How difficult is it to make your mind about the economic health of Pk?

[Pak Nationalist]

Two different papers, two different stories. Debt accumulation is continuing at a mindboggling pace. None of it is being used to increase the productive capacity of the economy, rather stave off default and keep the country afloat (as has been the story from the late 1980s, but I do not remember seeing such drastic increases in debt accumulation in recent memory). At the same time, the economy is growing. Credit offtake by the private sector has exceeded the 1 trillion PKR mark for the first time in history (it is worth exploring whether this credit is being used to finance the day-to-day operations or to increase the productive capacity). Agriculture is posting promising numbers for the second year in a row.

Foreign debt peaks to $13b in Jul-Jan | The Express Tribune

Around 82% of loans aimed at bridging budget gap, keeping reserves at current levels

tribune.com.pk

4.8pc growth target for FY22 to be achieved

Mid-year review sees let-up in external sector vulnerabilities.

www.dawn.com

If you try to make up your mind about these developments while being detached from the political partisanship, how difficult is it for you to decide what direction the economy is taking?

 

[nahtanbob]

Two different papers, two different stories. Debt accumulation is continuing at a mindboggling pace. None of it is being used to increase the productive capacity of the economy, rather stave off default and keep the country afloat (as has been the story from the 1990s, but I do not remember seeing such drastic increases in debt accumulation in recent memory). At the same time, the economy is growing. Credit offtake by the private sector has exceeded the 1 trillion PKR mark for the first time in history (it is worth exploring whether this credit is being used to finance the day-to-day operations or to increase the productive capacity). Agriculture is posting promising numbers for the second year in a row.

Foreign debt peaks to $13b in Jul-Jan | The Express Tribune

Around 82% of loans aimed at bridging budget gap, keeping reserves at current levels

tribune.com.pk

4.8pc growth target for FY22 to be achieved

Mid-year review sees let-up in external sector vulnerabilities.

www.dawn.com

If you try to make up your mind about these developments while being detached from the political partisanship, how difficult is it for you to decide what direction the economy is going?

I am not in Pakistan.

Keep in mind: Debt has been rising all over the world

The real issue is where does Pakistan have a lasting competitive advantage in economy & trade ? Is that advantage large enough for the population of Pakistan ?

 

[Black Tornado]

Two different papers, two different stories. Debt accumulation is continuing at a mindboggling pace. None of it is being used to increase the productive capacity of the economy, rather stave off default and keep the country afloat (as has been the story from the 1990s, but I do not remember seeing such drastic increases in debt accumulation in recent memory). At the same time, the economy is growing. Credit offtake by the private sector has exceeded the 1 trillion PKR mark for the first time in history (it is worth exploring whether this credit is being used to finance the day-to-day operations or to increase the productive capacity). Agriculture is posting promising numbers for the second year in a row.

Foreign debt peaks to $13b in Jul-Jan | The Express Tribune

Around 82% of loans aimed at bridging budget gap, keeping reserves at current levels

tribune.com.pk

4.8pc growth target for FY22 to be achieved

Mid-year review sees let-up in external sector vulnerabilities.

www.dawn.com

If you try to make up your mind about these developments while being detached from the political partisanship, how difficult is it for you to decide what direction the economy is going?

Boom and Bust

 

[Crimson Blue]

Two different papers, two different stories. Debt accumulation is continuing at a mindboggling pace. None of it is being used to increase the productive capacity of the economy, rather stave off default and keep the country afloat (as has been the story from the 1990s, but I do not remember seeing such drastic increases in debt accumulation in recent memory).

Correction: This $13 billion debt in USD is being used to cover the trade deficit (read current account deficit) which is running roughly about $2 biliion per month (after acocunting for remmitances by overseas Pakistanis) . Higher the trade deficit, more USD Pakistan has to borrow to finance her imports.

Only way out of this situation: Increase exports.

There was a strategic reason as why Pakistani exports were kept flatlined and production facilities such as steel mill were shut down and local auto-manufacturers were never asked to produce parts locally, between 2008 & 2018. The reason is to keep Pakistan India's bitch and Pakistan should always be looking West to ask for more USD to finance trade deficit.

 

[Pak Nationalist]

I am not in Pakistan.

Keep in mind: Debt has been rising all over the world

The real issue is where does Pakistan have a lasting competitive advantage in economy & trade ? Is that advantage large enough for the population of Pakistan ?

Actually, Pakistan's debt problem is older than the current rising debt levels across the world as the world bank has alarmingly pointed out. You may be onto something though because there could be a correlation between above the normal debt accumulation and the commodity supercycle. Pakistan's inflows are insufficient to finance the import bill which is growing rapidly despite all measures to restrict it. The growth in the import bill has to do with the commodity supercycle and atrophying of the existing manufacturing/agricultural potential of the country over the years.

