Well, sitting behind a computer and abusing is easy. The post below will set out certain facts (again). Talk on facts. And shove your misplaced patriotism in the place where the sun don't shine. The issue is not just the ratio of debt but more importantly how you fund that debt. And cause Pakistan cannot, it keeps going Back to IMF again and again. With 8 billion dollars of net forex reserves how is Pakistan going to fund a deficit of 26 billion dollars is the question.
Pakistan reserves decrease $124 mln to $13,983 mln week ending Jan 5 2018
https://in.reuters.com/article/****...-to-13983-mln-week-ending-jan-5-idINL4N1P64BU
See this is the reason. SBP reserves keep decreasing at an alarming rate. Because of the fudging of figures by SBP/ Ministry of finance the alarming situation is not brought to the fore. You realize that this figure of 13.98 billion dollars is fudged as SBP includes in the said amount deposit made by the general public that is 6 billion dollars. The same amount of 6 billion dollars is also shown as a separate amount while calculating reserves. The reserves with SBP 8 billion dollars. It shows 6 billion dollars which belong to the general public as its reserves. therefore 8 + 6 = 14 billion dollars. The same 6 billion dollars are again added up to the figure of 14 billion dollars and the forex reserves become 14 + 6 billion dollars = 20 billion dollars.
The Pakistani media keeps reporting this but alas no one want to discuss this issue and just want to ignore it.
"As of November 2017, the SBP’s official foreign currency reserves were $12.66 billion including $5.8 billion worth of currency swaps and forward contracts. Despite showing $5.8 billion as part of its own reserves, the SBP has also included the same amount in the total $6.01 billion reserves held by commercial banks.
By excluding $5.8 billion of short-term loans, the net usable reserves with the commercial banks stand at only $200 million. Out of $5.8 billion, $1.68 billion was obtained for one month, $2.46 billion for up to three months and $1.7 billion for up to one year, according to the SBP.
This is clearly double counting of $5.8 billion. In principle, it should have excluded this sum from the commercial banks’ reserves,” said Dr Ashfaque Hasan Khan, former director general of Debt of Ministry of Finance."
https://tribune.com.pk/story/157974...nths-sbps-net-reserves-will-mere-4-5-billion/
There are many other links available which I have posted here. Just google the issue. Now with 8 Billion dollars as reserves you need to take care of payment towards deficit and loans ( domestic + international ). Lets see, your imports expectation for this Financial year is 23 billion dollars. Your amount through remittances is 19 billion dollars. Your imports for this financial year is 60 billion dollars. Add to this loan repayment in forex of about 8 billion dollars. Now lets do the math. (
https://nation.com.pk/10-Jan-2018/pakistan-s-trade-deficit-swells-to-18bn ,
https://www.thenews.com.pk/magazine/money-matters/260222-left-with-few-options )
(60+8)- ( 23+19) = 26 billion dollars.
Now this amount of 26 billion dollars is a huge gap. And this figure should make you realize why PML-N has taken 45 billion dollars of loans in the last four years.
So how do you avoid default. By approaching the IMF. But this time they will extract their pound of flesh. especially with trump as POTUS.
Also to give you another example, your forex reserves were 13.7 billion dollars in October 2016. You got sukuk/eurobond issued which added 2.5 billlion dollars in your reserves in November 2018. The amount was transferred to Pakistan in First week of Nov 2018. Now as on 05 Jan 2018 your forex reserves are again at the same level i.e 13.9 billion dollars. So 2.5 billion dollars disappeared in Just about 2 months.
Your forex are reducing by 1-1.5 billion every month. Your net forex are 8 billion dollars. So you will approach IMF. PML N will issue bonds again and take loans for the chinese till the care taker govt takes over. But imagine how screwed the care taker govt will be. Next time Pakistan approaches IMF the size of the facility will be around 15 billion dollars. hats a big amount and will carry very strict conditions.
