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Govt can no longer borrow from state bank, a sad day.

phrozenflame

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Unfortunately govt can no longer borrow(print notes) from state bank.

This is sad day indeed as govt will loose a big portion of free money.

Now its state bank that will decide when to print notes, govt cant simply go and print huge chunk of money in election year

Lets see how much longer before IK supporters delete this thread like my other threads
It's not 'free', printing blindly causes devaluation vs dollar.
 

Pak Nationalist

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Unfortunately govt can no longer borrow(print notes) from state bank.

This is sad day indeed as govt will loose a big portion of free money.

Now its state bank that will decide when to print notes, govt cant simply go and print huge chunk of money in election year

Lets see how much longer before IK supporters delete this thread like my other threads
The bank is broken in the last election year (has been happening since 2007). Entire fiscal discipline goes tits up as the government tries to throw freebies right and left. This is a good thing in a way. The government would now be forced to sort out the broken tax system in this country and find revenue sources by going after all-encompassing tax reform. We did not sort out our financial system governance (surveillance and enforcement mainly) till FATF's sword started hanging on our heads. This move if correct would be the final impetus for the government to go after traders, the real estate (speculators) sector, the agriculture sector, the trade that is taking place in and out of Pakistan (under-invoicing). It will inject the political will into the federal/provincial governments for their own survival's sake to take what were supposed to be politically unwise (but utterly important) decisions for the economy. You don't do these things when you could just get the central bank to print you PKR. That cushion of not rocking the boat would be taken away if what is being said is factual. However, laws can be discarded/amended through future legislation. Once Pakistan is out of the program, a future government having the numbers in the parliament could always abolish the law through an act of parliament. For the time being, this can prove to be the missing ingredient/the blessing in disguise we were waiting for, for Pakistan to finally become fiscally responsible and rely on expanding the tax net to generate revenues needed for running the country. Inflation could also be reduced as the money supply would be moderated (double edged sword, this one though, developing economies generally require high quantum of money flowing in the economy to generate economic activity and subsequent growth). Another advantage of reduced money supply could be appreciation of PKR as well.
 
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ziaulislam

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Yaar I don’t understand your sarcasm sometimes ….

you make my blood pressure high…

View attachment 794514
Whats more sarcastic then same people screwing the country for 40 years and still praised & loved by educated people like me.

my leader nawaz sharif mashallah first time got elected before even i was born. He still mashallah has a good 10-15 years left in him
 

Gorgin Khan

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Can anybody tell me how that printed money got out of the bank ?? State bank distributed it for free ??

Why didn't khan hang the culprits who distributed this money from within the bank ?? OHH yeh he sold the bank to IMF. So much for economic policy.....

Hahaha :-):-)
 

ummarz

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We have sucessfully printed money on election years in last 40 years..inflation is next govt headache not the current
For example govt printed notes heavily in 2017-2018 but inflation became an issue in 2019-2020
lol you got me good, along with probably half of PDF. But now you wait for my surprise, it will come at the time and place of my choosing haha

For anybody who is scratching their heads, guys we are dealing with Master Sarcastic here.
 

Gorgin Khan

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We have sucessfully printed money on election years in last 40 years..inflation is next govt headache not the current
For example govt printed notes heavily in 2017-2018 but inflation became an issue in 2019-2020
Source please ?

Inflation increased because of the devaluation from 108 to 170s ...... You are depreciating your currency like 10 15 percent per annum and then coming up with threads like these to plug the hole.....Currency depreciated by 70 percent as a whole almost, due to blunders of Asad Umar , shabbar zaidi , Hafeez sheikh and all the aflatoon economist that PTI brought. they could not stick to their posts for even for months...... at the end Khan sold the state bank of this nation...... Aisay kaisay bhai ??? Even with such a devaluation they could not fix a single thing such a shame.....
 

Cookie Monster

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I swear this is by far the dumbest and stupidest thread on the forum right now.

free money ? Seriously ever heard of printing money causes inflation.

this is what happens when one goes to the schoolOf Patwaris where keeping dollar at Rs 90 is more important than saving economy…..

Just plain out stupid discussion .
The sarcasm went over ur head...
...OP is highlighting how the previous governments(PMLN, PPPP, etc.) used to do this... especially during election year...to gain voter support for the next term.
He is making the idiotic jiyalas and patwaris look stupid by using hyperbole and sort of playing a character as if he is one of them. Not sure if u are familiar with Colbert Report, where Stephen Colbert used to do the same thing...by playing a die hard conservative blind to reality. It's the similar concept Ziaulislam is doing here(and in his other threads lately).
 

