Current account gap widens to $2bn

[VCheng]

This implies that the external auditors are essentially local firms that the government may have some leverage over, right? In order to deal with that, could external audits be undertaken under the supervision of the IMF?

A lot can be done to improve the systems, but lip service is easier.

 

[p(-)0ENiX]

A lot can be done to improve the systems, but lip service is easier.

Are you referring to lip service by those in authority? In order to bring about any fundamental & long lasting change, everyone must change for the better, but good leadership & governance itself goes a long way to bringing about those improvements.

 

[Bilal.]

What about debt servicing?

As I mentioned, that total repatriation and debt service cant be more than ~2.7B, I mean if debt service is the cause of a current account deficit of $2B it would have to be ~$4.7B for H1 FY14 and that too when not factoring in foriegn investment and aid! That is not possible when Pakistan's total external debt including the new ones from IMF is around $70B.

 

[shuntmaster]

As I mentioned, that total repatriation and debt service cant be more than ~2.7B, I mean if debt service is the cause of a current account deficit of $2B it would have to be ~$4.7B for H1 FY14 and that too when not factoring in foriegn investment and aid! That is not possible when Pakistan's total external debt including the new ones from IMF is around $70B.

I read someplace that a third of Pakistan's federal annual budget goes into debt repayment. Do you have the actual number.
Then, there is other FDI outflows too.. like repatriation of profits from foreign investments..

 

[Bilal.]

I read someplace that a third of Pakistan's federal annual budget goes into debt repayment. Do you have the actual number.
Then, there is other FDI outflows too.. like repatriation of profits from foreign investments..

That includes local debts too. I did put the Net Inflows of Foriegn investment number in the previous post, it was around $640M. That means:

2.7+0.64 = ~$3.3B

How much outflow is there due to debt sevice and repatriation of profit?! It needs to be $5.3B just to go negative $2B when we dont include foriegn aid.

 

[VCheng]

Are you referring to lip service by those in authority? In order to bring about any fundamental & long lasting change, everyone must change for the better, but good leadership & governance itself goes a long way to bringing about those improvements.

Yes, you are correct in what you say above, and I am also proven correct by deduction since no one is about to change in a way that is necessary to bring about any fundamental changes. Hence, the lip service will continue.

 

[p(-)0ENiX]

Yes, you are correct in what you say above, and I am also proven correct by deduction since no one is about to change in a way that is necessary to bring about any fundamental changes. Hence, the lip service will continue.

Lol! Actually, this lip service to different issues is kind off decreasing in my opinion as frustration among the people rises. That sort of leads people in to taking their issues more seriously.

@Bilal.

Apart from payments of dividends, profit repatriations, & debt service, there are other factors like wages being paid to foreigners that too require consideration. The payment of dividends itself could amount to a lot of money, but I don't have the data on that at the moment. I think it's best that we wait for more information regarding this deficit because we simply do not have all of the required data to make our own calculations & any estimate based on guess work for some outflows won't be accurate. In any case, the accuracy of the State Bank's documentation was also questioned earlier, & while I can't comment on that, but reading that they have apparently been discovered to have been inaccurate in the past means that it's probably a good idea to wait for more updates to the story.