Pakistan to approach IMF for a bailout, Asad Umar announces

[shah_123]

Walk the talk now Khan sahab:

https://twitter.com/x/status/668375870000799744

 

[Imad.Khan]

I will see how how much Peshawar bus tickets will cost without losing money. Wait and then compare. As far as we know, its cost is already over all metro buses of Punjab combined. What will be running cost that will depend on ticket prices. Present better arguments with facts.

@BOLD that made me laugh coming from you. Just like the fact you presented that PMLN will win with even higher margin than 2013.

 

[Rusty]

Walk the talk now Khan sahab:

https://twitter.com/x/status/668375870000799744

Even a kid knows the meaning behind that sentiment.
There is a difference between going around with a begging bowl and humiliating yourself and going to a bank for a loan when you are at hard times.

BTW, if PMLN followed the advice of that in 2015, we would not be having to go to IMF now.

 

[Proudpakistaniguy]

You are right i shouldn't have said that, i apologize. As far as i know the KPK jungla bus is still in progress and the work has not stopped, but i will confirm with my family members. Majority of my family members think its a waste of money anyways.

Thank you for highlighting the wrongs PTI has done so far. I would like to know from an outsider's perspective, is there anything good they have done and not just these 52 days, but also the 5 yrs of KPK.

P.S. i said "outsiders perspective" as you have mentioned that you are not a supporter of PMLN, PPP or PTI.

Dear i might not be supporter of any political parties but people elected PTI and they are in governmemt and running the affairs of my country and people. They are also representative of those Pakistani who did not voted for them. Outsiders would have no clue whats going on inside Pakistan. I think you guys should look at Government from critical eyes now as they are policy maker and not in opposition ..any way decision has been taken and we can only pray and hope for the best not worst

 

[pragmatic_dude]

The dynamics of domestically funded debt and foreign funded debt are different.

Domestically funded debt is funded through the country's own financial institutions and is denominated in the local currency while externally funded debt is funded through an external financial institution and denominated in a foreign currency often USD.

What this comes down to are the conditions of domestic financial institutions and domestic currency exchange rate relative to external debt currency.

A country can be compelled to take on external debt if domestic debt is not available or doesn't have ideal rates. This can be caused by the lack of capital in the domestic banking system caused by lack of savings. Lack of savings can be caused by lack of trust within the system or the public is not familiar and doesn't need the banking system to be an economic participant. Banking reforms, incentives, and laws are needed to fund domestic financial institutions.

Often external debt is denominated in USD because it is an easily accessible and highly liquid currency due to its reserve currency status. Your trade doesn't have to balance bilaterally to acquire USD, you can earn it from another country that has USD. The amount you pay back is denominated USD, not your local currency. If the local currency depreciates significantly relative to USD, the burden upon the local economy to repay external debt goes up significantly, causing deleveraging and an economic slow down. If the local currency appreciates significantly then external debt becomes cheaper, this appreciation is often not sustained due the lack of diversification and general weakness of developing economies.

What external debt is used for is important. External debt can be sustainable if the economy can earn enough foreign currency. If foreign debt is used on a project to earn local currency, there is less certainty of earning enough foreign currency for the nation as compared to using foreign debt to fund a project that earns the external debt denominated currency. For projects that can be used to export goods and earn USD, it won't be as bad to borrow in USD to grow the business.


I agree, Pakistan needs to tap into its massive coal reserves and increase its proportion of coal in its energy portfolio. It should be utilized to earn foreign currency and invest in coal to liquid plants as well. Pakistan's usage of coal in electricity generation is very low compared to a developed country such as Germany which has about half of its electricity generation coming from coal. Most major industrial nations are still coal heavy, France is an outlier with 70% coming from nuclear but that jump would take decades to make if desired.

View attachment 503967 View attachment 503968

Domestically powered energy, would lessen imports, fund local industries, and add to the strength of the local currency.

Another big area as you mentioned is tax collection. It is one of the most vital issues to resolve. Once better tax collection is achieved, indirectly it empowers other institutions like the financial sector. More people would put their money in banks and use financial services, increasing the capacity for domestically funded debt.

An excellent post. Thank you.

 

[Imad.Khan]

Dear i might not be supporter of any political parties but people elected PTI and they are in governmemt and running the affairs of my country and people. They are also representative of those Pakistani who did not voted for them. Outsiders would have no clue whats going on inside Pakistan. I think you guys should look at Government from critical eyes now as they are policy maker and not in opposition ..any way decision has been taken and we can only pray and hope for the best not worst

thats a fair call. BTW you forgot to answer my question. In your opinion is there anything positive that PTI has done so far?

 

[shah_123]

Even a kid knows the meaning behind that sentiment.
There is a difference between going around with a begging bowl and humiliating yourself and going to a bank for a loan when you are at hard times.

