Daronomics - Dar's attack on exports has begun

[Crimson Blue]

https://twitter.com/x/status/1577597223801683968

APTMA announces countrywide closure of textile mills from Saturday

@JamD @Bilal Khan (Quwa)

 

[ziaulislam]

I think we should focus on services
Noone can revive the manfacturing in pakistan as confidence shattered takes decades to come back

What we need to do is ask everyone to leave the country and run thr country on remittances.

Obvisously this means we cant import heavy defense equipment or keep a large army. So we should disband it and just keep paramilitary forces and nuclear weapons.

We should legalize corruption as this casuing too much instability

 

[SoulSpokesman]

@ziaulislam

Zia sb,

What we need to do is ask everyone to leave the country and run the country on remittances.

That is not a bad business model at all. Kerala has become one of the wealthiest states in India by that model. And even Indian Punjab does it well. What it would require of course is for Pak to have high educational and healthcare standards for its citizens.

Regards

 

[Maula Jatt]

https://www.dawn.com/news/1713770/govt-announces-all-inclusive-power-subsidy-for-export-industries
Govt announces ‘all-inclusive’ power subsidy for export industries

Finance Minister Ishaq Dar on Thursday announced a power subsidy package for Pakistan’s export industries with per unit electricity cost set at Rs19.99.

In a media talk after negotiations with the Pakistan Textile Exporters Association (PTEA) in Islamabad, he termed the demand for energy subsidies “just” and promised that the government would bear the difference between the new fixed price and the actual per unit production cost.

“I expect the industries to now increase Pakistan’s exports.”

Dar said the annual burden of the subsidy would amount to around Rs90-100 billion, adding that the “all-inclusive” package was announced for the five major exporting sectors, and not just the textile sector.

He denied that the subsidy would have any impact on the primary or budget deficit, assuring that “everything will be taken care of”.

Meanwhile, in response to a question on whether the International Monetary Fund (IMF) was taken into confidence on the package, the finance minister said: “I don’t need to take [the IMF] into confidence […] when I know what I am doing then it is my responsibility to create [fiscal] space for it and I have done so.”

Dar added that he believed in taking “prudent decisions” and had a source of funds available for the package. “[I will explain it myself] when talks are held with them [IMF delegation] and when they arrive on October 25,” he added.

Dawn had earlier reported that the minister was considering a hefty package of energy subsidies for the textile sector to help it compete with regional countries.

Earlier this year, the PTEA held three meetings with former finance minister Miftah Ismail to sensitise the government about the rising energy cost in the country which rendered textile exports less competitive in comparison with other regional countries.

Market in the ‘right direction’​

The finance minister also addressed the continuous depreciation of the US dollar against the rupee, saying that the development occurred without him even doing anything.

Dawn Today on Instagram: "Finance Minister Ishaq Dar on Thursday addressed the continuous depreciation of the US dollar against the rupee, saying that the development occurred without him even doing anything. He was speaking to the media after negot

2,221 likes, 60 comments - dawn.today on October 6, 2022: "Finance Minister Ishaq Dar on Thursday addressed the continuous depreciation of the US dollar against the rupee, saying that the development occurred without him even doing anything. He was speaking to the media after negotiations with...

www.instagram.com

“I want to clarify that I can genuinely prove that its (dollar) actual value is below Rs200.”

He said the market was now going in the “right direction” and correcting itself.

Dar added that today’s rupee appreciation brought a reduction of around Rs2,600bn in public debt and liabilities without “giving back even a single rupee”.

 

[Arsalan345]

The twitter handle (used as information source in OP) is a well known pro PTI outlet. I've seen several PTI followers use this as a source to deliberately disseminate a skewed perception about macro economic indicators on this forum. Readers beware.

As for the information presented, rational readers must ask: Who decides what are competitive rates for different industries? Have we looked at peer countries in the region to identify the power tariff for high tension consumers? In India for example, many states give free electricity to farmers. This inevitably means that high tension customers are charged a premium and this collection is cross subsidized to low productive agricultural farms. This is hailed as welfare socialism and the electorate demands this benevolence from the elected politicians.

