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ARMalik

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Here we go again - the big white Master is asking the little Slave to behave and don't spend money without the approval of the big daddy. But hey, these shameless Pakistan government agents don't care. They would rather prefer to stand in a begging queue and be humiliated rather then do the right thing and make some very tough economic decisions.

https://www.thenews.com.pk/print/667902-freeze-non-development-expenditure-demands-imf
Freeze non-development expenditure, demands IMF

The International Monetary Fund (IMF) has asked Pakistan to undertake massive fiscal adjustments of Rs1,150 billion to bring down primary deficit at negative 0.4 percent of GDP for the upcoming budget 2020-21 post COVID-19 pandemic.

The IMF staff proposed freezing all major non-development expenditures heads, including salaries and defence, in order to bring down primary deficit from projected negative 2.9 percent in outgoing fiscal year to -0.4 percent of GDP in the next budget for 2020-21.

Top officials sources confirmed that the stalled IMF programme under the $6 billion Extended Fund Facility (EFF) could only be revived provided the government demonstrates its ability to present and pass the next budge
 

ejaz007

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Pak external financing requirement to jump to $29.3 bn

ISLAMABAD: Amid decreasing non-debt creating dollar inflows in upcoming budget, Pakistan’s gross external financing requirement is expected to jump up from $25 billion in outgoing fiscal to at least $29.3 billion in next financial year 2020-21, it is learnt.

The budget makers are worried in the aftermath of outbreak of coronavirus and its persistence in the country because it might result into decreased non- debt creating dollar inflows into Pakistan in next fiscal year such as foreign direct investment, fetching exports earnings and remittances so Islamabad will be forced to increase its reliance on foreign loans to meet its financing gap on external account.

The decreased oil prices in international market is real bonanza for our economy but if it rebounded on higher side then the trade balance might further worsen and demand for dollar for bridging financing gap might further escalate. This is the potential risk identified by the budget makers, said the official sources.

“The gross external financing needs might cross $30 billion mark in the next fiscal budget for 2020-21 against projected estimates of $25 billion in outgoing fiscal year” top official sources confirmed to The News here on Friday.

The International Monetary Fund (IMF) has estimated that Islamabad’s gross financing needs will be standing at $29.3 billion in the next budget. The debt repayment on account of total external debt and liabilities is estimated to consume $13.8 billion in the coming budget 2020-21.

The macroeconomic framework approved prepared by Planning Commission and approved by the Annual Plan Coordination Committee (APCC) envisages that the current account deficit is targeted at $4.4 billion for next fiscal year. The exports are targeted to fetch $22.7 billion in next fiscal year against initially envisaged pre COVID-19 target of $26.187 billion for outgoing fiscal year, indicating that the exports might decrease by $3.487 billion. The imports were targeted at $42.142 billion in the next budget against revised estimates of $41.9 billion for the outgoing fiscal year. The remittances are going to face major hit as the government expects to receive $21.5 billion remittances from Pakistanis living abroad in next fiscal year against initially envisaged target of $24.030 billion in outgoing fiscal year ending on June 30, 2020.

The Ministry of Finance has estimated that the government will have to get foreign loans of $14 to $15 billion in the next budget while repayment of public debt is going to consume $11 billion. So net external borrowing will be standing around over $4 billion in the next budget.

The IMF has estimated that the current account deficit would be hovering around $6.5 billion in the next budget but Ministry of Finance is pitching it at $5.5 billion on maximum side at the moment. The government also plans to launch Eurobond to generate $1.5 billion in the next fiscal year. The government also decided to rollover the commercial loans instead of seeking new one but all will depend upon the yawning budget deficit and its financing requirement for the current fiscal year.

So far the Ministry of Finance has estimated that total debt servicing requirement would be standing at Rs3,150 billion for the next budget. One top official argued that the government managed T-bills for 6 months to one year instead of 3 months so the debt servicing requirement will go up these debt instruments got matured by next fiscal year. Although the discount rate had decreased but the debt servicing requirement is still on higher side size of loan portfolio increased manifold. The buffer created by the government within the SBP to the tune of over Rs1 trillion is also under severe criticism because it is ballooning debt servicing bill.

https://www.thenews.com.pk/print/668778-pak-external-financing-requirement-to-jump-to-29-3-bn

http://www.sbp.org.pk/ecodata/forex.pdf
 

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ejaz007

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Pakistan: GDP forecast massively revised downward
ISLAMABAD: The World Bank (WB) has massively revised downward the GDP growth rate projection for Pakistan by five...

Tahir Amin June 09, 2020

ISLAMABAD: The World Bank (WB) has massively revised downward the GDP growth rate projection for Pakistan by five percent to negative 2.6 percent from 2.4 percent for the outgoing fiscal year 2019-2020.

