Pak plans to seek USD 15 bn in new loans to pay external public debt

[ZAC1]

27Billion will be spent to pay off old loans and we still have 86Billion left. We are so trapped, no matter how much we borrow, our debt is getting higher. Nobody has solution to this. Pti was blaming PML N for taking loans and now they are in the same position.

So whats should he do...already was in mess...now this corona mess...its good more the money we will have easy to go through these tuff days.world is spending trillions of dollars...whats our capacity.after independence all corrupted leaders looted us...there is no where to go...also in coming days we are going to face a war with india...thanks to china for ladakh...bcz india needs a war to justify many things.

 

[ARMalik]

governments in gcc doesn’t print money like pakistanis
u have that mfil in economy from london school of economics
tell me basic formula about printing money
is it good or bad for ur country

Right, so the largest and the most powerful Central Bank, the US Federal Reserve is dumb to be printing money? As the US Central Bank, do you know what is their strategy to manage money creation, in conjunction with interests rates and targeting specific assets? Again, do you know what is the function of a Central bank?
And please, do not compare these camel riders with other countries as these GCC countries have vastly different economic and monetary control conditions compared to Pakistan.

 

[OldenWisdom...قول بزرگ]

27Billion will be spent to pay off old loans and we still have 86Billion left. We are so trapped, no matter how much we borrow, our debt is getting higher. Nobody has solution to this. Pti was blaming PML N for taking loans and now they are in the same position.

I get confused these days... in U.S. cities have such small debts ... for example NYC has around $120 billion in debt.

 

[Patriot forever]

So whats should he do...already was in mess...now this corona mess...its good more the money we will have easy to go through these tuff days.world is spending trillions of dollars...whats our capacity.after independence all corrupted leaders looted us...there is no where to...also in coming days we going face a war on india...thanks to china for ladakh...bcz india needs a war to justify many things.

We are in a bad state but not as unstable as we were in 2018. In my humble opinion first we need to take full advantage of the long term low cost loans post covid available in market and roll them with our high interest commercial ones.
2nd we need to privatise all the elephants in out house was soon as possible because we won't be able to bail them out with printing money and increasing inflation.
3rd in the long term we need to find money and invest in dams or local coal power plants and bring them online as soon as possible before these extortion contracts with the current ipps end. Reduced electricity prices will help our industry compete in the brutal recession struck post covid market.
Just my humble opinion. Everyone is welcome to add to this.

Right, so the largest and the most powerful Central Bank, the US Federal Reserve is dumb to be printing money? As the US Central Bank, do you know what is their strategy to manage money creation, in conjunction with interests rates and targeting specific assets? Again, do you know what is the function of a Central bank?
And please, do not compare these camel riders with other countries as these GCC countries have vastly different economic and monetary control conditions compared to Pakistan.

Us dollar is an international currency. It has a lot of demand all over the world. If we start printing currency like them our inflation will sky rocket. GCC is export oriented petro economy exactly opposite to the current state of our import oriented one.

 

[Jungibaaz]

Sir if they had that much aqal or knowledge do you really think they would have been patwaris?


You have to be special type of a dumb *** to still support those who have brought us to this state.

Jug jug jeeyo @Jungibaaz @Xestan @volatile @Tameem @BATMAN @bafxet and other patwari members of PDF.

I’ve defended your party here in this thread, yet you’re still crying.

What have I told you in the past about reading before reacting? Look:

People criticising this approach and jumping to ‘ye bikk gayi hai gormint’ conclusions need to re-evaluate.

You need to understand that as I have said before, IK’s government has no choice. With debt maturing it means outflows of forex, reserves that themselves were created by borrowings in the first place. The additional debt is troublesome, but in the short term it’s hard to reduce this without taking some very tough and oppressive measures. Long term if they fail to make meaningful progress to boosting exports and rebalancing economy, then we can judge them on possible failure.

is this sufficient, or to your liking is this not enough eulogising for your dear leader?

 

[Armchair]

Reducing import of luxury and nonessential products is just a basic solution. There are also additional solutions and ideas, a million of them actually. Here is what I would do to help shore up the economy:

TO PROTECT THE POOR AND SAVE PAKISTAN'S MOST VULNERABLE
Keynesian expansion - a fiscal expansion, employing the poor and youth without jobs. A small very basic minuscule salary, boots, a uniform and join "public works projects". Plant trees, fruit farms, dig canals, construct small dams. One could even use conscription to aid this.