Hello Wood. very sensible comment. Do you think Ishaq dar is the right man or not? Do you think that the above-implemented policies are right? They are talking about attacks on exports. I know nothing about finance. I know Indians understand finance subject much better than others. Please ask someone in your country about our present situation. Is there a way out? PKr is 223 right now. it was 240 previously. During nawaz era, it was 125. PTI made it 183. Who is right here? PTI or PMLN? Please explain in detail because I want to understand our economy.

 

[Wood]

Hello Wood. very sensible comment. Do you think Ishaq dar is the right man or not? Do you think that the above-implemented policies are right? They are talking about attacks on exports. I know nothing about finance. I know Indians understand finance subject much better than others. Please ask someone in your country about our present situation. Is there a way out? PKr is 223 right now. it was 240 previously. During nawaz era, it was 125. PTI made it 183. Who is right here? PTI or PMLN? Please explain in detail because I want to understand our economy.

You flatter me with too much credit for raising some common sense questions. PTI supporters here are so desperate to attack the current government that they often indulge in unjust propaganda.

I'm not an expert on finance and I do not know more about Pakistani economy than what is posted by other members in this forum. But over the last few months, I've been reading the Pakistani economy section of this forum keenly. In my view, Mr. Miftah was given a very difficult task when he took charge. The new PDM government at that time did not have the political will to immediately douse the fire (fuel subsidy) that Imran set upon the Pakistani exchequer in a game of brinkmanship. Despite this, Miftah managed to keep IMF invested in negotiations while the PM eventually managed to find the political will to raise cost of goods and show some fiscal discipline. This was a very commendable achievement.

About the exchange rate - when PKR dropped from around 200 to 240, I suspected that it was mostly because of unbridled speculation and sudden increase in commodity prices (Ukraine war). The fundamentals of an economy will not change in 1 or 2 weeks, yet the currency drops so precipitously - why? PTI supporters will peddle the wishful theory that currency dropped because overseas Pakistanis withdrew all their money and therefore country lost all its forex $. But the numbers simply do not add up. More likely, it was because of people who try to short the currency and make a quick buck on the misery of Pakistani citizens. The speculation is fueled by an expectation that Pakistan's economy will default. Speculators know that without an IMF deal, other lenders will not be willing to let Pakistan's debt roll over. The real value of an IMF deal after all is not the measly $1 or $2 billion that it provides against a loan payment of $8 or $10 in near horizon. IMF deal is actually required for the credibility that it brings to any fiscal plan that Pakistan has committed to follow. Other creditors whose debt is due will decide to trust IMF's monitoring capacity to make sure that Pakistani economy is committed to belt tightening. So once the IMF deal is done, I was expecting PKR to drop below 200. Indeed, PKR was improving for a while (mid August PKR was less than 215) - but then the floods happened. Now once again the economy faces an above normal contraction in a year that world economy is already contracting because of global events. Pakistan hit a doubly whammy. Where will the currency go from here? No one can say for sure. Because if you can predict the future, then you can become the richest person

Is Mr. Dar a better person than Miftah? I don't know enough about that. The members in this forum certainly do not think so. One accusation that is often flaunted on PLM-N's earlier tenure is that they borrowed too much money for expensive coal based power plants. From what I remember, it was a period when Pakistani textile exporters were facing severe electricity shortage and were moving to Bangladesh. Not many investors were willing to put their money in Pakistan because of the terrible security situation (Taliban attacks) at that time. So Mr. Nawaz likely took the only loan option (CPEC) that was available in a desperate move to save the only credible export industry in the country. I do not blame a man who fought for his country's beating heart! Second accusation is that Mr. Dar kept currency artificially high by burning reserves. IMO, burning forex to keep currency stability should only be a short term measure for abnormal circumstances. I don't support the idea of keeping currency artificially high for prolonged periods of time. So if the second accusation is true, then Mr. Dar's policy is not something that I will vote for. Will Mr. Dar do better this time with similar policies from his last tenure? Only someone who has access to the same data that the federal gov. is privy to will be able to give any sort of opinion on that.

 

[Arsalan345]

You flatter me with too much credit for raising some common sense questions. PTI supporters here are so desperate to attack the current government that they often indulge in unjust propaganda.