The bank in its latest report, "Global economic prospects", forecast Pakistan's current year growth rate at negative 2.6 percent - five percent lower than its estimates of January 2020 - before touching negative 0.2 percent for next fiscal year 2020-2021. The bank earlier in January 2020 projected the GDP growth rate at three percent for 2020-2021, but now it has been revised downward by 3.2 percent.

The National Accounts Committee has calculated GDP growth to be negative 0.38 percent for outgoing fiscal year.

The swift and massive shock of the coronavirus pandemic and shutdown measures to contain it have plunged the global economy into a severe contraction.

According to bank forecasts, the global economy will shrink by 5.2 percent this year.

That would represent the deepest recession since the Second World War, with the largest fraction of economies experiencing declines in per capita output since 1870, the bank added.

Pakistan and Afghanistan are both projected to experience contractions in 2020.

Mitigation measures imposed in these countries are expected to weigh heavily on private consumption, contributing to output contractions of -2.6 percent (2019-2020) and -5.5 percent, respectively.

Key labour-intensive export sectors such as textiles are expected to contract sharply and subsequently recover slowly.

The bank further stated that, while limited testing capacity may understate the true scale of the regional outbreak, the majority of infections in the region are in India (200,000), Pakistan (70,000), and Bangladesh (50,000). Nationwide lockdowns in these three largest regional economies sharply curtailed activity in the services sector, and manufacturing production.

Sales and production in a number of key sectors in regional economies (e.g., autos in Pakistan, garment in Bangladesh) have been hit especially hard amid anemic demand.

Business confidence in both manufacturing and services sectors have concomitantly fallen in economies such as Pakistan's.

Key trading corridors in the region also witnessed disruptions.

It further stated that private consumption has been severely hindered as large-scale lockdowns were instituted in several economies, including Bangladesh, India, Nepal, and Pakistan.

Some recent relaxations to these measures have been cautious, given continued rise in the Covid-19 cases.

Non-essential business closures stalled retail sales.

In rural areas, food and other essential activity deliveries also faced major impediments.

Closure of small and medium-sized enterprises, a key engine of regional private sector activity, induced a substantial loss in employment and private investment.

The sharp decline in oil prices in 2020 could provide some support to the region, given sizable oil imports in India and Pakistan, and help cushion fiscal and current account balances. This positive effect may be offset by falling remittance inflows from oil-exporting economies, however, as economies that host migrants from South Asia Region (SAR) struggle with the twin challenges of the pandemic and the oil price collapse.

These flows are expected to decline by about one-fifth in the SAR region this year.

International travel bans and school closures have been widespread in SAR economies.

Public transport has also been closed in two-third of the countries.

Near total lockdowns in several regional economies severely hindered mobility and impeded delivery of essential services, non-essential businesses have been closed in Pakistan, and airports have been shut for arrivals in Sri Lanka.

Despite the deterioration in fiscal positions, a number of commodity importers have announced stimulus packages (India, Pakistan, Poland, Thailand, and Turkey).

In addition, central banks in many commodity importers have enacted policy rate cuts.

Several central banks in the SAR have also lowered policy interest rates, aided by an impending drop in inflation due to falling oil prices (Bangladesh, India, Pakistan, and Sri Lanka).

These monetary policy actions have been complemented with measures to provide liquidity to financial markets and banking systems in several economies.

In SAR, India, Pakistan, and Bangladesh have announced fiscal, liquidity, and loan support measures, ranging from three to 10 percent of the GDP. In Pakistan, measures also include additional spending on healthcare, cash transfers, and relief in utility payments. The median fiscal deficit in the SAR is foreseen to widen from 5.4 percent of GDP in 2019 to 6.9 this year.

Copyright Business Recorder, 2020

https://www.brecorder.com/news/1002751/pakistan-gdp-forecast-massively-revised-downward
 

Path-Finder

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https://threadreaderapp.com/thread/1271396911182950400.html


1/9)Where was Pakistan's Economy heading Pre-COVID19? Thread

Exports in Feb20 increased significantly by 13.6%

Despite an ongoing global slowdown, exports in fiscal year 2019-20 were growing compared to other peer countries.
Pakistan= 3.6% ⬆
India= 1.9% ⬇
Bangladesh= 5.2% ⬇
2/9)Foreign Direct Investment in first 9 months of fiscal year July 2019- March 2020 was highest in last 11 years when compared with same period. Current Account Deficit decreased 70%, after a 32% decrease last year.
3/9)In December 2019 Moody's upgraded Pakistan's rating outlook to B3 'Stable' from 'Negative' which was downgraded just before PTI Govt in June 2020.
Similarly another gift we received was FATF greylisting in June 2018. From 27 action items, only 2 were incomplete by Feb20.
4/9)By Jan/Feb this year the Pakistan Stock Exchange had crossed the 41K mark and was also rated as one of the best performing markets globally.
Ease of Doing Business Index went up by 28 points 108 from 136, world bank ranked Pakistan in top 10 improvers.
5/9)By March 20, remittances were up by 6% with a strong growth in last 5 months.