This is a relatively shorter term solution.

DEVELOPMENT OF TRADE

Ultimately countries such as Pakistan need to develop their own distribution networks. There is only so much you can earn by exporting slave labor and making t-shirts for Wal-Mart. In the longer term, Pakistan needs to develop an export distribution network by the "Pak Malls" idea. This is to build self-contained forts / trading posts all over the world. Shops would be sold to the Pakistani business community. These self-contained small forts / trading posts will have living quarters on the upper level and other amenities (like a masjid / school) and also contain the Pak diplomatic mission.

In the longer term, Pakistan also needs to target specific industries for building a national capability. This can be lighter industries that China is now moving away from. Like the watch making industry. Lighting fixtures industry. Calculator / light electronics industry. Optics industry. Hunting Rifles. These are relatively low cost / low capital industries. One could establish new "cities" like the aviation city "Clock City" "Optics City" ... etc.

A Risky Idea that Could Backfire but...

But could really save Pakistan a lot of money if executed right. A lot of debts are written with English Law backing them, contracts made in London. The UK is the main money laundering center that was a key player in siphoning capital out of Pakistan.

Most of it ill gotten. Also, the UK gives immunity and keeps these corrupt people (to be used at opportune time to basically run the colonial order without the colonist's hand being visible). Many terrorists responsible for death and mayhem in Pakistan sit in the UK and relax.

Now, if Pakistan imposes sanctions on the UK, for sponsoring terrorism and corruption in Pakistan, in one blow, Pak could refuse to honor British debt (and by extension, debts written in London). Now, only the goras impose sanctions usually on people of color. This would be a first reversal of roles.

Basically Pak would treat the UK as the West treats Iran or North Korea. Until they return all ill-gotten money, the corrupt and the terrorists.

I understand that this is indirectly a condition of "odious debt", but it technically isn't. Pak will continue to honor all debts other than this. Yes, we can write off the IMF and World Bank. But Pak is already headed away from the West and does not need them in its future. It will be a big blow for London as a financial center. And there will be consequences no doubt. But the juice may just be worth the squeeze.

 

[Jungibaaz]

Obviously bunch of uneducated arastotles, Indian piss drinkers , Patwari inbreds decides to come together since they all have a same genetic code and created this news out of their butt.

Surely all that was missing from this thread was a highly educated quality comment such as above. Vielen dank fur deinen beitrag.

At least look at the source ... googleThe truth of the matter is this. The money is extremely cheap right now. Although I highly doubt the news there may be a good possibility to pay off expensive loans and borrow at extremely low rate available in the market .

Clearly you have some financial knowledge but your attitude is very unpleasant. I'm currently working from home, I'm taking a break, am logged into bloomberg terminal remotely. Let me know what you which rate you're looking at, I'll have realtime market data.

since COVId the yield on bonds is extremely low and LiBoR rate is almost zero.

doea any bloody genius knows what is the LIBOR rate right now?

It’s almost zero or in some cases negative. If one is paying six percent interest and now the money is available at 2 percent ...... do the F.... calculations......15 billion at 2 percent va 6 percent ........
The saving is almost $600 million per year....

LIBOR is lower on previous months, as are rates in general. Sure, but markets were troubled initially on the back of risk sentiment. Yields are low because of QE and central bank intervention in markets. APP's are continuing in Europe, Fed has stepped in US markets, PEPP is a new programme from the ECB. This is the reason yields are low, there are wider macroeconomic trends that have lowered it historically, but nothing unique from the perspective that you're using here.

Also, why are you quoting LIBOR? We don't borrow anywhere near LIBOR, EURIBOR, etc. Our sovereign debt is still expensive, latest Iss price I see is 92.8863, with yield at 7.68%, don't mislead people by suggesting we're borrowing anywhere near a lowered LIBOR rate, PAKTB 2 years ago was being priced around the same. In fact, just having looked at some Q2 2018 zero cpn 6M PAKTB, issue yield then was 6.35% whereas the latest issuance has 7.845% yield. So what exactly are you claiming here? Borrowing is cheaper for us? It's clearly not, and where it is relative to another time period, it's for a whole host of reasons, none of which contribute to this argument.

