Govt borrows over Rs1 trillion

[WishLivePak]

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)

If you don't want me quoting you, don't talk about me.

It was better pakistan who was questioning economics background from 3 different people(including one with two pakistani flags himself) So I had the right to ask him.

@Akheilos

Stay out of it. It's spanning over different thread and this particular user has been swearing at other people (telling people to suck his testicles etc). Many of his posts got deleted as well. Finally, one needs proper English before they can attend university. Something he lacks, yet he says he has expansive economic background.


To both of you, I had no interest in this thread. He mentioned me because he was upset that a bunch of us proved him wrong in multiple other threads (which discussed debt including)

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

if someone tells other members they're morons born idiots and to suck his testicles, that idiot person needs to be dealt with.

 

[tarrar]

All that money is going in the accounts of corrupt & incompetent politicians.

 

[ziaulislam]

borrowing is normal and their is nothing wrong with it.
you will always borrow if you have deficit budget. govt under the IMF is forced to keep its deficit under a specific level and thats what its doing. it has been coming down past 2 years now its under 5% of gdp.
although this doesnt mean its borrowing will go down in abolute value, as GDP growth has to be kept into mind too
.

Pakistan debt is at manageable issue, we have other worries like keeping another whole generation uneducated! without education, the same people will be a big burden on the country

 

[I.R.A]

If you don't want me quoting you, don't talk about me.

It was better pakistan who was questioning economics background from 3 different people(including one with two pakistani flags himself) So I had the right to ask him.

Normally it would be you telling people not to tag etc etc. I said not to quote me because you sometime act weird and in my view you are the most "Handle with care" poster on this forum. No offense but why you act like that?

To both of you, I had no interest in this thread. He mentioned me because he was upset that a bunch of us proved him wrong in multiple other threads (which discussed debt including)

Now you are here can you please answer my question, which was directed at SBD

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

 

[Faiez]

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

-risk free because the likelihood of the government defaulting is low.
-high returns because gov. wants to sell too many of these bonds (very high deficits which gov. wants to cover by issuing bonds, so the interest rate goes up when bond prices fall).
-you say that anyone will go for it since it's risk free, well lets say everyone has already gone for it and the gov. still has more bonds to sell. Now it's harder to sell the bond, so naturally the bond price falls and interest goes up.
-right now interest rate is expected to fall, so bond prices will rise, that's why banks are buying more bonds to make a quick buck on asset value appreciation, rather than the interest. They will hold onto them for a year, maybe two and make a very decent return depending on how much interest rates fall.
-similarly bonds are shorted (short sold, search for "short selling" if you don't know) when interest rates are expected to rise. As is the case in USA where people are expecting rates to rise in some time due to better than expected growth rates, so they're probably considering shorting right now on US treasuries.
-search on internet for how treasuries/bonds are traded, you'll find out some interesting things about the bond market and how to make money off it.
-If I'm not wrong, treasuries are not sold to the public in pakistan, only to banks. I'm not completely sure.

 

[I.R.A]

-risk free because the likelihood of the government defaulting is low.
-high returns because gov. wants to sell too many of these bonds (very high deficits which gov. wants to cover by issuing bonds, so the interest rate goes up when bond prices fall).
-you say that anyone will go for it since it's risk free, well lets say everyone has already gone for it and the gov. still has more bonds to sell. Now it's harder to sell the bond, so naturally the bond price falls and interest goes up.
-right now interest rate is expected to fall, so bond prices will rise, that's why banks are buying more bonds to make a quick buck on asset value appreciation, rather than the interest. They will hold onto them for a year, maybe two and make a very decent return depending on how much interest rates fall.
-similarly bonds are shorted (short sold, search for "short selling" if you don't know) when interest rates are expected to rise. As is the case in USA where people are expecting rates to rise in some time due to better than expected growth rates, so they're probably considering shorting right now on US treasuries.
-search on internet for how treasuries/bonds are traded, you'll find out some interesting things about the bond market and how to make money off it.
-If I'm not wrong, treasuries are not sold to the public in pakistan, only to banks. I'm not completely sure.

