Govt borrows over Rs1 trillion

[Dubious]

but Pakistan's economy has improved, says IMF - The Express Tribune

Yes I was actually going to bring this up...Is IMF blind, lying or are stupid?

What about the amount on the interest? Are we stuck in debt circle forever? Bloody hell!

 

[SBD-3]

Aik he to forum mila hai apni bak bak karny ka to faida utha raa ho, warna normal life may log kahan bardasht kary gy myri yeh sab paglo wali batain



The bold part and your opening sentence is confusing me, high yield / falling interest rates? And high demand to sell cheaper means............. borrowing on lower interest rate? Sorry if I am making no sense but would love to understand this.

That bold part is reported in news, not my reply. PIBs usually offer more yields than MTBs being long term assets.
@Topic
Simple price yield (interest) relationship. If i buy a high yield fixed income asset today -i.e. a PIB with a coupon of 7%- and market interest rate is the same as the return of the asset, the asset will be priced at par. However, if I expect that the the market interest rate tomorrow is going to be reduced to 6%, then my asset having 7% of return will be priced at a premium tomorrow (because the par asset will then by a PIB having 6% yield).
A simple pricing formula goes PV=Sum[C/(1+i)^n]+P/(1+i)^n (Where C denotes coupons and P is principal face value)
Now let us consider an example
Suppose I have a PIB of face value 100 offering 10 Rs annualy having 2 year maturity
now given the market interest rate (or yield) is 10%
PV=10/1.10+10/1.10^2+100/1.10^2=100
Now lets say that the market yield is now 9%
The PV will increase to 101.75911 resulting in a gain of 1.75911 Rs.
That's why banks are heavily investing in PIBs

 

[WishLivePak]

@WishLivePak now say SBP is lying

Aw poor kid can't help mentioning anywhere.

don't open your mouth too much until you can tell us where you got your economics background little boy. Metric pass isn't enough.

 

[BetterPakistan]

Aw poor kid can't help mentioning anywhere.

don't open your mouth too much until you can tell us where you got your economics background little boy. Metric pass isn't enough.

metric pass A metric pass can't speak like this

Now say that this money was borrowed by previous govt not this one.

Poor fellow who don't have any knowledge regarding Pakistan economy and asking about other people knowledge . Why don't you take some time and read about Pakistan economy a bit?

 

[I.R.A]

That bold part is reported in news, not my reply. PIBs usually offer more yields than MTBs being long term assets.
@Topic
Simple price yield (interest) relationship. If i buy a high yield fixed income asset today -i.e. a PIB with a coupon of 7%- and market interest rate is the same as the return of the asset, the asset will be priced at par. However, if I expect that the the market interest rate tomorrow is going to be reduced to 6%, then my asset having 7% of return will be priced at a premium tomorrow (because the par asset will then by a PIB having 6% yield).
A simple pricing formula goes PV=Sum[C/(1+i)^n]+P/(1+i)^n (Where C denotes coupons and P is principal face value)
Now let us consider an example
Suppose I have a PIB of face value 100 offering 10 Rs annualy having 2 year maturity
now given the market interest rate (or yield) is 10%
PV=10/1.10+10/1.10^2+100/1.10^2=100
Now lets say that the market yield is now 9%
The PV will increase to 101.75911 resulting in a gain of 1.75911 Rs.
That's why banks are heavily investing in PIBs

So I can assume GOP offered higher return on these PIBs compared to market so as to attract lenders which in this case happen to be banks, for funds generation? If my understanding is correct then how does GOP plan to pay return on these PIBs and principal after maturity? I mean where these funds are invested to guarantee atleast repayment of borrowing with return and generate future profits?

 

[WishLivePak]

metric pass A metric pass can't speak like this

Now say that this money was borrowed by previous govt not this one.

Poor fellow who don't have any knowledge regarding Pakistan economy and asking about other people knowledge . Why don't you take some time and read about Pakistan economy a bit?

Yeah a metric pass who cannot speak proper English.


For your info, I'm enrolled in a very excellent post secondary institution in Canada and I also get high grades. I took a course which has resembles to pakistani issues and I was in top 10% of class.

What are your qualification? Government school metric failed? Wikipedia?

Or you're just jealous that I sit here in Canada and you're stuck in Pakistan?