Nov 19 = 9.35%
Dec 19 = 20%
Jan 20 = 9.36%
Feb 20 = 15.34%
March20 = 9.28%
Similarly last year remittances increased by 10%.
Note: There was no increase in remittances in last 3 years of PMLN
6/9)On the budgetary side

• FBR tax Rs 3 trillion (Jul-Feb up 17%)

• Primary balance surplus of Rs 177 bn (0.4% of GDP), first time ever in 20 years

• Budget Deficit 3.8% of GDP, with additional non tax revenue the fiscal deficit would have been close to the target.
7/9)Similarly SBP reserves increased from $7.2B to $12B in 9 months, inflation had already started to coming down, Pakistan was expected to grow at 2.4-3% & all this macroeconomic stabilisation would have allowed further growth next year.
8/9)Govt gave a Rs 1.2T package to provide relief, cash transfers covers 45% of population, additional wheat purchases to help farmers, agri subsidy, electricity bill waivers to 95% commercial & 72% industrial connections, refunds to exporters, SBP meaures, construction package.
9/9)Due to COVID-19, global economy will shrink 3%, all countries are in contraction. This is the worst global health & economic crisis since Pakistan's creation. While some issues should be managed better, it is simple dishonesty to blame IK for growth or economic crisis.
 
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Path-Finder

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(Short: 1/n) Wat caused #Pakistan's economy to grow between 2013-18? Short answer: consumption fueled by debt! Let's break it down: Data from recent econ survey shows that high growth rate in FY17 & FY18 was driven by consumption. But wat was behind this increase in consumption?


(2/n) Debt, and all types of debt! Household debt increased from 2.84% of GDP in 2014 to 3.92% in 2018. Debt to private sector increased from 15.59% of GDP to 18.83% over similar period. Finally, govt debt also increased from 62% of GDP to 69.5% between 2014 and 2018.
(3/n) Next, y did everyone borrow so much? Bec interest rates decreased to historic low: from close to 10% in 2014 to less than 6% in 2016. Interest rates remained at their lowest all the way till 2018. Importantly, this was done in an ingenious way, perhaps not intentionally.
(4/n) Ingenuity: The federal government shut down most key channels through which unsustainable growth rate shows up as high inflation. This is imp because it is through controlling infl that the central bank stops the economy from over or under-heating. Wat were these channels?
(5/n) For example, govt used foreign reserves to stop exchange rate from depreciating thus killing an important channel through which an overheated economy will result in inflation. Second, govt also stopped increase in electricity and gas prices thus killing another channel.
(6/n) In short, fixed exchange rate regime + refusal to pass on necessary price adjustments helped keep infl artificially lower than it would have otherwise been. This resulted in historically low interest rates and, consequently, a debt binge resulting in an overheated economy.
(n/n) The party finally came to an end but the hangover still remains! Those who threw the party r quite happy with themselves. But those with hangover (i.e. awaam) r wondering wat went wrong! But whoever u blame, agli dafa jab char baj jain to party khutam ker di jiay ga! Enjoy!

https://threadreaderapp.com/thread/1272512472654721024.html
 

Fazal Abbass

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Here we go again - the big white Master is asking the little Slave to behave and don't spend money without the approval of the big daddy. But hey, these shameless Pakistan government agents don't care. They would rather prefer to stand in a begging queue and be humiliated rather then do the right thing and make some very tough economic decisions.

https://www.thenews.com.pk/print/667902-freeze-non-development-expenditure-demands-imf
Freeze non-development expenditure, demands IMF

The International Monetary Fund (IMF) has asked Pakistan to undertake massive fiscal adjustments of Rs1,150 billion to bring down primary deficit at negative 0.4 percent of GDP for the upcoming budget 2020-21 post COVID-19 pandemic.

The IMF staff proposed freezing all major non-development expenditures heads, including salaries and defence, in order to bring down primary deficit from projected negative 2.9 percent in outgoing fiscal year to -0.4 percent of GDP in the next budget for 2020-21.

Top officials sources confirmed that the stalled IMF programme under the $6 billion Extended Fund Facility (EFF) could only be revived provided the government demonstrates its ability to present and pass the next budge
[/QUOTE


Sir can you tell me about primary deficit or if we can discuss about it on whatsapp or Facebook In details.I am new.
Thanks
 

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