BTW, if PMLN followed the advice of that in 2015, we would not be having to go to IMF now.

even a kid understands what ALLAH swt' has said regarding Riba', our ruling class doesn't.

The downfall of Imran Khan has begun.

“Those who eat riba will not stand (on the Day of Resurrection) except like the standing of a person beaten by Shaytan (Satan) leading him to insanity…

O you who believe! Be afraid of Allah and give up what remains (due to you) from riba (from now onwards) if you are (really) believers.

And if you do not do it, then take a notice of war from Allah and His Messenger."
[2:275, 278-279]

 

[Riz]

Bechari PTI mari gai... They were looking towards shandar taraki.. Pak china sa agy nikal gia.. Pak na koi karza nhi lia balkay chaina aor amrica ko karzy deay mian nawaz sharif ki govt ma.. . Bechari PTI ko pata he nhi tha k rozana noory k leay karzon ki mad ma 6 billion rupees sood daina pary ga.. Hahaa

 

[Kambojaric]

This was always going to happen. The real question is will the government be able to make the required structural changes to the Pakistani economy with the leverage these funds will provide?

 

[Zhukov]

Everyone read this before loosing your steam on this issue and then think on this topic.

Our monthly Exports (Goods that our industry produce and we sale to other countries) is much less then our Imports (goods that we buy from other countries). All these Sale purchase from other countries is done in Euros Dollars and other currencies that have demand in International Market.

To buy Goods you need Dollars or Euros. Where they come from? By Selling your goods to other countries or by foreign remittances.

so you are not even generating enough International Currencies to Pay for your imports rather then paying installments of Loans that you have to pay as well. You cannot purchase goods and pay back loans by printing your own currency or taxing your own people. You need to generate foreign currency reserves.

Now what can be done here?
Either make foreign currencies so expensive to buy that Importers cannot afford to buy that currency giving their Rupees to state bank for imports and Exporters rush to increase their business because same amount of Goods now fetch so much more Rupees because of increase price of Dollar.
BUT
we are big importers of energy and Fuel, An increase of Dollar means increase of energy prices as well which will hit the whole economy. They can subsidize these crucial imports like fuel and Machinery by Taxing other sectors.

And the other option is Take more loan.

NOW the MOST IMPORTANT QUESTION. Who is to blame for this mess? Why is industry in this state that it is importing much much more then it can Export? Are Decision makers to tackle with this situation are to be blamed or are those under whom Industry reached this state are to be blamed?

 

[Rusty]

even a kid understands what ALLAH swt' has said regarding Riba', our ruling class doesn't.

The downfall of Imran Khan has begun.

“Those who eat riba will not stand (on the Day of Resurrection) except like the standing of a person beaten by Shaytan (Satan) leading him to insanity…

O you who believe! Be afraid of Allah and give up what remains (due to you) from riba (from now onwards) if you are (really) believers.

And if you do not do it, then take a notice of war from Allah and His Messenger."
[2:275, 278-279]

IK did not create the modern world and he did not place Pakistan in the position it is in.
He is just trying to clean up the mess 30 years of PPP and PMLN have created.

Also, if Muslims are so concerned with riba, maybe they should have kept up with the modern world and had a say in the development of modern banking.

 

[shah_123]

IK did not create the modern world and he did not place Pakistan in the position it is in.
He is just trying to clean up the mess 30 years of PPP and PMLN have created.

Also, if Muslims are so concerned with riba, maybe they should have kept up with the modern world and had a say in the development of modern banking.

Benazir/sharif/zardari/musharraf, all got humiliated -- now it's Imran Khan's turn.

 

[RIP Pak LAW]

Benazir/sharif/zardari/musharraf, all got humiliated -- now it's Imran Khan's turn.

No he won't. People trust him more than anybody else. With proper governance , Pakistan will come out from a harsh economic period. This is the test for PTI as well.

You are pasting tweets of PTI/Asad which are 4 years old when Pakistani circular debt was $10 billion lesser unlike today. Had PML-N left Government with $15 billion reserves than $6 billions, PTI would had never opted for IMF. So in that time, Asad/Imran tweets did make sense.

 

[Indus Pakistan]

Also if you had no other option then why expert economic team of PTI took such long time to decide of going to IMF

To do so is political poison. They have tried to avoid the bitter pill but left no choice. 4 weeks in not so "long". I could ask the more pertinent question that why the previous government kept on borrowing on huge scale year after year when they knew it was all going to savagely bite the country. And never took course correction over 5 years?

Just look at this finiancial suicide. Even Mr 10% rule looks benign compared to post 2018 Mr Avenfield

 

[Rusty]

Benazir/sharif/zardari/musharraf, all got humiliated -- now it's Imran Khan's turn.

You almost sound gleeful at this prospect.
Are you sure you are not an Indian troll?