Greek crisis and similarities with Pakistan

[Bouncer]

I have been following the Greek crisis with a mild interest for the past few months. It is a mixture of corruption, populist policies, low tax base, weak manufacturing sector and a taste of cheap credit. And my basic understanding of Pakistan's tells me that Pakistan has some of these symptoms as well except that our credit hasn't been very cheap.

Here are a few key similarities between both countries,

1. Corruption. Greek politicians are corrupt, admittedly by European standards. Our politicians make them look like angels.
2. People are not willing to pay taxes. The tax collectors are corrupt and a lot of people simply don't care. Recently BBC or someother channel reported that Greeks had the highest number luxury yachts in EU but the corresponding tax numbers didn't match. //Sound familiar to the huge palaces and expensive cars you see in ISB/LHR/KHI/PESH?
3. Populist policies. When Greeks adopted Euro, the cost of credit suddenly came crashing down. This led to a massive public and private spending. Secondly their politicians have made the negotiations between Greece and EU in an issue of poverty vs. sovereignty thus almost shifting the blame to evil foreign powers like Germany and IMF. //Ring a bell about the mantra of evil IMF ka shikanja?
4. Cheap credit. Above boom was fueled by cheap credit from EU and IMF. Greek governments of last decade went nuts with this free money. For example, Olympics 2004 ran a total bill of 12Billion$. Greek cities got shiny new public transport systems, and none of these trains/buses were manufactured in Greece. People who could not afford to rent a place of their own soon had multiple properties. //PKR 50Bn metro bus? And many more to come. Though we didn't go crazy to that level but the way things are going, we are getting stuff which is not made in Pakistan and we are using loans to pay for it.

I realize that there is much more to it than my simplistic view. And I also realize that many other countries have these same issues and they are doing fine; I hope this thread doesn't become "look India/xyz is also doing it".

Anyone else share my views here?

 

[truthseeker2010]

I have been following the Greek crisis with a mild interest for the past few months. It is a mixture of corruption, populist policies, low tax base, weak manufacturing sector and a taste of cheap credit. And my basic understanding of Pakistan's tells me that Pakistan has some of these symptoms as well except that our credit hasn't been very cheap.

Here are a few key similarities between both countries,

1. Corruption. Greek politicians are corrupt, admittedly by European standards. Our politicians make them look like angels.
2. People are not willing to pay taxes. The tax collectors are corrupt and a lot of people simply don't care. Recently BBC or someother channel reported that Greeks had the highest number luxury yachts in EU but the corresponding tax numbers didn't match. //Sound familiar to the huge palaces and expensive cars you see in ISB/LHR/KHI/PESH?
3. Populist policies. When Greeks adopted Euro, the cost of credit suddenly came crashing down. This led to a massive public and private spending. Secondly their politicians have made the negotiations between Greece and EU in an issue of poverty vs. sovereignty thus almost shifting the blame to evil foreign powers like Germany and IMF. //Ring a bell about the mantra of evil IMF ka shikanja?
4. Cheap credit. Above boom was fueled by cheap credit from EU and IMF. Greek governments of last decade went nuts with this free money. For example, Olympics 2004 ran a total bill of 12Billion$. Greek cities got shiny new public transport systems, and none of these trains/buses were manufactured in Greece. People who could not afford to rent a place of their own soon had multiple properties. //PKR 50Bn metro bus? And many more to come. Though we didn't go crazy to that level but the way things are going, we are getting stuff which is not made in Pakistan and we are using loans to pay for it.

I realize that there is much more to it than my simplistic view. And I also realize that many other countries have these same issues and they are doing fine; I hope this thread doesn't become "look India/xyz is also doing it".

Anyone else share my views here?

IMO, the difference is in debt to gdp with pak at around 65% with greece at 175%. so as long as debt servicing is in control, pak's economy will be stable, the problem with greece is they need to borrow just to pay interest on debt, so they are piling up more and more debt without any use of that money and are now in never ending spiral.

 

[Bouncer]

the problem with greece is they need to borrow just to pay interest on debt, so they are piling up more and more debt without any use of that money and are now in never ending spiral.

Please correct me if I am wrong, aren't we also borrowing more to pay interest? We spent around 39% of our budget on debt servicing this year. I understand that this is nowhere near the Greek level but its increasing and Finance minister has no plans to reverse this trend.

Debt servicing to eat up two-fifth of total budget - thenews.com.pk

 

[Riddick]

ke he said Pakistan's Debt to GDP ratio is 65% that is normal for most of the countries, we are no where near Greece and things are only looking better for Pakistan economically at least

 

[Hyde]

It is true that Greece and Pakistan does share similarities in negative way but Greece's overall economy is way better than us. There is a reason why they are part of European Union and we are still a developing nation.

Greece is tied up with debt servicing since recession and they have not been able to find a permanent solution of this menace but it does not take away the other achievements made by Greece in past few years.

One major problem with Greece has been their stern attitude while dealing with rest of Europe. They are tied up so badly and yet want everything to be dictated on their terms and when IMF and EU has shown their back, they are finally realising the consequences of their stubbornness. Once the permanent solution for debt servicing is explored, they have the potential to quickly stand on its feet and become one of the strongest economy of Eastern and Southeastern Europe

 

[Super Falcon]

But only difference we cant get rid if political thief they do

 

[macnurv]

no they are not linked, furthermore Greeks really cooked their books. If by any of those standards Pakistan would have gone bankrupt ages ago as for debt to GDP ratio, its pretty average.

 

[truthseeker2010]

Please correct me if I am wrong, aren't we also borrowing more to pay interest? We spent around 39% of our budget on debt servicing this year. I understand that this is nowhere near the Greek level but its increasing and Finance minister has no plans to reverse this trend.

Debt servicing to eat up two-fifth of total budget - thenews.com.pk

no, we borrowed to beef up are foreign reserves