I think you are trying to put a positive spin on this when in fact, it's just a case of IK doing what exactly other Pakistani government has done since time immemorial; borrow to finance when in need is pressing. It has nothing to do with false perceptions of ability to borrow really cheaply. Also, your quote of raw yields, are you a finance guy? If you are, I'm guessing you aren't in fixed income. Cheap and expensive is not in terms of raw yield, it's usually spread vs xyz, measure, whether that's mid-swaps, LIBOR/EURIBOR etc, or comparable sovereigns. Our debt is not cheap, and this borrowing has nothing much at all to do with low yields that have resulted from CB intervention in Europe and elsewhere. @Nilgiri

Last of all, I'd ask you to tone down this sort of rhetoric:

uneducated arastotles, Indian piss drinkers , Patwari inbreds decides to come together since they all have a same genetic code and created this news out of their butt.

....

doea any bloody genius knows what is the LIBOR rate right now?

Knowing something that others might not is not license to make such disparaging remarks. I have responded to your post without belittling you I hope, and keeping it respectful. Pls let's keep that for all members. Thanks.

 

[ali_raza]

Right, so the largest and the most powerful Central Bank, the US Federal Reserve is dumb to be printing money? As the US Central Bank, do you know what is their strategy to manage money creation, in conjunction with interests rates and targeting specific assets? Again, do you know what is the function of a Central bank?
And please, do not compare these camel riders with other countries as these GCC countries have vastly different economic and monetary control conditions compared to Pakistan.

do u absolutely have to to this much dumb?
or r u pretending?

 

[blueazure]

Surely all that was missing from this thread was a highly educated quality comment such as above. Vielen dank fur deinen beitrag.

sir this genuis @Flight of falcon thinks we are borrowing 15bn at negative interest rates

PTI logic



move on , nothing to see here,

---------

 

[Jungibaaz]

sir this genuis @Flight of falcon thinks we are borrowing 15bn at negative interest rates

PTI logic



move on , nothing to see here,

---------

Im sure he only meant to say that since rates generally are low, we should in his view be able to borrow more cheaply. But I don’t agree with this analysis, and I don’t think it’s relevant to current plans either.

 

[blueazure]

what should have been the alternative?

1 . zero compromise on looted money return

2. gold from riko diq . could have been sold in intl market to raise equity

3. creation of a sovereign wealth fund

4. loosen regulations to boost real estate , industry

5. loosen taxes

6. cut down govt spending , loose the govt tit suckers like PIA, SNGPL

7. protect the ruppee from mkt free fall of the speculators and whales .


---------------------


this govt did the opposite

went running to IMF lenders .......

 

[AZ1]

Why any party went for making dams? Hydro electricity would save huge amount of dollar plus cheap electricity to consumers and good market for investors to settle companies in Pakistan due to cheap electricity?

After ayoub khan nothing happened in this regards. Now construction started under IK.

Imagine if we had continue with this pace we wouldnt needed loan for anything.

 

[bananarepublic]

sir this genuis @Flight of falcon thinks we are borrowing 15bn at negative interest rates

PTI logic



move on , nothing to see here,

---------

They may talk about how they are different from PMLN and PPP ,but the fact is that blindly following will lead you nowhere.
Imran Khan won't lead us to a better nation, its the institutions he would strength that might break the status quo of so called politicians and the armed forces.
Modren nations are not run by strongmen, they are run by institutions will impeccable performance.

These youthias and patawaris are no different boundlessly following their leader, justify their every mistake and rightdoings.
Its the same circus with different men in charger and the only thing that might change it is if he decides to change the institutional status quo and that would mean political suicide for him

 

[AZ1]

They may talk about how they are different from PMLN and PPP ,but the fact is that blindly following will lead you nowhere.
Imran Khan won't lead us to a better nation, its the institutions he would strength that might break the status quo of so called politicians and the armed forces.
Modren nations are not run by strongmen, they are run by institutions will impeccable performance.

These youthias and patawaris are no different boundlessly following their leader, justify their every mistake and rightdoings.
Its the same circus with different men in charger and the only thing that might change it is if he decides to change the institutional status quo and that would mean political suicide for him

Haha what nation? A nation who sold their souls on 1 plate briyani? Or nation who are corrupt to core and blame everything on govt?

You yourself blind to see the real cancer of the society. Its no other than nation itself.

 

[Flight of falcon]

Surely all that was missing from this thread was a highly educated quality comment such as above. Vielen dank fur deinen beitrag.



Clearly you have some financial knowledge but your attitude is very unpleasant. I'm currently working from home, I'm taking a break, am logged into bloomberg terminal remotely. Let me know what you which rate you're looking at, I'll have realtime market data.



