What's new

Pakistan’s external debt, liabilities increase 12.3% to $85b

OK YOU NOW FORCE ME TO REPEAT

Pakistan’s economic fortunes now in the hands of the IMF

WIth Islamabad running out of funds to service its debt payments and current account deficit, talks are underway with regard to a bailout package

With Pakistan’s foreign-currency reserves falling 29% this year to US$12.6 billion by the end of October and the country’s trade deficit ticking ever upward, Islamabad has found itself back at the International Monetary Fund (IMF) to discuss a bailout.

First on the IMF’s checklist is devaluation of the Pakistani rupee. The State Bank of Pakistan (SBP) loosened its grip on the currency on December 8, resulting in a downward adjustment in its exchange rate in interbank and open market transactions. It quickly shed over 5% against with the US dollar. Discussions regarding policy-level measures are ongoing.

The dailyReport

Must-reads from across Asia - directly to your inbox
Pakistan’s economy had already been showing signs of floundering before it was reported in August that the central bank had borrowed $5.81 billion from commercial banks under “forward and currency swap” arrangements to boost its reserves position and stabilize the currency. Excluding those loans, Pakistan’s actual foreign currency reserves would stand at a mere $6.79 billion.And they should be excluded, because they are not usable in any sense.

“The SBP did not deny the media reports, nor did the government issue any clarification which [disputes] the apprehension that the economy has gone haywire,” a senior executive at a Dubai-based exchange company told Asia Times. Pakistan’s reserves position was particularly alarming, he added, in light of the World Bank’s estimate, in October, that Islamabad will need $17 billion worth of external financing in the fiscal year ending June 30, 2018, to service its debt payments and current account deficit.

“How the government will honor its external commitments needs to be explained,” he said, adding that as far as any IMF package is concerned, it will come with painful strings attached (for one thing, devaluation means inflation). Any “stopgap” measures, he said, would make little impact on a current account deficit of $14.4 billion, or subdue an import growth rate of $5 billion per month on the back of China’s “Belt and Road” infrastructure drive.

Excluding those loans, Pakistan’s actual foreign currency reserves would stand at a mere US$6.79 billion. And they should be excluded, because they are not usable in any sense.

At the end of last month, the government launched Sukuk (Islamic bonds) and Euro bonds worth $2.5 billion, at a profit rate of 5.6% and 6.8%, respectively, again to prop up its reserves. It claimed the bidding reflected “overwhelming confidence of the global investor in Pakistan’s economy.” Independent financial analysts remained skeptical, however.

The SBP, in justifying its deregulation ploy last week, declared: “The continuation of high growth in imports led to a widening of the current account deficit, and consequently to depletion in the country’s foreign exchange reserves. These pressures have persisted, leading to an adjustment in interbank exchange rates. This movement in the exchange rate is based on demand and supply of foreign exchange in the interbank market.”

Speaking at a meeting of the Pakistan Society of Development Economists on Wednesday just after the rupee slid against the dollar, SBP governor Tariq Bajwa said the exchange rate would be determined from now on by “market forces”. The aim, he said, was for the currency to attain “equilibrium.”

In the days since, however, Peshawar’s Chowk Yadgar currency market has been directionless, with exchange companies and currency dealers hesitant to do any deals around buying or selling dollars.

http://www.atimes.com/article/pending-review-pakistans-economic-fortunes-now-hands-imf/
 
.
I see you using furnace oil plants and Rlng plants in the summer. Remember this is 'additional' capacity. Imports will only increase. the deficit will increase to 37 billion dollars this year up 5 billion dollars from the previous year.


Here you go...charity begins at home.

India’s external debt rises to $485.8 billion at June-end

India’s external debt was placed at $485.8 billion at the end of June, recording an increase of 3% over its level at end-March 2017, RBI data showed

“At end-June 2017, India’s external debt was placed at $485.8 billion, recording an increase of $13.96 billion over its level at end-March 2017,” a RBI data released on Friday said. The increase in the magnitude of external debt was partly due to valuation loss resulting from the depreciation of the US dollar vis-a-vis the rupee and other major currencies.

The external debt to GDP (gross domestic product) ratio stood at 20.3% as at June-end 2017, a shade higher than its level of 20.2% at March-end 2017.


http://www.livemint.com/Money/6MUiE...al-debt-rises-to-4858-billion-at-Juneend.html
 
.

An Audio Visual Presentation on the current affairs of Pakistani Economy.
 
