Govt moves to ‘cool down’ an ‘over heating’ economy

[Desprado]

@Norwegian

What Imran Khan seriously was thinking before pausing IMF program. What he thought i seriously do not under why they paused IMF program and bring Pakistan back to 2019 in just 3 months? What kind of advice was given to him?

 

[Hareeb]

.

Exactly and icing on the cake was to fix the prices like default countries does, delay IMF program and biggest dump move was from SBP was to force negative interest rate, which brought all problems forward at once. You nailed it.

The budget totally relied on import growth that was the hidden plan, which flopped and PMLN could have much PTI did in this matter.

Actually the biggest flaw I see is the expansionary fiscal policy.
Ideally, government should encourage private sector participation in GDP by having larger share for private sectors using tight fiscal policy/easy monetary policy: private sector will be stimulated and rise in share, and public sector will shrink.
But here we have a PSDP target of 2.1T but finance minister still will subsidize certain sectors and will not pass price hike of commodities in international markets to consumers. Did he ever though how come he was going to meet the revenue targets? Moreover, his ministry issued domestic bonds worth 1700 billion to meet budgetary targets due to decrease in tax collection and tax/GDP ratio. And now all of a sudden, he is worried about heating economy. Who made him Finance minister at the first place?
About monetary rate, I think it was inline with the expansionary policy. Recent policy rate decision in Pakistan was one of the many tough decisions economic policymakers had to make to ensure macro stability in the medium-term. Inevitably, this involves a big compromise on growth in the near-term and doing whatever necessary to keep the IMF on board. It always pays off to have the IMF on board to better negotiate with World Bank/ADB and other bilateral and multilateral arrangements at a time when risks on external account slippages are rising. Well, the implications of recent policy rate decision by the central bank are simple: Rate hike suggests the government is willing to do what is necessary to ensure medium-term macro stability. This entails higher energy cost, higher raw material cost (cost of import, currency) and financial cost (interest rate) for the broad range of companies and retesting their pricing power and margins. The progress on the IMF program, coupled with Sep-end results (for banks & E&Ps in particular), may allow the market to shake off the overhang sooner rather than later. Bottom line is that one should be optimistic that the high cost of delaying the inevitable will push policy makers to make the right choices at the right time(I hope it's not too late).

This graph explains Shaukat Tareen walking talking disaster View attachment 779620View attachment 779621

Bhai Union bank ka jo is ne satya nas kiya tha, usk baad abhi IK ko ni pata chala is bandey ka

 

[maithil]

One reason because they relied on import led growth because did no reforms or even anything expect how slides on twitter.

Maybe next govt should stop drooling over export sector industries and stop giving huge subsidies to them. Instead redirect those concessions to import substitution. This will hit growth rate for some time, but at least some self sufficiency in economy will get created.

 

[VCheng]

Pakistan will have to take difficult decisions in future due to IMF: SBP governor

Tough decisions ahead due to IMF, says SBP Governor Reza BaqirSBP governor says Pakistan has overcome threat of COVID-19 as positivity rate of infection is now much lower than global rate.Baqir briefs Prime Minister Imran...

www.geo.tv

IMF is not the villain here, but the savior of those who repeatedly mismanage the economy into a crisis, i.e. Pakistan.

 

[Norwegian]

Man i wish Atif Mian was still here, at least he was genuine but unfortunately, religion takes precedence over skill..

Exactly. All the problems started in the first month of this govt when Dr Atif Mian was fired from his post, and he took other international economic and financial experts in the Economic Advisory Council with him as a reaction.

More embarrassment for govt as second economist resigns from EAC over Atif Mian's exclusion

Dr Imran Rasul says he "profoundly disagree[s]" with the circumstances in which Atif Mian was asked to resign.

www.dawn.com

 

[Desprado]

We can sum up guys that Shaukat Tarin has made Pakistan economy just like Silk Bank

 

[Hareeb]

Good it means SBP is not doing any intervention

Actually no. SBP injected $1.2 billion in market to stabilize rupee but ye to rukne ka naam hi ni le raha.
I was listening to an analyst. He said that in Pak, market participants over react to certain information and this is what is happening these days. Things will cool down soon.

 

[maithil]

Exactly. Desperate for growth by using same old Musharraf, Zardari, Nawaz strategy that always ended in failure View attachment 779626

Good old import substitution seems to be only way out. Exporters have become rent seekers and only concentrate on getting subsidies.

 

[Norwegian]

@Norwegian

What Imran Khan seriously was thinking before pausing IMF program. What he thought i seriously do not under why they paused IMF program and bring Pakistan back to 2019 in just 3 months? What kind of advice was given to him?

Seriously, I have no idea what kind of idiot advisors are surrounding PM Imran Khan these days. They are certainly not his well wishers.

Who made him Finance minister at the first place?

PM Imran Khan who else?

 

[AZ1]

Delayed IMF program, lack of FDI, ADB, WB and AIIB has stopped giving loan to Pakistan due imf program delayed , negative government uptake same level as 2018, created shortage of dollar due to conession on luxury and cars imports, negative interest rate, investment outflows, CAD of 2.3 billion dollar in 2 months ,which was suppose to be in 1 whole year according to budget 2021-2022, no export growth and relied on import for growth opposite of budget 2021-2022.

Same ADB predicted gdp of above 4% by 2022 today

 

[Desprado]

Same ADB predicted gdp of above 4% by 2022 today

Depends on IMF program and what are their condition. According ADB Inflation will be 7.5% higher than the whole south Asian countries.


Delaying in IMF program backfired very bad and same optics of Febuary 2019 ,where Asad Umar and SBP governor both were fired at the same day.

 

[AZ1]

Depends on IMF program and what are their condition. According ADB Inflation will be 7.5% higher than the whole south Asian countries.


Delaying in IMF program backfired very bad and same optics of Febuary 2019 ,where Asad Umar and SBP governor both were fired at the same day.

then we have to wait till then. As i said lots of thing will clear by 2022 end.

 

[Desprado]

then we have to wait till then. As i said lots of thing will clear by 2022 end.

Mid October all things will cleared.

 

[Winchester]

Depends on IMF program and what are their condition. According ADB Inflation will be 7.5% higher than the whole south Asian countries.


Delaying in IMF program backfired very bad and same optics of Febuary 2019 ,where Asad Umar and SBP governor both were fired at the same day.

7.5 % is not a bad number. Lets not start comparisons with other South Asian economies.

Although I doubt they could even get it down to 7.5 !

 

[Desprado]

7.5 % is not a bad number. Lets not start comparisons with other South Asian economies.

Although I doubt they could even get it down to 7.5 !

https://twitter.com/x/status/1419592978704777218