I'm not an expert on finance and I do not know more about Pakistani economy than what is posted by other members in this forum. But over the last few months, I've been reading the Pakistani economy section of this forum keenly. In my view, Mr. Miftah was given a very difficult task when he took charge. The new PDM government at that time did not have the political will to immediately douse the fire (fuel subsidy) that Imran set upon the Pakistani exchequer in a game of brinkmanship. Despite this, Miftah managed to keep IMF invested in negotiations while the PM eventually managed to find the political will to raise cost of goods and show some fiscal discipline. This was a very commendable achievement.

About the exchange rate - when PKR dropped from around 200 to 240, I suspected that it was mostly because of unbridled speculation and sudden increase in commodity prices (Ukraine war). The fundamentals of an economy will not change in 1 or 2 weeks, yet the currency drops so precipitously - why? PTI supporters will peddle the wishful theory that currency dropped because overseas Pakistanis withdrew all their money and therefore country lost all its forex $. But the numbers simply do not add up. More likely, it was because of people who try to short the currency and make a quick buck on the misery of Pakistani citizens. The speculation is fueled by an expectation that Pakistan's economy will default. Speculators know that without an IMF deal, other lenders will not be willing to let Pakistan's debt roll over. The real value of an IMF deal after all is not the measly $1 or $2 billion that it provides against a loan payment of $8 or $10 in near horizon. IMF deal is actually required for the credibility that it brings to any fiscal plan that Pakistan has committed to follow. Other creditors whose debt is due will decide to trust IMF's monitoring capacity to make sure that Pakistani economy is committed to belt tightening. So once the IMF deal is done, I was expecting PKR to drop below 200. Indeed, PKR was improving for a while (mid August PKR was less than 215) - but then the floods happened. Now once again the economy faces an above normal contraction in a year that world economy is already contracting because of global events. Pakistan hit a doubly whammy. Where will the currency go from here? No one can say for sure. Because if you can predict the future, then you can become the richest person

Is Mr. Dar a better person than Miftah? I don't know enough about that. The members in this forum certainly do not think so. One accusation that is often flaunted on PLM-N's earlier tenure is that they borrowed too much money for expensive coal based power plants. From what I remember, it was a period when Pakistani textile exporters were facing severe electricity shortage and were moving to Bangladesh. Not many investors were willing to put their money in Pakistan because of the terrible security situation (Taliban attacks) at that time. So Mr. Nawaz likely took the only loan option (CPEC) that was available in a desperate move to save the only credible export industry in the country. I do not blame a man who fought for his country's beating heart! Second accusation is that Mr. Dar kept currency artificially high by burning reserves. IMO, burning forex to keep currency stability should only be a short term measure for abnormal circumstances. I don't support the idea of keeping currency artificially high for prolonged periods of time. So if the second accusation is true, then Mr. Dar's policy is not something that I will vote for. Will Mr. Dar do better this time with similar policies from his last tenure? Only someone who has access to the same data that the federal gov. is privy to will be able to give any sort of opinion on that.

Thanks, Wood. Pkr is now 217. looks like a better economic situation after another IMF deal. Pkr 160 to 170 is a possibility. read this wood. look at this corrupt mafia. our own banks are corrupt.

8 banks being investigated in connection with exchange rate manipulation, SBP governor tells NA panel

Says the rest of the banks will be investigated in the next phase.

www.dawn.com

 

[Ghessan]