.
OK YOU NOW FORCE ME TO REPEAT


You are making a fun of yourself to the extent of deriding. This is quite churlish and juvenile that an Indian here is posting articles about Pakistan financial woes and ignoring theirs own, the India which should matter here.

Start posting articles about India and let Pakistan worry about Pakistan financial matters and economics...you are cutting a sorry figure here, what is the point of it.

Again I repeat charity begins at home...first thing first. India should be your focus here, your knowledge about Pakistan is juvenile and rudimentary, not worth discussion here.
 
.
Economy headed towards point of no return, warn businessmen
By Our Correspondent
1586075-bannerx-1513493877-531-640x480.jpg

LCCI says rupee’s weakness adding to the country’s economic woes. PHOTO: LCCI

LAHORE: Pakistan’s economy is slowing heading towards a point of no return due to interference of the International Monetary Fund (IMF) in economic matters, therefore, people at the helm of affairs must revisit the country’s policies, said the Lahore Chamber of Commerce and Industry (LCCI) while painting a picture of difficult days ahead.

“I have identified 25 sectors that can help overcome the trade deficit,” LCCI President Malik Tahir Javaid said in a statement.

He decried that the industry was the main victim of the deepening economic crisis whereas rupee depreciation was adding to economic miseries of the country.

LCCI welcomes suspension of RD

“All these ills were just because of the IMF’s interference in Pakistan’s economic matters and dictations to the policymakers to take harsh measures,” he said.

The LCCI chief pointed out that Pakistan governments often depended on borrowing from the IMF and in return accepted stringent conditions, adding the global lender always forced Pakistan to adopt bad policies like rupee depreciation and massive increases in electricity and gas tariffs.

“How a country can take independent decisions and its economy can grow when it is carrying a debt burden of over $85 billion and utilising a huge part of the federal budget on debt servicing,” he asked.

Though it was difficult to get rid of the massive loans, it was not impossible, he emphasised. “If Turkey can do it, then why we cannot,” he remarked.

5-1513451060.jpg


CREATIVE COMMONS

Javaid, along with other office-bearers including Senior Vice President Khawaja Khawar Rashid and Vice President Zeshan Khalil, underscored the need for appointing a permanent finance minister.

At present, the portfolio of finance minister is under the prime minister’s control as per cabinet rules.

They clarified that the business community knew that there was no overnight solution to the economic woes, but there was a dire need to set direction and introduce economic reforms in favour of the trade and industry.

Pakistan faced various economic challenges last year including a decline in exports and foreign direct investment, lowest tax-to-gross domestic product ratio and inefficiency of public sector enterprises.

These challenges could be addressed through meaningful partnership and dialogue between the government and private sector, they suggested.

LCCI demands end to double taxation by FBR

Saying that there were a number of issues that must be tackled head-on, they pointed out that the biggest one was how to keep the growth momentum going following less-than-targeted expansion of the agriculture and manufacturing sectors. The second big challenge is the widening gap between exports and imports that could be bridged by enhancing shipments to overseas markets.

https://tribune.com.pk/story/1586075/2-economy-headed-towards-point-no-return-warn-businessmen/

 
.
An Audio Visual Presentation on the current affairs of Pakistani Economy.


Lot of critical analysis of Pakistan economy, a SWOT kind of thing, a good thing to look at the problems and then look for solutions brushing them under the carpet, huge criticism of Pakistan current government and policies to the extent that calling them plunderers and looters...

Media is quite open here unlike the perception. No Bhakts here....I repeat no Bhakts and few sycophants here, only 2 to 3 channels praises the govt, dozens others gives an alternate view.

Repeat...

You are making a fun of yourself to the extent of deriding. This is quite churlish and juvenile that an Indian here is posting articles about Pakistan financial woes and ignoring theirs own, the India which should matter here.

Start posting articles about India and let Pakistan worry about Pakistan financial matters and economics...you are cutting a sorry figure here, what is the point of it.

Again I repeat charity begins at home...first thing first. India should be your focus here, your knowledge about Pakistan is juvenile and rudimentary, not worth discussion here.
 
.
Some Pakistani Experts See No End to Nation's Economic Slide

Pakistan's economy has been on a steady downward slide with no end in sight, some experts say, with the currency dropping, foreign exchange reserves dwindling, the trade deficit spiking and the benchmark stock index at an 18-month low.

