Mr Dar took loans to boost forex (others have done this too) but then he kept pumping dollars into the market to keep PKR artificially undervalued (this is darnomics), this was unnecessary borrowing, that started a chain reaction of borrowing to pay back old loans. Misreported figures to IMF for which Pakistan was fined. Under him PMLN was able to make some very expensive PR infra projects which were possible because the finance minister allowed expenses beyond that were sustainable. There were no efforts to curtail expenses so incoming governments were left with deficits to pay for loans that were unplanned.This post has been triggered by the impending return of Ishaq Dar, fondly known as Dollar Dar, as the Pak FM. A common accusation against him has been that he kept the PKR artificially high which has been partly the cause of the current mess. However, there are a few things that don't make sense to me.
Pakistan Foreign Exchange Reserves, 1959 – 2024 | CEIC Data
Pakistan Foreign Exchange Reserves was measured at 14.2 USD bn in Aug 2024, compared with 14.0 USD bn in the previous month. Pakistan Foreign Exchange Reserves: USD mn data is updated monthly, available from Jan 1959 to Aug 2024.www.ceicdata.com
If we see the Chart in the link above (Click on 10 years trend) we see that the forex reserves actually increased from around USD 8 bn in 2013 to around USD 15 bn in 2018. Why would forex reserves increase if the PKR was overvalued.
Pakistan External Debt, 2006 – 2024 | CEIC Data
Pakistan External Debt reached 133.5 USD bn in Sep 2024, compared with 131.0 USD bn in the previous quarter. Pakistan External Debt: USD mn data is updated quarterly, available from Jun 2006 to Sep 2024.
Then again if we look at the debt levels, while debt increased from USD 62 bn to USD 90 bn, a large chunk of this would be capex debt (mainly for CPEC), so it is unlikely that the reserves would be bolstered too much by working capital debt. But here again as we go forward from 2018 we see that the debt kept mounting from USD 90 bn in 2018 to around USD 110 bn plus by mid 2021 (i.e. even before the sharp upward movement of crude gained momentum).
The data appears a bit puzzling. Maybe some of the learned Maulaners here- @RiazHaq @waz @Jango @VCheng @Joe Shearer @Wood @maithil - can explain this conundrum
Regards
We have been through all this on insaniyat; is there anything left unsaid?This post has been triggered by the impending return of Ishaq Dar, fondly known as Dollar Dar, as the Pak FM. A common accusation against him has been that he kept the PKR artificially high which has been partly the cause of the current mess. However, there are a few things that don't make sense to me.
Pakistan Foreign Exchange Reserves, 1959 – 2024 | CEIC Data
Pakistan Foreign Exchange Reserves was measured at 14.2 USD bn in Aug 2024, compared with 14.0 USD bn in the previous month. Pakistan Foreign Exchange Reserves: USD mn data is updated monthly, available from Jan 1959 to Aug 2024.
If we see the Chart in the link above (Click on 10 years trend) we see that the forex reserves actually increased from around USD 8 bn in 2013 to around USD 15 bn in 2018. Why would forex reserves increase if the PKR was overvalued.
Pakistan External Debt, 2006 – 2024 | CEIC Data
Pakistan External Debt reached 133.5 USD bn in Sep 2024, compared with 131.0 USD bn in the previous quarter. Pakistan External Debt: USD mn data is updated quarterly, available from Jun 2006 to Sep 2024.
Then again if we look at the debt levels, while debt increased from USD 62 bn to USD 90 bn, a large chunk of this would be capex debt (mainly for CPEC), so it is unlikely that the reserves would be bolstered too much by working capital debt. But here again as we go forward from 2018 we see that the debt kept mounting from USD 90 bn in 2018 to around USD 110 bn plus by mid 2021 (i.e. even before the sharp upward movement of crude gained momentum).
The data appears a bit puzzling. Maybe some of the learned Maulaners here- @RiazHaq @waz @Jango @VCheng @Joe Shearer @Wood @maithil - can explain this conundrum
Regards