LIBOR is lower on previous months, as are rates in general. Sure, but markets were troubled initially on the back of risk sentiment. Yields are low because of QE and central bank intervention in markets. APP's are continuing in Europe, Fed has stepped in US markets, PEPP is a new programme from the ECB. This is the reason yields are low, there are wider macroeconomic trends that have lowered it historically, but nothing unique from the perspective that you're using here.

Also, why are you quoting LIBOR? We don't borrow anywhere near LIBOR, EURIBOR, etc. Our sovereign debt is still expensive, latest Iss price I see is 92.8863, with yield at 7.68%, don't mislead people by suggesting we're borrowing anywhere near a lowered LIBOR rate, PAKTB 2 years ago was being priced around the same. In fact, just having looked at some Q2 2018 zero cpn 6M PAKTB, issue yield then was 6.35% whereas the latest issuance has 7.845% yield. So what exactly are you claiming here? Borrowing is cheaper for us? It's clearly not, and where it is relative to another time period, it's for a whole host of reasons, none of which contribute to this argument.

I think you are trying to put a positive spin on this when in fact, it's just a case of IK doing what exactly other Pakistani government has done since time immemorial; borrow to finance when in need is pressing. It has nothing to do with false perceptions of ability to borrow really cheaply. Also, your quote of raw yields, are you a finance guy? If you are, I'm guessing you aren't in fixed income. Cheap and expensive is not in terms of raw yield, it's usually spread vs xyz, measure, whether that's mid-swaps, LIBOR/EURIBOR etc, or comparable sovereigns. Our debt is not cheap, and this borrowing has nothing much at all to do with low yields that have resulted from CB intervention in Europe and elsewhere. @Nilgiri

Last of all, I'd ask you to tone down this sort of rhetoric:



Knowing something that others might not is not license to make such disparaging remarks. I have responded to your post without belittling you I hope, and keeping it respectful. Pls let's keep that for all members. Thanks.

I see your point and yes I am wrong in many things. So lets clear few things first:

You seem to have a background in trading or banking. I am in a medical field and did joint degree with the business management (three courses short of finishing MBA in Health related field from CWRU, OHIO to be exact). So my knowledge of your specialized field of bonds and yields is limited. My job is to run businesses and invest not make and understand market interest policies.


I rarely, if ever, run into people who are professionals in their field here at Pakistan defence. Almost 95 percent posts are posted by political activists and people who feel they need to comment about things they have no knowledge of. I unfortunately return their sarcasm and insults with even more insults. Trust me I am not very proud of that.

Now coming back to the debt issue, I am aware that the government owes debts in different forms and cetagories.

Most of the Pakistan debt is from Multilateral donors/IMF etc. I also understand that this debt is at a lower interest (possibly the lowest rate) and more flexible payment options.

Debt owed to friendly countries which again is at the nominal fixed interest rate.

Government borrowing through T bills where the rate is very high even at around 9 percent today down from almost 13 percent few months back. But please correct me if I am wrong but T bills are safe for the government to offer as it is in Rs denomination and income earned is considered taxable and the investor has to pay taxes on earnings before cashing out. So the true cost to the government is less than 9% and its safer for the government because it is in local currency and no worry with fluctuating exchange rate.

Eurobonds and Sukuk where the market determines the yield based on our credit worthiness etc. This actually may be no more than 12 percent of our total debt.

And finally CPEC loan which if I understand is more of a commercial and market based loan. This is where I believe LIBOR is used for interest payments. I am well aware that no one ever gets posted LIBOR rate but if one is to believe that we owe China 30 billion dollars and we need to borrow more for payments/upcoming projects my thinking was that since the LIBOR rate is so low why can we not sort of refinance at the fixed lower rate and pay off expensive debts. Obviously it depends on the terms of the contracts and if such prepayment/refinancing clause is even used. Similarly many CPEC and other infrastructure projects were financed at commercial rates at the time the contracts were signed. Why can we not take advantage of lower commercial rates and borrow money to pay off more expensive debts?

We do allow public enterprises under state control to borrow money as well on commercial rates through commercial sources such as banks...for example PIA, power plants, oil purchase on credit etc.

what about the currency swap agreement? are they at the fixed rate too or base on an international rate such as LIBOR.

I just financed a real estate deal and the interest rate was fixed at LIBOR plus few points in Florida.

you know better and I would love to read comments to understand and educate myself.


As for using rude language against Patwaris and Indian trolls I am not going to spare them if they instigate me. Sorry....