Pakistan may soon be ineligible for World Bank loans

[StraightShooter]

i like how your crystal ball works.

Many experts are predicting a 10-15% depreciation of PKR.

 

[El Sidd]

Many experts are predicting a 10-15% depreciation of PKR.

dude predictions are not worth commenting on.
it is an opinion.
just like yours about how 1 PKR will be equal to 120 USD
both have equal value since these are just opinions.

 

[Stephen Cohen]

dude predictions are not worth commenting on.
it is an opinion.
just like yours about how 1 PKR will be equal to 120 USD
both have equal value since these are just opinions.

What is your personal opinion and forecast

 

[El Sidd]

What is your personal opinion and forecast

Only God knows.
But it will be for the better.
If anyone tells you any other thing he is lying and confusing you.

 

[BABA AGHORI]

I know.
We can't go if we are ineligible.
Now we have to earn on our own and build our own.
So it's good that it happens soon that people realise that they have to help themselves.
Its a good thing.

It's like need to earn on your own and return the principle plus interest back before build on your won.

 

[El Sidd]

It's like need to earn on your own and return the principle plus interest back before build on your won.

Was sein sollen, soll es sein.
Keine kann was schätzen heutezutage.

 

[ito]

Falling reserves are a sign of bankruptcy and decreased competitiveness of the economy. The present political instability in Pakistan is exacerbating the situation further. Unless Pakistan corrects, FDI and investments will dry up. If you are not credit worthy, generally you cannot attract investments too. Anyway why is Chinese loans in CPEC not showing up in Forex reserves?

 

[SarthakGanguly]

Good news. The world Bank needs Pakistan. Not the other way round.

 

[Chak Bamu]

In other words, the PKR has to be devalued to help exports. The questions are by how much, how sudden, and whether Pakistan's exporters will be able to take advantage of such a devaluation. The export boom you hope for is not assured.

Its the natural order of things in economics - Supply & Demand. PKR's devaluation would be managed to follow a predictable pattern over months.

Improvement in exports is a near certainty that need not be debated. There is no convincing skeptics. I have successfully run a manufacturing & export business so I know what I am talking about.

 

[Chak Bamu]

But devalution will increase the burden of external debt ; make imports costlier
and hence will be inflationary

With panic setting in ; devalution can result in a melt down of reserves

Panic & alarmism is just your imagination. You are seeing things because you wish to see them that way.

The burden of external debt is manageable as long as there is decent growth. Currency fluctuations are not a big deal. They happen all the time.

Nothing's extraordinarily adverse shall happen as USD appreciates. Pakistanis have been through this and more. A small structural shift / adjustment is not a major issue.

 

[VCheng]

Its the natural order of things in economics - Supply & Demand. PKR's devaluation would be managed to follow a predictable pattern over months.

Improvement in exports is a near certainty that need not be debated. There is no convincing skeptics. I have successfully run a manufacturing & export business so I know what I am talking about.

I respect your experience with exports from Pakistan.

Taking an international perspective, Pakistan faces increasingly stiff competition from other exporters in the global market, even in its traditional areas of strength, such as textiles, however. Devaluing the PKR will help lower prices in dollars to make Pakistani exporters more attractive, but there is only so much give in how low productions costs can go, given the restraints within Pakistan.

After all, other exporters are competing for the same global markets. Pakistan has a tough course ahead of it economically.

Nothing's extraordinarily adverse shall happen as USD appreciates. Pakistanis have been through this and more. A small structural shift / adjustment is not a major issue.

Pakistan is far more vulnerable to a oil/gas price shock when it happens than to a PKR devaluation. It's energy import bill holiday won't last forever.

 

[I S I]

Blessing in disguise.

 

[Stephen Cohen]

I respect your experience with exports from Pakistan.

Taking an international perspective, Pakistan faces increasingly stiff competition from other exporters in the global market, even in its traditional areas of strength, such as textiles, however. Devaluing the PKR will help lower prices in dollars to make Pakistani exporters more attractive, but there is only so much give in how low productions costs can go, given the restraints within Pakistan.

After all, other exporters are competing for the same global markets. Pakistan has a tough course ahead of it economically.



Pakistan is far more vulnerable to a oil/gas price shock when it happens than to a PKR devaluation. It's energy import bill holiday won't last forever.

The decision not to devalue PKR and keep it fixed has been taken due to political considerations and it will cause problems in near future

Since Pakistan imports a lot of things ; devaluation will make them expensive
and set off inflationary pressures

Also Pakistani exports are dependent on imports

For eg if oil and gas becomes expensive ; the End product that is textiles becomes more expensive

Similarly you import a lot of cotton ;machinery and capital goods for
producing exportable products

So exporters would feel the pinch of rising input costs

Debt servicing will become more expensive

Govt of Pakistan will need more PKR to buy dollars
which will come from Printing more currency or raising taxes

It is like being caught between a rock and a hard place

The burden of external debt is manageable as long as there is decent growth.

Trade deficit widens by 56pc

Capital suggestion: Alarm bells

https://www.thenews.com.pk/print/221703-Capital-suggestion-Alarm-bells

 

[VCheng]

The decision not to devalue PKR and keep it fixed has been taken due to political considerations and it will cause problems in near future

Since Pakistan imports a lot of things ; devaluation will make them expensive
and set off inflationary pressures

Also Pakistani exports are dependent on imports

For eg if oil and gas becomes expensive ; the End product that is textiles becomes more expensive

Similarly you import a lot of cotton ;machinery and capital goods for
producing exportable products

So exporters would feel the pinch of rising input costs

Debt servicing will become more expensive

Govt of Pakistan will need more PKR to buy dollars
which will come from Printing more currency or raising taxes

It is like being caught between a rock and a hard place



Trade deficit widens by 56pc

Please do not forget the crucial contribution made by remittances in reducing the current account deficit to more manageable levels. Granted, that also has its complications, but it helps hugely.

 

[Stephen Cohen]

Please do not forget the crucial contribution made by remittances in reducing the current account deficit to more manageable levels. Granted, that also has its complications, but it helps hugely.

Yes they help but slowly when the forex reserves run out ( In every five years time )
an IMF package becomes inevitable

And the powers that be ; instead of making real and tough reforms
just kick the can down the road for another government to face the problem