Flight of falcon

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Blood pressure ya koi aur pressure ? How much of this pressure is due to 14 trillion khan borrowed ..... 10 15 percent uska bhi hoga....
You sound like someone missing 2/3rd of his brain…..

try not to engage me . Continue your childish nonsense with your likeminded Patwaris
 

Enigma SIG

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Whats more sarcastic then same people screwing the country for 40 years and still praised & loved by educated people like me.

my leader nawaz sharif mashallah first time got elected before even i was born. He still mashallah has a good 10-15 years left in him
Love how no one gets the sarcasm. Kudos to you sir!
 

-blitzkrieg-

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maithil

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Should a developing country have a completely autonomous Central Bank? Govts in developing world usually are forced to borrow from their state/reserve banks to meet need of their people due to fiscal deficit.

Taking away this option will force govts to borrow from commercial banks at commercial interest rate. Which in turn will make deficit financing even more costly and in turn making deficit bigger. Another option is to decrease size of already abysmal spending on development funds and subsidies, which will introduce its own repercussions. Tax collection could be theoretically increased but that's easier said.
 

blueazure

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Government (PTI) has not borrowed from SBP since in came in power. ( Just for the people who don't get the sarcasm in your post).

borrowing from local lenders is at an all time high

not sure where you get your facts from


KARACHI:
The Pakistan Tehreek-e-Insaf (PTI) government has planned to raise debt worth Rs5.87 trillion by offering sovereign securities to commercial banks over the next three months, according to the central bank.

The funds to be raised through the issuance of treasury bills (T-bills) and Pakistan Investment Bonds (PIBs) would be partially utilised to pay off the maturing debt of Rs5.15 trillion. However, they will also add a net Rs720 billion to the public debt portfolio in the three months from October to December 2021.

The planned borrowing will be expensive in the wake of an uptick of 25 basis points in the benchmark policy rate of the central bank in September 2021 and will increase the debt burden on the nation.

“An increase of one percentage point in the benchmark interest rate increases interest payment (debt servicing) by Rs180 billion,” Economist Dr Ashfaque Hasan Khan said.

Besides, Rs1.8 trillion had been added to the foreign debt component of the total public debt because of rupee depreciation over the past five months, said Khan, who is also the Dean and Professor at National University of Sciences and Technology (NUST).

The rupee has depreciated by Rs18.53 from the 22-month peak of Rs152.28 touched in May 2021. The local currency closed at Rs170.8 against the greenback on Tuesday.

The breakdown of the planned fresh borrowing suggests that the government will borrow Rs5.05 trillion by issuing three to 12-month T-bills against maturing papers of Rs5.1 trillion from October to December 2021.

Similarly, it will raise Rs300 billion by floating three to 30-year PIBs (at a fixed rate of return) against the maturity of previously issued bonds worth Rs55 billion during the three months.

Govt to borrow Rs4.8tr from commercial banks

It will borrow an additional Rs225 billion through the issuance of three to five-year PIBs at a floating (variable) interest rate against zero maturity as the floating rate bonds are relatively new.

“The issuance of government debt securities at a floating rate is aimed at reducing the cost of borrowing,” Pak-Kuwait Investment Company Head of Research Samiullah Tariq said the other day.

The government is also gradually replacing its short-term debt (T-bills) with long-term borrowing (PIBs).

“This measure is aimed at making the debt profile sustainable, getting enough time to implement economic reforms and overcoming the challenge of increasing tax collection by the time long-term papers of up to 30 years reach maturity,” he said.

The government will utilise the net new debt of Rs720 billion to finance its budget expenditure including development projects like roads and dams under the Public Sector Development Programme (PSDP).

It will also partially finance its defence requirements and issue funds to different ministries in the form of debt.

The government will finance its expenditures through the debt because tax revenue collection has remained low compared to the immediate requirement for funds for the ongoing fiscal year 2021-22.

The government has set the economic growth target at 4.8% for the current fiscal year. It has announced a budget of Rs8.5 trillion for the purpose.

The outlay is supposed to be financed through the targeted revenue collection of Rs5.82 trillion and borrowing worth Rs3.42 trillion.

The government has set the fiscal deficit target at Rs3.42 trillion (or 6.3% of GDP) for the current fiscal year against 7% last year.

It aims to collect 17.4% higher tax revenue through the Federal Board of Revenue (FBR) to Rs5.82 trillion in FY22 compared to Rs4.96 trillion in FY21.

Published in The Express Tribune, October 6th, 2021.
I don't know which political party this guy belongs to but all his posts are hyberbolic and politicized as if this is a voting campaign mods should be able to deal with such politicized campaigns in PDF @waz @LeGenD @The Eagle


this OP deliberately misleads the audience by off topic discourse and half truths

he will tell you how SBP has stopped lending to govt, but he wont mention the fact the govt borrowing from local comm banks is at an ATH .

