possible strategy to deal with those issues.

    Umar, sources said, was informed about the issues related to the Financial Action Task Force (FATF) and the role the caretaker minister played in this regard.

    He was reportedly informed that Pakistan’s gross forex reserves would slip below $9 billion by the end of September even after securing a $2 billion official inflow from China and arranging $1.4 billion commercial loans over the past two months.


    The assessment was in line with Umar’s opinion. He is reported to have said that the PTI government would have to make crucial decisions about handling the external sector challenges before the end of September.

    The would-be-finance minister was informed that forex reveres were expected to remain around $10 billion by the end of this month, the sources said.

    After the Chinese injection of $2 billion, the gross official reserves had bounced back to over $10.4 billion by the end of July.

    The caretaker finance minister is also said to have informed him about the fiscal situation, which Umar had already described as being unsustainable.

    He was told that over the previous fiscal year (2017-18), budget deficit increased to 6.8% of GDP or Rs2.3 trillion.

    In absolute terms, it was the highest-ever budget deficit recorded in the country’s history.

    The previous PML-N government had set the budget deficit target at 4.1% of GDP, which had been breached by a wide margin.

    Historically, the budget deficit and current account deficit were major reasons behind seeking bailout packages from the IMF.

    Sources said the caretaker finance minister favoured seeking an IMF bailout package.

    Umar was also briefed about fiscal trends witnessed in the current fiscal year.

    For this year, the last parliament had approved a budget deficit target of 4.9% of GDP or Rs1.9 trillion. But, Umar was informed that initial trends were not positive.

    The budget deficit in the first month of the new fiscal year was close to Rs150 billion or 0.4% of GDP, significantly higher than the one recorded in the same month of the last fiscal year.

    Higher interest payments were said to be the main reason for excessive spending in July, sources said.

    They said that interest payments in July alone amounted to two-thirds of the total spending, indicating that controlling current expenditures would be an uphill task for the PTI government.

    The last National Assembly had sanctioned Rs1.62 trillion for debt servicing in the ongoing fiscal year and about 15% of that has already been consumed in a single month, sources said.

    The caretaker finance minister also informed Umar about the steps she had taken to ‘contain’ expenditures and correct macroeconomic imbalances, said sources.

    US should worry about paying off their debt to China, says Asad Umar

    They said she listed increase in interest rates and devaluation of the rupee as measures to improve the balance of payment situation.

    Another challenge that Umar will have to face is building a good team at the Ministry of Finance.

    He might not have been briefed about that but almost all additional finance secretaries had either gone on leave or were planning to take long leaves.

    Those include additional secretaries dealing with human resource management, budget, internal finance and external finance.

    https://tribune.com.pk/story/1776472/1-official-indicators-point-bleak-economic-outlook/
     
  2. Indus Pakistan

    Indus Pakistan PDF THINK TANK: CONSULTANT

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    India Express News headlines . By september next ....

    "Pakistan Army goes bankrupt".

    Other headlines in Indian media -

    "Pakistan going bankrupt but still a long way to go"
     
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  3. war&peace

    war&peace ELITE MEMBER

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    These Gangadeshis slum dogs have been dreaming for this since 1946 but it never happened, not even after 1971. The saddest toiletless orphans of south Asia should go and play their national sport on their child girls because Pakistan is too important to fail.
     
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  4. Hakikat ve Hikmet

    Hakikat ve Hikmet SENIOR MEMBER

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    A God sent opportunity that comes once in a lifetime!!! Some suggestions from this Fakir:
    • Declare corruption = terrorism; corrupts = suicide bombers. Confiscate the properties of corrupts, especially politicians and bureaucrats, as if they belong to your arch enemies (e.g. RAW, NA thugs etc.) in a war footing.
    • Tax reforms and managing customs duties and collecting taxes via as much automation as possible at all levels of transactions. Get young folks to get the IT jobs done!!! And, their dedication and loyalty toward Imran Bey should be like what Jennisary soldiers had for the Ottoman Sultans!!!
    • Consider all tax and customs officers are as corrupt as Iblis if not proved otherwise. Fire as many as possible. Remember an empty house is better than a bad tenant. Tax defaulters will be automatically sorted out, and undocumented economy will get counted.
    • Curb on imports, especially luxury items.
    • Go for strict fiscal reforms.
    • Drastically cut the government expenses. No perks and privileges for any officials till the situation gets under control. They aren't indespensable. For 90% of the government jobs recent high school grads are more than enough.
    • Get rid of state owned enterprises.
    • If the money launderers don't bring back the money ensure that not a drop of water for them.
    • If necessary, go for a general mobilization to attain that. NCOs are more than enough to get this job done!!!
     
    Last edited: Aug 10, 2018
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  5. Pak_Sher

    Pak_Sher SENIOR MEMBER

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    Too good

    Too good
     
  6. Ghareeb_Da_Baal

    Ghareeb_Da_Baal SENIOR MEMBER

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    self delete............
     
  7. WarKa DaNG

    WarKa DaNG FULL MEMBER

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    Too much obsession
     
  8. MBT 3000

    MBT 3000 SENIOR MEMBER

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    agree, but the janissaries started to become corrupt and stopped reforms and overthrew sultans until Mahmud ii disbanded them and succesfully crushed their revolt.
     
  9. ziaulislam

    ziaulislam SENIOR MEMBER

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    the situation on external front is bleak...
    good thing is that required devaluation is already done and asad umar views are very realistic, now whther he will be allowed to work or not is different thing
     
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  10. Indus Pakistan

    Indus Pakistan PDF THINK TANK: CONSULTANT

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    I know. You know. That a nuclear state cannot go bankrupt. A solution would be found. Others like Greece or Ireland have faced 10 times worse but were helped to stand. Grim the situation is. Pakistan will prevail.

    But in the meantime members from the toiletless wonder on the Ganga are gloating and having orgasms about the iminent demise of Pakistan. My reply was to them.
     
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  11. Taimoor Khan

    Taimoor Khan SENIOR MEMBER

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    There is no other option but to bring back all the looted money/assets parked in foreign lands on war footings. No dithering, no political compulsions should be tolerated. Those states who do no comply towards returning money, threaten them with sever consequences.
     
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  12. Hakikat ve Hikmet

    Hakikat ve Hikmet SENIOR MEMBER

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    It was a mistake, and the Sultans had to pay the price with their lives...
     
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  13. ziaulislam

    ziaulislam SENIOR MEMBER

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    nuclear state can go bankrupt(USSR did)
    situation was more bleak in 1998, today its less bleak than 1998..if mushi fixed that problem in 3-4 years so we can now
    real question is will pakistani asked sharif to come back and destroy it again or not

    noone is talking baout bankrupcy..logically that cant happen, as we can easily borrow more..untill we go bankrupt...debt ratio of 70% and servicing of 24% is not horrible by any measures..infact its almost same as india which was way bad in 2006s when her debt reached almost 90% with CAD of>5%
     
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  14. Indus Pakistan

    Indus Pakistan PDF THINK TANK: CONSULTANT

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    USSR collapsed because of the public disillusion with the Soviet communist order - it was not simple accounting deficit that caused it. And it came after decades of competition with the west and Afghan war which left the system politically spent.

    Mush did not fix it. He papered over the problems by 'pawning' Afghanistan to Northern Alliance for couple of billion US dollars which he then injected into the economy giving everybody good times until the money ran out. Back to square one.
     
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  15. ziaulislam

    ziaulislam SENIOR MEMBER

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    Statistically speaking he fixed things debt fell from 96% to 55%
    Factually USSR went bankrupt