The civilian government is at odds with the powerful military, creating an uncertain political landscape that keeps investors on the sidelines. The ousted prime minister, Nawaz Sharif, is on trial for corruption, and Finance Minister Ishaq Dar has fled the country after also being charged with graft, raising questions about the prospects of turning things around.

658DB89D-80CC-4EEF-9C8F-BD64BF5178B9_w650_r0_s.jpg

FILE - Employees unload documents before they are distributed for the presentation of the national budget in the National Assembly in Islamabad, Pakistan, May 26, 2017.
The International Monetary Fund isn't happy about all the red ink and has questioned how Pakistan could pay back funds for a massive hydroelectric project that China has offered to build. Islamabad has pulled out of the project, at least for now.

Rupee's value

The U.N. Economic and Social Survey for Asia and Pacific's (UNESCAP) 2017 report warned this week that Pakistan's intervention in the exchange market to stabilize the rupee, which plunged more than 5 percent against the U.S. dollar in three days, might become unsustainable.

Cabinet minister Ahsan Iqbal tried Wednesday to dispel the negativity as he defended Dar's economic and financial policies.

"Pakistan is not drowning; it is heading toward stability and progress," Iqbal said.

But the economic gurus in Pakistan don't trust the platitudes, and neither do the markets.

"It was inevitable. It had to go like that way," Ashfaque Hasan Khan, a former economic adviser to the Ministry of Finance, told VOA Deewa. "Finance Minister Ishaq Dar was going against the philosophy of the IMF. He tried to keep a fixed rate of rupee against dollar throughout his tenure in the last four-plus years."

89BF22EB-F2FD-4D5E-8E00-37CB92A323BD_w650_r0_s.jpg

FILE - Pakistan's Finance Minister Ishaq Dar is seen after a party meeting in Islamabad, Pakistan, Sept. 26, 2017.
Khan said he didn't see the rupee strengthening anytime soon because the timing is not right for improving export-producing industries.

"The damage is already done," he said.

'False argument'

Zafar Moti, the former chief and CEO of the Karachi stock exchange, said the government's stance that exports would grow as a result of the devaluation was a "false argument." Exports are "very low" to start with, inflation has grown from 4 percent to 6 percent, and with the announcement of devaluation, "the foreign debt has risen by $300 million," he said.

Moti predicted that in the current climate of political instability, if the IMF devalued the rupee by 10 to 15 percent, "the results will be catastrophic."

The trade deficit stands at about $15 billion as official statistics released this week showed imports at $18 billion and exports as low as $3 billion for July through November, the first five months of Pakistan's fiscal year.

Tariq Bajwa, governor of the State Bank regulatory body, has his own argument for the fall in the rupee exchange rate.

"The current account deficit is a serious challenge, and the movement in exchange rate is in response to this challenge," local media quoted him as saying Wednesday. The UNESCAP report put Pakistan's widening current account deficit at $12.1 billion.

"It was long due," said Faiq Hussain, a Pakistan-based economic expert with People Islamic Modaraba, a private company dealing in partnerships between investors and companies in commercial enterprises.

The current account deficit isn't the only issue, Hussain said. Imports over the past three to four years of Chinese machinery under the massive China Pakistan Economic Corridor (CPEC) infrastructure program have been remarkably high, he said.

Pakistan has lately expressed reservations about the $54 billion in projects under the umbrella of CPEC. Members of the Senate have maintained that China pushed Pakistan into some deals to the benefit of Chinese investors and firms.

FB1F01AF-C970-425E-B3D4-6BFEB4CFDA17_w650_r0_s.jpg

FILE - The logo of Pakistan Stock Exchange is seen at its headquarters in Islamabad, Pakistan, Nov. 23, 2017.
Unconcerned by stock prices

Hasan said he wasn't worried about the fluctuations in the stock market, saying they don't reflect the major economic indicators in developing countries like Pakistan.

"It's the deficit in current account, trade and the uneconomic policy of Finance Minister Ishaq Dar and his cronies," he said.

Hasan said the minister's obsession with a stable rupee ran contrary to the market, raising the public debt, while imports remained cheaper for the investor and the cost of local production increased.

While relations with the U.S. have been fraying, years of American financial assistance for Pakistan's role in the global war on terrorism — about $14 billion since 2002 — has helped Pakistan's successive governments use dollars as a hedge against the deficits.

The latest tranche includes $700 million in conditional aid to reimburse Pakistan for supporting U.S. military operations in Afghanistan.

