IMF approves $1.1 billion loan for Pakistan

[ali_raza]

Did you Ever Files your Income Tax Return?

Did you ever Files it Correctly.?

sir i dont live in pakistan.but our property tax each year that we pay is in millions.we send hell alote to pakistan.its heart breaking that all our efforts are in vain.

 

[FaujHistorian]

sir i dont live in pakistan.but our property tax each year that we pay is in millions.we send hell alote to pakistan.its heart breaking that all our efforts are in vain.

Total expat remittances are in the tune of $10-15 billion per year for Pakistan.

Most of this money comes from low/un educated blue color workers in the Middle East (and not from UK USA).

And no this money builds dreams and keep Pakistan from going the way of Somalia.


so no, expat money does not go to waste.

IMF loans always come with massive strings attached, usually involving privatisation.

Strings? yes.

Massive? No!

 

[Faiez]

No sir

The loan/interest payments are in dollars.

And the only way to pay them is for state bank to issue dollar checks from its reserves.


Just like in your personal case, if you have higher balance in your bank,
the bank will give you loan on lower interest payment.

Same thing here.

The more dollar reserves we have in State bank, the lower the interest rate on our rates and bonds.



And those who don't understand even the abc of modern international trade, should not throw stones at IMF

IMF gives us loan at very very very low (sometimes as low as half percent) interest rates.


What we must worry about is the international bonds. They recently went for 5-8% range.


But I don't expect you will understand, and keep on yelling "hell" hell, hell.

So sorry to see the waste of intellect.


peace



Sarcasm at its best.

Thank you

The foreign exchange is bought by the government from the open market using our tax money. So yes, it IS paid by our tax money and has a direct impact on us as is raises dollar prices when government buys dollars in market and that lowers our buying power. And this dollar is bought using tax revenue.

So again, my original question, what is this additional $1.1 billion going to do for Pakistan ?

 

[FaujHistorian]

The foreign exchange is bought by the government from the open market using our tax money. So yes, it IS paid by our tax money and has a direct impact on us as is raises dollar prices when government buys dollars in market and that lowers our buying power. And this dollar is bought using tax revenue.

So again, my original question, what is this additional $1.1 billion going to do for Pakistan ?

ignorance is a bliss. isn't it?

 

[Hurter]

LOAN not AID

And how we gonna return? What would be the interest rate? Let the International Oil market stable, hum Tatti baad mai karenge, pay pehlay through Petrol, Electricity and GSTs.

 

[Faiez]

ignorance is a bliss. isn't it?

My question is a serious one. Does the government really have a plan?

 

[FaujHistorian]

And how we gonna return?.

by taking more $ loans + US support dollars + floating dollar bonds

My question is a serious one. Does the government really have a plan?

same plan since ayub time ( if not since 1947).

 

[Hurter]

by taking more $ loans + US support dollars + floating dollar bonds



same plan since ayub time ( if not since 1947).

Lets name this country then 'Yes Sir'

 

[FaujHistorian]

Lets name this country then 'Yes Sir'

every country without hard currency, is yes sir country with varying degree.

 

[Meengla]

same plan since ayub time ( if not since 1947).

The new country of Pakistan in 1947 was a near bankrupt country where supposedly thorns from desert around Karachi were being used as paperclips to tie the refugees' papers together.

It is a legitimate question to ask: How the govt will utilize the latest loan. But it is not right to challenge every IMF loan for the sake of challenging--for without the loans Pakistanis would not have gone much farther than using the thorns as paperclips...

 

[asquare]

As someone who works in a sister organisation of the IMF, all I can say is watch out. While my organisation, which is still corrupt and inefficient, has reformed somewhat, the IMF is still run the way it was 25 years ago. I will look up the conditions of this loan, but in general IMF conditionalities are arbitrary and whimsical. There isn't a single modern macroeconomist, at least in academia, who agrees with the way the IMF functions. Further, their incentives lie in forcing defaults after which they'll bail you out with a battery of even stronger and more misguided conditions.

How is your central bank run? Does it have an independent mandate? You are still a moderate public debt country (62% of GDP)- why can't a mixture of larger budget deficits and central bank financing be used for a while. Even the economists who first wrote the debt overhang literature (Krugman, Sachs etc) have reversed their positions. The broad consensus in the profession is that countries with independent currencies (pretty much every one except the EU member states and a few small nations) can sustain far higher debt levels than previously thought. Unfortunately, the IMF guys have been too busy at their million dollar christmas parties to care.

 

[A.M.]

Actually this approach is very very simplistic.

Even if 100% Pakistanis pay all their income to the taxes,
We still will need these loans.

you know why?

We can select civilian, army, sarkari baboo, IK, NS, PPP, we'll still need these loans.

you know why?

The loans come in hard currency aka dollars.
Our taxes are collected in soft currency aka rupees.



You ever wonder if your parents gave you 50 rupees and then immediately took 10 rupees back? in the name of taxes?

Would that help your family budget if you paid back 10 rupees?


My dear friend the global economy of today is way more complicated than electing IK/NS/AZ or paying rupee taxes.

Why

Because the governments of today run on dollars.

Either you print them (only possible for USA)

or you get them from tourism, loans, aids, exports, expats.


So please let's think out of the box.

You're making it too complicated.

Any government is like a business. You need to spend the same amount that you're making otherwise you go broke. Pakistan doesn't earn as much as it has to spend, hence the loans.

We need to increase our income intake whether it be by increasing number of people who pay taxes, through FDI, tourism or just overall economic growth. These loans are hopefully being used to accomplish the above.

Your comments regarding rupee and dollar is a completely different topic separate from this.

 

[Faiez]

You're making it too complicated.

Any government is like a business. You need to spend the same amount that you're making otherwise you go broke. Pakistan doesn't earn as much as it has to spend, hence the loans.

We need to increase our income intake whether it be by increasing number of people who pay taxes, through FDI, tourism or just overall economic growth. These loans are hopefully being used to accomplish the above.

Your comments regarding rupee and dollar is a completely different topic separate from this.

or most importantly, CUTTING EXPENDITURE !

same plan since ayub time ( if not since 1947).

so no real plan then....

government will get large amount of forex through loans. due to which dollar gets cheaper steadily till 2018, PML-N shows off "economic improvement" in the form of dollar rate coming down...Success !

New government comes to power with even larger amount of foreign debt, debt that did nothing good for the country, blames previous government, takes more loans to try and pay off previous ones. Repeat process for ever.

 

[FaujHistorian]

You're making it too complicated. .

this topic is not for the faint hearted (nor for the un-trained).

 

[FaujHistorian]

or most importantly, CUTTING EXPENDITURE !
.

A high school drop out can continnue doing menial jobs, not enough money, and thus starve slowly.

Or

He can take a loan, go back to school college, figure out his specialization and go around the world to find more and better work.

Pakistan is no exception.

but you want to live like high school drop out, starving and cutting expenditure.

Shhabash.

so no real plan then.....

That plan was as real as it could be.

But Islamo socialists have made sure we live like high school drop outs.