IMF team concludes Pakistan visit without finalizing a possible bailout

[ziaulislam]

PPP basically printed money freely and borrowed freely from the local market as well. That led to insane interest rates and complete shut down of credit to private companies. The economy suffered from both high inflation and low growth.

The PML-N continued the borrowing but instead of doing it locally they took advantage of low interest rates globally to borrow from foreigners. They increased our external debt by 50% in their 5 years. On the back of all that foreign borrowing we got the highest growth rate in their 5 years of just 5.8%. 7% is required just to absorb all the new entrants in the labour market but we couldn't even achieve that. Global interest rates are rising, the rupee is falling and now we will have to pay back all that we have borrowed in dollars. No way to do this without borrowing even more dollars. PTI will replicate what the PML-N did. Another 50% increase in external debt!

facts and figures from state bank DONOT SUPPORT what you said..

Go back and read sbp.gov.pk figures and comw back...PPPP kept fiscal deficit lower than 5% and never launched treasury bills in excess of demamd(printing money) as PMLN did in its last year

I can achieve 10% growth if i borrow 20% of gdp but it has no value as the growth is consumption base..
Getting a 5.8 growth with 6.6 fiscal deficit is COMPLETELY USELESS..if you continue to do this your economy is going to collapse like argentia, greece and Venezuela

 

[nahtanbob]

facts and figures from state bank DONOT SUPPORT what you said..

Go back and read sbp.gov.pk figures and comw back...PPPP kept fiscal deficit lower than 5% and never launched treasury bills in excess of demamd(printing money) as PMLN did in its last year

I can achieve 10% growth if i borrow 20% of gdp but it has no value as the growth is consumption base..
Getting a 5.8 growth with 6.6 fiscal deficit is COMPLETELY USELESS..if you continue to do this your economy is going to collapse like argentia, greece and Venezuela

if the fiscal deficit is fueled by domestic monetary expansion (ie printing pakistani currency) I will take 5.8% real growth (nominal growth - inflation). it is a no brainer.

if it is fueled by borrowing from foreign sources you will have to weigh the pros and cons. otherwise it is downward spiral like argentina, greece and venezuela.

 

[ziaulislam]

if the fiscal deficit is fueled by domestic monetary expansion (ie printing pakistani currency) I will take 5.8% real growth (nominal growth - inflation). it is a no brainer.

if it is fueled by borrowing from foreign sources you will have to weigh the pros and cons. otherwise it is downward spiral like argentina, greece and venezuela.

mostly fueled by foreign borrowing, (grew by almost 50% from 58b to 94b).

its not the Chinese solution where they have huge(some say 300% of gdp) local debt..
local debt is fine..
inflation was kept low due to currency manipulation..
you are right printing money will automatically fuel inflation and wont effect the real growth but the printing was done last year only(2018), you will see its effects inflation now ...

 

[Abdussamad]

facts and figures from state bank DONOT SUPPORT what you said..

Here you go:

http://www.finance.gov.pk/publications/FPS_2012_13_web.pdf

Page 21 lists the fiscal deficit for 2010-2011 (6%) and 2011-2012 (6.6%) .

Below on page 25 you can see the numbers for their first year:

http://www.finance.gov.pk/publications/Fiscal_Policy_Statement.pdf

7.4% of GDP! So I don't know why you think the PPP didn't run large fiscal deficits. Note that figures as a percentage of GDP are what matter not the nominal amounts.

Also regarding the PML-Ns performance I've covered that in the second paragraph of my last post above which you've totally ignored.

 

[ziaulislam]

unfortunately most of debt wasnt taken for dams, exports were over taxed, and direct taxation was ignored leading to uncompetitive business

Here you go:

http://www.finance.gov.pk/publications/FPS_2012_13_web.pdf

Page 21 lists the fiscal deficit for 2010-2011 (6%) and 2011-2012 (6.6%) .

Below on page 25 you can see the numbers for their first year:

http://www.finance.gov.pk/publications/Fiscal_Policy_Statement.pdf

7.4% of GDP! So I don't know why you think the PPP didn't run large fiscal deficits. Note that figures as a percentage of GDP are what matter not the nominal amounts.

Also regarding the PML-Ns performance I've covered that in the second paragraph of my last post above which you've totally ignored.

you do know that 7.3% Deficit PPPP clocked included 560b circular debt paid by PMLN govt in first couple of months while the 6.6 fiscal deficit PMLN clocked doesnt calculate the 900 billion rupees gas/electri debt..if you count that its 10% deficit. By PMLN definition (excluding power payments ) the debt was 5.1% not 7.7%

In 2010-11 GDP dropped to zero due to biggest floods in our history and high energy prices yet they clocked at 6.3%

And what you got a gdp rate just 1% higher than PPPP at cost of higher CAD and fiscal deficit(10%)

The impact of this 10% deficit and higher prices for export industry meant export decreased in 5 years rather than going to 35b(projected at 2012) and CAD INCREASED FROM 2B /month to 24b/yr

I am not saying PPPP performance was good and i am saying it was not as bad as PML
had PMLN had oil prices greater than 100 with similar floods they would have clocked debt at 15% rather rhan 10% they did as compared to 6.6 of PPPP

Ishaq dar is well known for tweaking debt definition for sake of good figures this is the classical example

In 1998 when Pakistan used up private deposits in CAD Financing and when people wanted tl drew money it didnt existed And we defaulted.again a classical example of tweaking figures ..

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But thankyou for reading up some stuff...
Atleast we all agree that fiscal deficit of this large was disastrous proving BOTH PMLN and PPPP screwed Pakistan

 

[ziaulislam]

Listen from minute 8 to 12