This is part of the U.S. defense budget signed by President Donald Trump on Wednesday. The funds are conditional; Defense Secretary Jim Mattis must certify that Pakistan has taken demonstrable action against the extremist Haqqani Network.

Two successive U.S. defense secretaries, Ash Carter and Mattis, have refused to give such a certification in the last two budgets, and there is no indication that Mattis will approve it this time.

VOA Urdu's Nafisa Hoodbhoy contributed to this report.

https://www.voanews.com/a/some-pakistani-experts-see-no-end-nation-economic-slide/4164385.html
 
.
This is part of the U.S. defense budget signed by President Donald Trump on Wednesday. The funds are conditional; Defense Secretary Jim Mattis must certify that Pakistan has taken demonstrable action against the extremist Haqqani Network.


You are a funny guy I must say, either suffering from dementia, psychosomatic disorder, and certainly xenophobia, look for its meaning.

And/or a combination of all the cognitive and other psycho related problems I've mentioned....

First thing first...


India is borrowing more and more to pay its existing loans, and that could wreck development dreams

The government has set up a cell to manage India's public debt and expects better results than those achieved by the Reserve Bank and the Finance Ministry.

If debt is bad, taking new loans to pay back old ones has all the makings of a debt trap and the Indian government seems to be doing just that. India owed Rs 57,75,685 crores to internal and external lenders in the financial year 2014-2015 – a whopping 46% of the country’s gross domestic product. And it turns out that 77% of all long-term borrowings made by the government were actually used to pay back interest and principal on earlier borrowings rather than being spent on development expenditure.



https://scroll.in/article/818686/in...loans-and-that-could-wreck-development-dreams

This is part of the U.S. defense budget signed by President Donald Trump on Wednesday. The funds are conditional; Defense Secretary Jim Mattis must certify that Pakistan has taken demonstrable action against the extremist Haqqani Network.



If you are Bhakt read this...

Why India's Zombie Debt Imperils Modi's Plans: QuickTake Q&A
By
Anirban Nag
May 30, 2017, 5:47 AM GMT+5
From
https://www.bloomberg.com/quicktake

https://www.bloomberg.com/quicktake
The amount of stressed assets at India’s state banks exceeds the value of the banks themselves, according to a McKinsey & Co. report. Provisions made for bad debt by all banks -- private and state -- undershoot by $93 billion the total of stressed assets (which mostly are bad loans and restructured loans). As McKinsey put it, “as these stressed assets continue to turn bad, the entire equity base of the banks could be at risk.”

https://www.bloomberg.com/news/arti...mbie-debt-imperils-modi-s-plans-quicktake-q-a
 
.
Devaluation

Listen

no-img-fb.jpg




A disease is a “disorder of structure or function especially one that produces specific symptoms.” And a symptom is an “indication of the existence of something, especially of an undesirable situation.”

Devaluation is a symptom, not a disease. The Pakistani rupee losing value against the US dollar is a symptom, not a disease. Devaluation is an ‘indication of the existence of something undesirable’. The disease is the ‘cost of doing business’ in Pakistan; devaluation is a mere symptom.

For the past couple of years, Pakistan’s ‘currency policy’ has had four ingredients: ego, figure fudging, artificial controls and dollar-denominated loans. In the second week of December 2017, Pakistan’s ‘currency policy’ was handed over to two entities: the IMF and currency speculators.

Over the past week, our foreign loans have gone up from Rs8.9 trillion to Rs9.4 trillion; an increase of Rs500 billion. And that means an additional debt burden of Rs17,000 for each and every Pakistani family. Over the past week, the value of our annual imports has gone up from Rs5.7 trillion to Rs6.1 trillion; an increase of Rs330 billion. And that means an inflationary burden of Rs11,000 for each and every Pakistani family. Lo and behold, the rupee devaluation of the past week has cost each and every Pakistani family a hefty Rs28,000. And the story of this suffering hasn’t come to an end yet.

The captain-less Ministry of Finance is out to suppress the symptoms – nothing about the disease so far. The disease requires chemotherapy; the only thing that our Ministry of Finance is administering is aspirin. The cure of the disease lies in chemotherapy and aspirin would only suppress the symptoms (that too temporarily).

The ‘cost of doing business’ in Pakistan has at least three components: expensive electricity, expensive gas and an oppressive tax system. Some five years ago, Pakistan and Bangladesh’s exports were at about the same level – around $25 billion a year. Bangladesh has since moved up to $38 billion a year while Pakistan went down to under $20 billion. If our exports had kept pace with Bangladesh we would have had no balance of payment crises.

