Pak teetering on the brink of complete economic breakdown: Finance Minister

[Zebronic]

providing a reality check on the shaky economic situation, Pakistan Finance Minister Dr. Hafeez Sheikh has said that the country is on the verge of a 'complete economic breakdown'.

Dr. Sheikh further sought the cooperation of the federal and provincial governments to steer the nation out of the mess.

He made these remarks in a meeting presided over by Prime Minister Yousuf Raza Gilani on August 26.

Chief Ministers, Joint Chiefs of Staff Committee Chairman, services chiefs and bureaucrats attended the meeting.

"Giving an overview of the economic situation, the Finance Minister clearly told the top civil and military leadership that the national economy was teetering on the brink even before the floods and was now heading towards an abyss because of the devastation caused by the disaster," The Dawn quoted a senior official who attended the meeting, as saying.

The Finance Minister also said that the country's overall debt stood at about Rs.8.75 trillion, which had increased by a massive 46 percent from Rs.6 trillion two years ago.

"The debt has increased to such a level that the country is on the edge of insolvency," the official added.

Dr. Sheikh further said that the government would have to show strong commitment to restructure and improve the situation.

He also called for implementation of austerity measures approved by the federal cabinet last year 'to stop further bleeding'. (ANI)

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[BATMAN]

The Finance Minister also said that the country's overall debt stood at about Rs.8.75 trillion, which had increased by a massive 46 percent from Rs.6 trillion two years ago.

Zardari Khabay.

 

[nForce]

Unfortunate indeed.Pakistan should open up its market for Indian investments,the way in Afghanistan.A steady flow of capital for investment will surely follow.That definitely help to a great extent to stabilize the current economic turmoil ,reduce the tension between the two countries and pave the path for long term peace and development in South Asia.

 

[AgNoStiC MuSliM]

Unfortunate indeed.Pakistan should open up its market for Indian investments,the way in Afghanistan.A steady flow of capital for investment will surely follow.That definitely help to a great extent to stabilize the current economic turmoil ,reduce the tension between the two countries and pave the path for long term peace and development in South Asia.

That's not really a solution at all for the immediate economic issues given the size of the challenge and the fact that even if investment from Indian companies were opened, there would be continued confidence issues (such as what we saw in the IPL) given the unresolved disputes between the two nations and current hostility.

Foreign investment only offers benefits in the long term, through employment opportunities, taxes from sales etc. Indian investment is not even going to come close to resolving the immediate to medium term need for trillions of rupees in rehabilitation and reconstruction costs.

 

[Areesh]

The Finance Minister also said that the country's overall debt stood at about Rs.8.75 trillion, which had increased by a massive 46 percent from Rs.6 trillion two years ago.

Thanks Zardari. Keep it up.

 

[gowthamraj]

what is the immideate solution for this

 

[Patriot]

I think we should privatize Steel Mills and other organizations due to which government assets has to pay i think 400 billion rs yearly to keep them running.Sell those and pump the money earned into economy again to give it some life.

 

[nForce]

That's not really a solution at all for the immediate economic issues given the size of the challenge and the fact that even if investment from Indian companies were opened, there would be continued confidence issues (such as what we saw in the IPL) given the unresolved disputes between the two nations and current hostility.

Foreign investment only offers benefits in the long term, through employment opportunities, taxes from sales etc. Indian investment is not even going to come close to resolving the immediate to medium term need for trillions of rupees in rehabilitation and reconstruction costs.

I agree with you,totally....If Indian investments start flowing in Pakistan,though the country provides a huge market,still the investments will not be enough to cover up for the massive economic turmoil that the country is experiencing these days....

Well the actual matter calls for a discussion on a much bigger scale.For now,let us just say that it is time that the Pakistani policy makers start looking for more stable and long term solutions to the adverse situations they are facing nowadays.

Massive economic benefits will follow if the South Asian countries join hand in trade.It will benefit both Pakistan and India in the long term.
Pakistan has huge potential.With proper investments in proper places,huge benefits can be reaped in near future.Being in this thread for some time makes me think that in Pakistan,the land and the wealth is primarily controlled by a few elite class people and a form of feudalism still exists in Pakistan in some parts,definitely not all.

If the focus shifts to business and the approach becomes more capitalistic,then a lot of social issues will automatically get addressed,unemployment for example.