( not to mention the circular debt of 2300bn )
 

Patriot forever

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borrowing from local lenders is at an all time high

not sure where you get your facts from


KARACHI:
The Pakistan Tehreek-e-Insaf (PTI) government has planned to raise debt worth Rs5.87 trillion by offering sovereign securities to commercial banks over the next three months, according to the central bank.

The funds to be raised through the issuance of treasury bills (T-bills) and Pakistan Investment Bonds (PIBs) would be partially utilised to pay off the maturing debt of Rs5.15 trillion. However, they will also add a net Rs720 billion to the public debt portfolio in the three months from October to December 2021.

The planned borrowing will be expensive in the wake of an uptick of 25 basis points in the benchmark policy rate of the central bank in September 2021 and will increase the debt burden on the nation.

“An increase of one percentage point in the benchmark interest rate increases interest payment (debt servicing) by Rs180 billion,” Economist Dr Ashfaque Hasan Khan said.

Besides, Rs1.8 trillion had been added to the foreign debt component of the total public debt because of rupee depreciation over the past five months, said Khan, who is also the Dean and Professor at National University of Sciences and Technology (NUST).

The rupee has depreciated by Rs18.53 from the 22-month peak of Rs152.28 touched in May 2021. The local currency closed at Rs170.8 against the greenback on Tuesday.

The breakdown of the planned fresh borrowing suggests that the government will borrow Rs5.05 trillion by issuing three to 12-month T-bills against maturing papers of Rs5.1 trillion from October to December 2021.

Similarly, it will raise Rs300 billion by floating three to 30-year PIBs (at a fixed rate of return) against the maturity of previously issued bonds worth Rs55 billion during the three months.

Govt to borrow Rs4.8tr from commercial banks

It will borrow an additional Rs225 billion through the issuance of three to five-year PIBs at a floating (variable) interest rate against zero maturity as the floating rate bonds are relatively new.

“The issuance of government debt securities at a floating rate is aimed at reducing the cost of borrowing,” Pak-Kuwait Investment Company Head of Research Samiullah Tariq said the other day.

The government is also gradually replacing its short-term debt (T-bills) with long-term borrowing (PIBs).

“This measure is aimed at making the debt profile sustainable, getting enough time to implement economic reforms and overcoming the challenge of increasing tax collection by the time long-term papers of up to 30 years reach maturity,” he said.

The government will utilise the net new debt of Rs720 billion to finance its budget expenditure including development projects like roads and dams under the Public Sector Development Programme (PSDP).

It will also partially finance its defence requirements and issue funds to different ministries in the form of debt.

The government will finance its expenditures through the debt because tax revenue collection has remained low compared to the immediate requirement for funds for the ongoing fiscal year 2021-22.

The government has set the economic growth target at 4.8% for the current fiscal year. It has announced a budget of Rs8.5 trillion for the purpose.

The outlay is supposed to be financed through the targeted revenue collection of Rs5.82 trillion and borrowing worth Rs3.42 trillion.

The government has set the fiscal deficit target at Rs3.42 trillion (or 6.3% of GDP) for the current fiscal year against 7% last year.

It aims to collect 17.4% higher tax revenue through the Federal Board of Revenue (FBR) to Rs5.82 trillion in FY22 compared to Rs4.96 trillion in FY21.

Published in The Express Tribune, October 6th, 2021.




this OP deliberately misleads the audience by off topic discourse and half truths

he will tell you how SBP has stopped lending to govt, but he wont mention the fact the govt borrowing from local comm banks is at an ATH .

( not to mention the circular debt of 2300bn )
Bro there is a big difference between borrowing from local commercial banks and SBP. What happened in the past is this injection was balanced off by subsidizized dollar to contain inflation compounding our BoP situation. This SBP autonomy is an absolute must for sustainable growth so we don't end up with the same cycle of repeated boom (artificial growth) and bust (correction phase).

Fisical deficit needs to be financed that's why government borrows. Our deficit is not due to government spending ( primary deficit) but due to debt and interest payments. ( Primary deficit + debt obligations = fiscal deficit).

You and I both know what has caused the circular debt to spiral out of control. Unless we adjust capacity payments completely in tariff circular debt will rise ( this is the main reason why IMF is demanding increase in electricity tariff). Our recovery head at Disco level is at 97% a huge increase , our T&D losses are grossly unchanged ( marginally decreased as well). On the other hand our capacity payments have swelled to trillion rupees a year due to coming online of 2015 IPP's. Government has contained this Capacity payment increase to ~ 400-500b range ( same level as plmn years when capacity payments were just 400b per year) by tariff increase and increasing collection under recovery head and marginal reduction of T&D losses ( T&D losses are built into tariff for decades).
Remember PPP left circular debt at just 200b per year vs now projected 1.4 trillion in 2023 due to IPP's under 2015 policy.
 
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