 

[SBD-3]

So I can assume GOP offered higher return on these PIBs compared to market so as to attract lenders which in this case happen to be banks, for funds generation? If my understanding is correct then how does GOP plan to pay return on these PIBs and principal after maturity? I mean where these funds are invested to guarantee atleast repayment of borrowing with return and generate future profits?

There is no comparable rate to PIB available in the market. Govt securities are considered as benchmark and the rate is called a risk free rate i.e. zero default probability. The longer term debt allows govt more fiscal space than short term debt. The mode of repayment can be cash flows from projects undertaken with these funds, fiscal revenues or in extreme case, some more printing of money.

 

[BetterPakistan]

Yeah a metric pass who cannot speak proper English.


For your info, I'm enrolled in a very excellent post secondary institution in Canada and I also get high grades. I took a course which has resembles to pakistani issues and I was in top 10% of class.

What are your qualification? Government school metric failed? Wikipedia?

Or you're just jealous that I sit here in Canada and you're stuck in Pakistan?

I am speaking english properly but you won't understand that because you can't yourself speak properly.

Oh really? why you always speak something that don't exist you vixen?

I am an engineer, graduated from a famous institution you pathetic fox

 

[WishLivePak]

I am speaking english properly but you won't understand that because you can't yourself speak properly.

Oh really? why you always speak something that don't exist you vixen?

I am an engineer, graduated from a famous institution you pathetic fox

Such proper English that you cannot capitalize letters after full stop or use commas. And you're engineer, that makes you an economics expert? That's like an economist saying he's a surgeon.

I happen to live in Canada and I've passed my English courses well. No need to question my credentials. One cannot get into post secondary without having good grasp of English, unlike in Pakistan (which is in your case, evident by your sentence structure, run ons and what not).

 

[I.R.A]

There is no comparable rate to PIB available in the market. Govt securities are considered as benchmark and the rate is called a risk free rate i.e. zero default probability. The longer term debt allows govt more fiscal space than short term debt. The mode of repayment can be cash flows from projects undertaken with these funds, fiscal revenues or in extreme case, some more printing of money.

Risk free return................ I am confused now, if there is no risk involved and its all secure (which it is being government based) then why High returns? Any person who is guaranteed his investment carries minimum risk and has a positive NPV will go for it no matter how low return.

Projects? That was my primary question where are these cash flow generating profitable projects? So it will come down to printing more money and obviously aloo piyaz mazeed mehnga ho jy ga

 

[Dubious]

Yeah a metric pass who cannot speak proper English.


For your info, I'm enrolled in a very excellent post secondary institution in Canada and I also get high grades. I took a course which has resembles to pakistani issues and I was in top 10% of class.

What are your qualification? Government school metric failed? Wikipedia?

Or you're just jealous that I sit here in Canada and you're stuck in Pakistan?

Such proper English that you cannot capitalize letters after full stop or use commas. And you're engineer, that makes you an economics expert? That's like an economist saying he's a surgeon.

I happen to live in Canada and I've passed my English courses well. No need to question my credentials. One cannot get into post secondary without having good grasp of English, unlike in Pakistan (which is in your case, evident by your sentence structure, run-on and whatnot).

Ok good to know you know English and quit boasting.

Now get to the point where you can actually say something related to the thread!

P/s: No need to thank me for fixing the very sentence you were bragging in...
PPS: credentials does not stop at English but the understanding and comprehending of issues, for this thread it would be economics or finance related field would be boast-worthy but definitely not English!

 

[I.R.A]

Ok good to know you know English and quit boasting.

Now get to the point where you can actually say something related to the thread!

P/s: No need to thank me for fixing the very sentence you were bragging in...
PPS: credentials does not stop at English but the understanding and comprehending of issues, for this thread it would be economics or finance related field would be boast-worthy but definitely not English!

Well that person is an Economics student, that is what I learnt on this thread.

And its his / her old habit of questioning everyone's school credentials, especially if one is carrying two Pakistani flags on this forum. I went through this already in fact that fight lead to me inviting him / her to duel to settle the score .

So don't mind whatever this person says about anyone's school. (Sorry I know we had a truce not to tag / quote / reply but I could not resist to refer here, you can avenge that by referring me anytime you want)

 

[WAJsal]

@WishLivePak ,@BetterPakistan ,guys no point in making it personal,seriously,chill out.

 

[Jazzbot]

Ishaq Dollar, a beggar who proudly begs at his own terms.

 

[Green Arrow]

This govt has only one strategy. Take loan, loan and again loan