Analysis: How the govt ‘tamed’ dollar, inflation in one fell swoop​

Mubarak Zeb Khan Published October 11, 2022 Updated about 2 hours ago




9
LISTEN TO ARTICLE1x1.2x1.5x
IT’S a curious case of the rising rupee and falling inflation.
How can the local currency strengthen as the mighty dollar continues to pummel all major currencies: the euro, pound sterling, the yen, the yuan, and whatnot?
And how did headline CPI inflation lose four percentage points to arrive at 23.2pc in September, when our curries have fewer and fewer tomatoes and onions these days?
At least, this is how the ‘common man’ — be he on the street or on social media — and, of course, the opposition parties think. They have a nagging suspicion that those at the helm have resorted to “technical manoeuvring” — or, to put it simply, playing with figures.
Former economic adviser Dr Ashfaque H. Khan says he had been saying for a while that treasurers of commercial banks and members of forex associations were involved in “playing havoc on the exchange rate”.
“I have been demanding for the last several weeks that the SBP investigate and punish these criminals,” he said.
He referred to Bangladesh’s central bank, which had ordered the removal of treasury chiefs of five local and one foreign bank in August for allegedly raising the price of the US currency by preserving more dollars than necessary.
Therefore, citizens in Pakistan “are constrained to think the [banking] regulator itself and some politicians may have been part of this manipulation,” Dr Khan told Dawn.
He also found it strange that the rupee had appreciated against the dollar when the currencies of even more powerful economies had come under pressure.
“Have Pakistan’s foreign exchange reserves skyrocketed? Have Pakistan’s economic fundamentals become much stronger?” he wondered before going on to say that “none of this has happened and yet the rupee has appreciated against the dollar”.
“Isn’t it surprising? Is this the market mechanism or have these commercial banks or forex associations played havoc on the exchange rate in recent months?” he asked. “Both the regulator and the government of Pakistan have remained silent spectators over six months. Are they partners in crime?”
Newly appointed Finance Minister Ishaq Dar, who is known to favour currency market interventions to keep the rupee stable, stressed last week that the rupee had been regaining strength since his arrival last month and reiterated that the dollar would fall below Rs200 within days, as the prevailing rate “is not its real value”.
This begs the question: Why did the PML-N coalition government earlier allow the rupee to free fall and let it hit a record Rs240 against the dollar, when the same prime minister is now saying that Mr Dar will bring it below Rs200?
Besides, if the dollar was actually unreasonably inflated, will those who benefitted and earned billions through this manipulation - including banks - be taken to task?
Interestingly, the SBP governor, who was appointed by former finance minister Miftah Ismail, recently said that an inquiry had been launched against those who manipulated the exchange rate. But why did he remain silent before Mr Dar took up the reins?
Mr Dar has also played smart by reducing the petroleum development levy on petrol but increasing it for diesel, and now it may go well with the IMF as some room in the import value of fuel in the next quarter would help him raise it further.
The current regime has also come under fire in recent days over alleged manipulation of inflation data, which had been hovering around record highs before Mr Dar stepped into office. So has the government been creating feel-good figures?
Consider this: the rise in inflation was mainly derived from record electricity rates, which were also reflected in the monthly bills of consumers who used fewer than 300 units.
Prime Minister Shehbaz Sharif then verbally announced a deferment of the fuel charge adjustment (FCA) for households using 200 units or fewer and later extended the exemption to 300 units.
This yielded two results: it came as a relief to millions of consumers and helped tame September inflation. The National Electric Power Regulatory Authority (Nepra) notified the deferment, which then became the basis for calculating the CPI by the Pakistan Bureau of Statistics (PBS).
But this shows just how the government can influence the methodology for inflation calculations; the PBS calculates inflation using, among other factors, electricity tariffs provided or notified on Nepra’s website.
The impact of prices on overall inflation varies depending on the weight of a particular item. In urban areas, the “housing, water, electricity, gas and fuels” head has a weight of 27pc, of which electricity is assigned 4.56 percentage points.
In August, the FCA was around Rs9.89 per unit against the average base power tariff of Rs17-18, meaning a total rate of around Rs28. So, the electricity charges in August skyrocketed 123.3pc on a year-on-year basis and 19.73pc on a month-on-month basis.
A rise in fuel prices also pushed up the CPI by 3-4pc in August’s inflation of 27pc. After the release of this figure, the government verbally announced that the FCA had been waived for consumers using below 300 units and would be adjusted in the next month’s bills.
Soon after this decision, the energy minister clarified that the FCA had not been waived but would be collected from consumers in instalments. The announcement apparently came to placate the International Monetary Fund (IMF) and keep the loan programme intact.
However, as of today, no official communication exists in this regard. A PBS official, who declined to be named, said: “We haven’t yet received any official record or statement from Nepra on the FPA waiver.”
Stats show that 88pc power consumers in Pakistan use fewer than 300 units a month. The FPA waiver was only for this bracket, while the remaining 12pc had to pay Rs30 per unit on average in August.
To calculate September inflation, the average tariff for 88pc consumers was considered at Rs7 to Rs8 per unit compared to around Rs28 in August.
The FCA of Rs9.89 for August along with another fuel adjustment of Rs4.45 for September were subtracted from August’s average tariff of Rs27 to Rs28 for this bracket. In September 2021, the FCA was Rs1.4 per unit.
As a result, electricity rates in the urban CPI fell 30.5pc on an annual basis and 65.3pc on a monthly basis to calculate September inflation.
The massive drop pushed annual inflation down from 27.3pc in August to 23.2pc in September. Nepra has yet to notify the mode of payments for August and September FCAs.
Published in Dawn, October 11th, 2022