So, Pakistan does not possess a competitive advantage in trade and economy barring in a handful of sectors (textiles, surgical instruments, now IT exports are posting stellar growth). There has definitely been an uptick in Pakistan's exports in the past 3 years that had largely stagnated between 2013 and 2018, but the growth in imports has been even larger offsetting the gains. That is why Pakistan needs to borrow repeatedly. The cycle could only break with the diversification of the export base to create new sectors where the country's merchandise and services could compete internationally. There appears to be a concerted effort now to claim a larger export share in the Chinese import market of over 2 trillion USD. If that could be tapped, results could be phenomenal. The strategic relationship must translate into one where Pakistan becomes a major trade partner of China. However, it has to be seen if the increase in exports to China is fast-paced enough. Right now, it is not.

 

[Pak Nationalist]

Correction: This $13 billion debt in USD is being used to cover the trade deficit (read current account deficit) which is running roughly about $2 biliion per month (after acocunting for remmitances by overseas Pakistanis) . Higher the trade deficit, more USD Pakistan has to borrow to finance her imports.

Only way out of this situation: Increase exports.

There was a strategic reason as why Pakistani exports were kept flatlined and production facilities such as steel mill were shut down and local auto-manufacturers were never asked to produce parts locally, between 2008 & 2018. The reason is to keep Pakistan India's bitch and Pakistan should always be looking West to ask for more USD to finance trade deficit.

These things do not happen by design. Corruption, political appointments, and incompetence are enough at their own. One does not have to resort to making some grand connections and giving in to conspiratorial frame of mind to explain the rot.

 

[nahtanbob]

Actually, Pakistan's debt problem is older than the current rising debt levels across the world as the world bank has alarmingly pointed out. You may be onto something though because there could be a correlation between above the normal debt accumulation and the commodity supercycle. Pakistan's inflows are insufficient to finance the import bill which is growing rapidly despite all measures to restrict it. The growth in the import bill has to do with the commodity supercycle and atrophying of the existing manufacturing/agricultural potential of the country over the years.

So, Pakistan does not possess a competitive advantage in trade and economy barring in a handful of sectors (textiles, surgical instruments, now IT exports are posting stellar growth). There has definitely been an uptick in Pakistan's exports in the past 3 years that had largely stagnated between 2013 and 2018, but the growth in imports has been even larger offsetting the gains. That is why Pakistan needs to borrow repeatedly. The cycle could only break with the diversification of the export base to create new sectors where the country's merchandise and services could compete internationally. There appears to be a concerted effort now to claim a larger export share in the Chinese import market of over 2 trillion USD. If that could be tapped, results could be phenomenal. The strategic relationship must translate into one where Pakistan becomes a major trade partner of China. However, it has to be seen if the increase in exports to China is fast-paced enough. Right now, it is not.

I realize Pakistan's debt issues are not the same as Japan or USA or even India.

The real issue is whether the competitive advantages are large enough to lift the entire population

If you can export $5 billion to China that is great. But divide it by 200 million (pretty soon it is 400 million) the numbers do not look great. Exporting commodities to China is better than nothing. It does not cut it in the long run

 

[Crimson Blue]

These things do not happen by design. Corruption, political appointments, and incompetence are enough at their own. One does not have to resort to making some grand connections and giving in to conspiratorial frame of mind to explain the rot.

After reading & listening to how things unfolded over past 15 years, I am now convinced that it was more than just corruption to keep Pakistan's manufacturing & exports sector suppressed.

But since you have made up your mind about corruption, happy sailing to you.

 

[Mr.Green]

The foreign debt is coming into Pakistan but not being spent on development projects. Where is the money going? The present government must account for how it has spent the billions of dollars of loan that it has been taking every year. A senior journalist said that Cryptocurrency is the tool being used to transfer money abroad.

 

[Pak Nationalist]

I realize Pakistan's debt issues are not the same as Japan or USA or even India.

The real issue is whether the competitive advantages are large enough to lift the entire population

If you can export $5 billion to China that is great. But divide it by 200 million (pretty soon it is 400 million) the numbers do not look great. Exporting commodities to China is better than nothing. It does not cut it in the long run

5 billion is a very tiny figure. We would be aiming for a much greater share in the pie.

The foreign debt is coming into Pakistan but not being spent on development projects. Where is the money going? The present government must account for how it has spent the billions of dollars of loan that it has been taking every year. A senior journalist said that Cryptocurrency is the tool being used to transfer money abroad.

It is being used to maintain state bank's reserves or finance the fiscal deficit (that itself is a result of a high component of debt servicing which includes interest + principal payments).