Imagine: the cost of natural gas to Pakistan’s industry is 2.6 times that of Sri Lanka’s. Imagine: labour cost in Pakistan is 2.3 times that of India’s. Imagine: the electricity tariff in Vietnam is $0.07 per unit as oppose to $0.11 per unit. Imagine: the gas tariff in Bangladesh is $0.03 per unit as oppose to $0.86 per unit.

Pakistan, for instance, produces around 100 billion units of electricity a year at a cost of $11 billion. Vietnam produces the same for $7 billion. What that means is that Pakistani electricity consumers are paying $4 billion a year over and above Vietnamese consumers. How can Pakistani exporters compete with Vietnamese exporters?

What’s the way out? The only way out is to reduce the ‘cost of doing business’ in Pakistan. The only way out is a wholesale renegotiation of sovereign contracts throughout our energy sector. There is no other way that the government of Pakistan – regardless of which political party is in power – can bring down the ‘cost of doing business’ in Pakistan.

The writer is a columnist based in Islamabad.

https://www.thenews.com.pk/print/257044-capital-suggestion
 
. .
This tu tu mein mein should stop. India's external as well as Internal economy is something Pakistan can only dream of. @SunilM take the high road and stop this madness. You both say mubarak to each other economy and move on.
 
.
Charity begins at home....stop worrying about Pakistan and start looking at India...




India’s external debt rises 3% to $485.8 billion
Increase partly due to valuation loss resulting from the depreciation of $ Vs Rs.


India’s external debt has increased three per cent to $ 485.8 billion at June-end over the previous quarter, mainly due to increase in inflow of foreign portfolio investment into domestic capital market’s debt segment.

“At end-June 2017, India’s external debt was placed at $ 485.8 billion, recording an increase of $13.96 billion over its level at end-March 2017,” the Reserve Bank of India said. The increase in the magnitude of external debt was partly due to valuation loss resulting from the depreciation of the US dollar vis-a-vis the rupee and other major currencies.

http://indianexpress.com/article/bu...ternal-debt-rises-3-to-485-8-billion-4867754/












Charity begins at home...


$191 billion and counting: Enormous bad debt burden is splitting India's banks in 4 ways

When Moody's Investors Service polled market participants in Hong Kong recently, 70 percent picked India's banking system as the most vulnerable among seven countries in South and Southeast Asia. I wonder what the remaining 30 percent were smoking.

As another earnings season rolls on, the weaknesses of Indian lenders -- depleted capital levels in state-run banks and an inability to shed soured corporate debt even in non-state-controlled ones -- are once again obvious. What's not as ..


https://economictimes.indiatimes.co...e-splintering-gadfly/articleshow/59788487.cms





 
. .
Charity begins at home



Sagging Growth Complicates India's Bad-Debt Clean Up

By
David Yong
and
Anurag Joshi
October 16, 2017, 2:00 AM GMT+5 Updated on October 16, 2017, 12:17 PM GMT+5
  • Loan amount due to ‘package failure’ has exceeded 2016 level
  • Central bank is pushing for ‘end game’ in bad loan resolution

Sagging economic growth in India is complicating efforts to clean up a mountain of bad debt at the nation’s banks.


Loans worth 1.7 trillion rupees ($26 billion) have been withdrawn in total since the 2001 inception of the Corporate Debt Restructuring Mechanism through to the end of August, according to the latest data from the agency that brokers agreements between borrowers and lenders.


That’s a net increase of 446 billion rupees from the end of 2016, and already exceeds the 415 billion rupees of loans that couldn’t be revamped last year, the data show.


800x-1.png

The jump in failures underscores the challenges banks face in rehabilitating their assets with growth in the economy forecast to slow to a four-year low. Lenders are stuck with 1.5 trillion rupees of live cases with the CDR forum, mainly from the steel sector. The central bank had asked lenders more than two years ago to choose legal action over the mechanism to tackle the problem.


https://www.bloomberg.com/news/arti...failures-portend-more-pain-for-indian-lenders
 
.
This tu tu mein mein should stop. India's external as well as Internal economy is something Pakistan can only dream of. @SunilM take the high road and stop this madness. You both say mubarak to each other economy and move on.

Haha, I know. The thread is already ruined. Sigh!
 
.

Pakistan Defence Latest Posts

Pakistan Affairs Latest Posts

Back
Top Bottom