Analysis: How the govt ‘tamed’ dollar, inflation in one fell swoop

Common man, opposition parties have a nagging suspicion that those at the helm have resorted to "technical manoeuvring".

www.dawn.com

 

[PakFactor]

Thanks, Wood. Pkr is now 217. looks like a better economic situation after another IMF deal. Pkr 160 to 170 is a possibility. read this wood. look at this corrupt mafia. our own banks are corrupt.

8 banks being investigated in connection with exchange rate manipulation, SBP governor tells NA panel

Says the rest of the banks will be investigated in the next phase.

www.dawn.com

Manipulation of the market was immense and I have made a lot of money due to the frequency of swings. I predicted the 240 PKR range months back and dumped over USD 100K and making a handsome amount. I'll wait until the 150-170 PKR level before pulling out. Mostly likely start selling in smaller lots, around 170.

 

[Arsalan345]

Manipulation of the market was immense and I have made a lot of money due to the frequency of swings. I predicted the 240 PKR range months back and dumped over USD 100K and making a handsome amount. I'll wait until the 150-170 PKR level before pulling out. Mostly likely start selling in smaller lots, around 170.

Pkr 217 now. He is trying to recover this country from mess.

 

[Areesh]

know Indians understand finance subject much better than others. Please ask someone in your country about our present situation.

 

[PakFactor]

Pkr 217 now. He is trying to recover this country from mess.

Not possible to recover, this country is on a ventilator. Let him manipulate forex cause he has nothing else to salvage this country.

 

[Ghessan]

Hello Wood. very sensible comment. Do you think Ishaq dar is the right man or not? Do you think that the above-implemented policies are right? They are talking about attacks on exports. I know nothing about finance. I know Indians understand finance subject much better than others. Please ask someone in your country about our present situation. Is there a way out? PKr is 223 right now. it was 240 previously. During nawaz era, it was 125. PTI made it 183. Who is right here? PTI or PMLN? Please explain in detail because I want to understand our economy.

what are you man, that you want to understand your economy ...

and who is he that someone you are asking for help, haven't you got enough patwaris here to satisfy your soul if you are really from patwarkhana.

otherwise read this article i just mentioned in my post above, educate yourself by helping your self-self and don't fall from grace:

Analysis: How the govt ‘tamed’ dollar, inflation in one fell swoop

Common man, opposition parties have a nagging suspicion that those at the helm have resorted to "technical manoeuvring".

www.dawn.com

 

[Arsalan345]

what are you man, that you want to understand your economy ...

and who is he that someone you are asking for help, haven't you got enough patwaris here to satisfy your soul if you are really from patwarkhana.

otherwise read this article i just mentioned in my post above, educate yourself by helping your self-self and don't fall from grace:

Analysis: How the govt ‘tamed’ dollar, inflation in one fell swoop

Common man, opposition parties have a nagging suspicion that those at the helm have resorted to "technical manoeuvring".

www.dawn.com

Pls stop this patwari vs Imran Khan show. I am neutral. I don't care. Wood defined in a better way. I will not read your propaganda article.

 

[Ghessan]

Pls stop this patwari vs Imran Khan show. I am neutral. I don't care. Wood defined in a better way. I will not read your propaganda article.

you proved yourself what i suspect, you even did not read it and do this trash. grow up man otherwise you are one of those who ruined this land, ignorants.