If people have enough money to support their own life then other socio-political issues can be addressed easily,like the resorting to radicalism in Pakistan and Naxalite issue in India.

The grindhouses like IPL,which has more loopholes to give a middle finger to the IT-department than hair on my head, cannot be compared with corporate infrastructures where chances of corruption are far less.If any Company wishes to do a shortcut,then there is a very good chance that it will go down,example Satyam in India.Since the companies are very much concerned about their own profile,such chances are very less.

The involvement of Corporate houses ,not only Indian but also Pakistani as well as others will significantly reduce the involvement of the so-called corrupt elite class.India also had the very same problems not long ago,and still has similar problems,though at a much lower scale.The globalization of market changed everything....

 

[Eminem]

Pakistan needs to change her policies.

Pls elect a new president.If you want to survive.

 

[nForce]

I think we should privatize Steel Mills and other organizations due to which government assets has to pay i think 400 billion rs yearly to keep them running.Sell those and pump the money earned into economy again to give it some life.

Privatisation can be a good idea.It helped India a lot

 

[jha]

@nForce..
How many corporate houses will risk capital in such a huge quantity. Another mumbai and whole capital will be gone. And dont forget the backlash at home against those corporate houses.
For now Pakistan should consider the investment from all the available sources.

 

[BATMAN]

what is the immideate solution for this

same as before..... IMF or WORLD BANK.
I recommend a book...
'confessions of economic hitman'

 

[Tuahaa]

Pakistan needs to change her policies.

Pls elect a new president.If you want to survive.

Now only if I could find a good leader... perhaps I might have one under my bed.

I agree with you, but unfortunately it is easier said than done...

 

[AgNoStiC MuSliM]

@nForce..
How many corporate houses will risk capital in such a huge quantity. Another mumbai and whole capital will be gone. And dont forget the backlash at home against those corporate houses.
For now Pakistan should consider the investment from all the available sources.

Unless things have been turned around at those PSE's (or are in the process of being turned around), the largest loss making PSE's drain almost as much as the entire defence budget in annual losses, and Pakistan would be better off privatizing them even at rock bottom prices.

The GoP would probably attract interest from domestic/Arab/Chinese bidders if it indicated a willingness to sell at low prices, and still end up saving a ton money annually from not having to deal with the losses and the rampant corruption (thousands of unnecessary politically motivated appointments at the PSE's).

 

[nForce]

@nForce..
How many corporate houses will risk capital in such a huge quantity. Another mumbai and whole capital will be gone. And dont forget the backlash at home against those corporate houses.
For now Pakistan should consider the investment from all the available sources.

You raise a very important question my friend.Yes indeed the risk factor will be there.But then,we cannot deny the fact that as long as people live at some place,there will be their needs.As long as there will be needs,there will be a demand.As long as there is a demand,there must be supply.As long as there is a requirement of supply,there will be an opportunity for trade.

Maybe the bigger corporate houses would not like to get involved primarily,but they are definitely not the only way of trade.

Even without the liberalization of trade,an estimated volume of $ 1.6 billion of trade exists between India and Pakistan.It can increase by leaps and bounds if market liberalization is done.

Just an example............

Since the coming of the FTA in March 2000, trade has grown rapidly. Bilateral trade exceeded US $ 1.7 billion in 2004 and rose to US $ 2.025 billion in 2005. Exports from India to Sri Lanka in 2004 amounted to US$ 1350 million, while exports from Sri Lanka to India in the same year amounted to US$ 382 million. It rose to further US $ 1.437 billion and US $ 588 million respectively in 2005. The FTA prompted a 257 % increase in bilateral trade between 2001 and 2004. At 15% of the total, India is the biggest source of Sri Lankan imports. It is also the 3rd largest destination for Sri Lankan exports. With FDI approvals of US $ 450 million, India is the 4th largest investor in Sri Lanka. Indian Oil Corporation, Taj Hotels, Apollo Hospitals, L & T, Ambujas, Tatas and Ashok Leyland are among the prominent Indian companies operating in Sri Lanka. Connectivity between the two countries is at an all time high with approximately 100 flights per week, including Indian private airlines, to and from 10 destinations in India.


Now wonder,what an FTA between India and Pakistan can do......