Dear my primary question stands unanswered.......... where are those projects which will ensure cash flows and future profitability to cover repayment of principal and return on all this borrowing?

Second you misinterpreted when I said everyone will go for it.................. it was not just because these are risk free secure bonds, it was mainly because it has a positive NPV, and arriving at cost of debt Kd to discount these bond investments the risk factor is built in. Higher risk investments offer higher return rates and that makes sense but secure risk free investment offering higher rates leaves us no other choice then to assume that GOP desperately needs funds (which always is the case). Anyways that is necessity but then again my primary questions stands answered...............

And what would you say when SBD-3 said that there is no comparable market for these bonds and Government's rate is benchmark, if banks are trying to make a capital gain here, where are they going to dispose off these bonds before maturity?

Do you remember Stock exchange crash of 2004 I think............ I got pretty much exposure of this short selling then. and Corporates also issue bonds, which I recall are traded in a stock market. Not sure on this will have to recheck.

 

[Dubious]

If you don't want me quoting you, don't talk about me.

It was better pakistan who was questioning economics background from 3 different people(including one with two pakistani flags himself) So I had the right to ask him.

@Akheilos

He has rights to ask...its up to us to reply, ignore or troll...you chose trolling by barging about English which was not relevant ...nor necessary...

Stay out of it. It's spanning over different thread and this particular user has been swearing at other people (telling people to suck his testicles etc). Many of his posts got deleted as well. Finally, one needs proper English before they can attend university. Something he lacks, yet he says he has expansive economic background.

Thats his problem...Shakki damagh isnt gonna lead you anywhere! What he does is his problem...Besides I also wanna know what the economic level of people supporting khullum khulla corruption is! Its a valid question...

And that is all I backed the question, not the guy nor his attitude!

To both of you, I had no interest in this thread. He mentioned me because he was upset that a bunch of us proved him wrong in multiple other threads (which discussed debt including)

Then you could have been the wiser one to ignore....

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 .

Ahh I see....though I didnt understand what post secondary means...

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

Do I know you?

 

[I.R.A]

Ahh I see....though I didnt understand what post secondary means...


Do I know you?

No you don't know me and that part of my post was within brackets and not intended for you. The intended recipient is genius enough to interpret it and has replied already

 

[Jungibaaz]

You have to speculate to accumulate.

I have no issues with borrowing but how the money is used.

You should take issue with this. You're in a situation where you're paying off debt with further debt.
With little to no structural reforms, apart from some privatisation measures. You should also be worried by mismanagement of funds, and inefficiency. You should also seriously question some insane policies that only our government employs.

And this isn't to say that the leaders alone are to blame, ordinary citizens are too, after all it is for them the deficits are being run. Public spending, we always demand more, while also refusing to pay taxes or earn our keep. Pakistan is not paying it's way, and nor are Pakistanis when fiscal health is considered. And the world that you owe sums of money too, will not care whether it was for your survival you spent your money, or whether you were cheated out of it by your own politicians, you'll pay it back one day the easy way or the hard way.

 

[WishLivePak]

He has rights to ask...its up to us to reply, ignore or troll...you chose trolling by barging about English which was not relevant ...nor necessary...


Thats his problem...Shakki damagh isnt gonna lead you anywhere! What he does is his problem...Besides I also wanna know what the economic level of people supporting khullum khulla corruption is! Its a valid question...

And that is all I backed the question, not the guy nor his attitude!


Then you could have been the wiser one to ignore....


Ahh I see....though I didnt understand what post secondary means...


Do I know you?

And I will troll him back. It's very amusing.

I don't care about level of English. There are many economists who are bad at English. Hell im too. But I'm just trolling him.

Normally it would be you telling people not to tag etc etc. I said not to quote me because you sometime act weird and in my view you are the most "Handle with care" poster on this forum. No offense but why you act like that?



Now you are here can you please answer my question, which was directed at SBD

Ask from sbd, I don't know.

And I don't like mention spam.

Also he was mentioning me in different threads when I stopped replying to him

 

[Dubious]

And I will troll him back. It's very amusing.

I don't care about level of English. There are many economists who are bad at English. Hell im too. But I'm just trolling him.

Ahh thank you for telling me!

privatisation measures

Before we know it Pakistan is "OWNED" by someone who opened many different companies and bought off most of Pakistan...If we scream at that point, I guess it will be too late, huh?

I recall something similar happened to Palestine....I am not saying the Jews are behind this but I am saying technique isnt new!

 

[Faiez]

Dear my primary question stands unanswered.......... where are those projects which will ensure cash flows and future profitability to cover repayment of principal and return on all this borrowing?

Second you misinterpreted when I said everyone will go for it.................. it was not just because these are risk free secure bonds, it was mainly because it has a positive NPV, and arriving at cost of debt Kd to discount these bond investments the risk factor is built in. Higher risk investments offer higher return rates and that makes sense but secure risk free investment offering higher rates leaves us no other choice then to assume that GOP desperately needs funds (which always is the case). Anyways that is necessity but then again my primary questions stands answered...............

And what would you say when SBD-3 said that there is no comparable market for these bonds and Government's rate is benchmark, if banks are trying to make a capital gain here, where are they going to dispose off these bonds before maturity?

Do you remember Stock exchange crash of 2004 I think............ I got pretty much exposure of this short selling then. and Corporates also issue bonds, which I recall are traded in a stock market. Not sure on this will have to recheck.

The gov. so far is only financing deficits and making no efforts to cure/fix deficits. My guess is that it will keep on adding debt, keep taking loans and keep dollar rate artificially low till it runs out of time and money (election 2018), their goal right now is to max out on all the credit cards, then the next government comes to pay taxes(austerity measures) and then they'll have the political edge. The projects which gov. is right now funding are "lolly pop" projects. These are not self sustainable(you can say negative NPV), will run in losses and will be given subsidies to keep them running. Then next gov. will come to power and run into massive massive problems, then current party will say that we were so much better than these guys, look what they've done.
Politics as usual. Life goes on.

Principal rarely gets repayed in order to maximize expenditure. The assumption is that the economy always keeps growing in the long run so the debt level stays more or less the same as a percentage of gdp (so you have a decent credit rating and can keep borrowing more). Maybe a government can manage to add loads of debt but eventually someone will have to make austerity measures in the future and get that debt level back to a more sustainable level. Debt in its absolute value rarely goes down, debt as a percentage of gdp is what they're after and that's what matters. Sometimes you could get lucky just by rigging gdp figures as well. Like this gov. just did by simply artificially lowering the exchange rate so nominal gdp in dollar figures looked much higher than what they should have been.

The banks will sell those bonds to other banks. They have their ways.

 

[gangsta_rap]

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.

If you think your a big-shot for getting admitted into Carleton PolSci then boy, do I have news for you.

 

[WishLivePak]

If you think your a big-shot for getting admitted into Carleton PolSci then boy, do I have news for you.

I was talking to him

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 just saw changes.
I was typing on iPhone so that's why. I've to manually do some changes and I'm too lazy :p but I missed whatnot.

And if I look back, there are more structure mistakes I made. But then I'm not writing a term paper here. So I write it all out and submit.

Here is the thread where I wasn't talking to him nor mention my knowledge, but he came and started discussing it. New auto policy: Looking to balance local and imported

He was also telling other people to learn economics first before they quote him and how they were all morons etc. his posts got deleted and seems like he is banned, but I wanted it to be clear because this argument was spanning on multiple threads.

 

[Dubious]

And if I look back, there are more structure mistakes I made. But then I'm not writing a term paper here. So I write it all out and submit.

Yet you felt the need to criticize someone else's ability...was he by any chance writing his term paper on PDF?

Here is the thread where I wasn't talking to him nor mention my knowledge, but he came and started discussing it. New auto policy: Looking to balance local and imported

Asking the depth of your knowledge regarding economics or finance in a thread talking about loans is very much valid!

He was also telling other people to learn economics first before they quote him and how they were all morons etc. his posts got deleted and seems like he is banned, but I wanted it to be clear because this argument was spanning on multiple threads.

I see....It is no surprise when the govt is taking multiple loans without a future aim of the how portion of paying it back when the loans are not put into the revenue generating loop....