Pakistan's Goodbye to IMF

[karan.1970]

India runs huge trade and budget deficits and therefore heavily dependent on foreign inflows of loans, FDI and FII to drive its economic growth and to meet its debt obligations....not very different from Greece and other nations depending on foreign inflows. And we all know how quickly Greek economy went from being healthy to being very sick....and how many Western economies in the twin-deficit club are also suffering now.

Haq's Musings: Soaring Chinese Imports and Twin Deficits Worry India
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Since 2007–08, the fiscal deficit has increased to around 6.5 to 7 per cent of India’s GDP, subsequently leading to a combined federal and state deficit of over 10 per cent of GDP in 2009–10. The actual numbers are higher, by at least 1 per cent, as some items were kept off the balance sheet.

India

There is a concept of external Debt to Reserves ratio. Very similar to Debt to Equity ratio of companies.

India


External debt = 308 billion USD
Forex and gold = 317 billion USD

Pakistan
External debt = 60 billion USD
Forex and gold = 13 billion USD

GreeceU]
External debt = 570 billion USD
Forex and gold = 8 billion USD


To me, Pakistan seems closer to Greece than INdia... And the S&P credit score (for whatever its worth) says the same

 

[RiazHaq]

There is a concept of external Debt to Reserves ratio. Very similar to Debt to Equity ratio of companies.

India


External debt = 308 billion USD
Forex and gold = 317 billion USD

Pakistan
External debt = 60 billion USD
Forex and gold = 13 billion USD

GreeceU]
External debt = 570 billion USD
Forex and gold = 8 billion USD


To me, Pakistan seems closer to Greece than INdia... And the S&P credit score (for whatever its worth) says the same

Please study the work on twin deficits and how the two affect each other to assess which nation is closer to Greece.

India's total fiscal deficit including fed and states is over 11%, far higher than Pakistan's 5-6% of gdp. This deficit spending feeds into the the rising trade deficits by stimulating consumption and increasing imports.

 

[Rafi]

Please study the work on twin deficits and how the two affect each other to assess which nation is closer to Greece.

India's total fiscal deficit including fed and states is over 11%, far higher than Pakistan's 5-6% of gdp. This deficit spending feeds into the the rising trade deficits by stimulating consumption and increasing imports.

Riaz bro - unlike the indians here, you have seen and done it all, you are a successful Pakistani we are all keen on hearing from.

 

[great]

Riaz bro - unlike the indians here, you have seen and done it all, you are a successful Pakistani we are all keen on hearing from.

Hehe.. What exactly has he seen?

 

[Pakistanisage]

Citing significant improvements in Pakistan's current account balance, Pakistan's Finance Minister Dr Abdul Hafeez Shaikh has said that his government would not waste its energy on reviving the currently suspended IMF program that began in 2008, or seek a new IMF bailout, according to a report in Pakistan's Dawn newspaper.

Pakistan's decision follows the latest State Bank report of a current account surplus equivalent to 604 Million USD in the second quarter of 2011.



The surplus is the result of rising exports from Pakistan and growing remittances from Pakistani diaspora, the 7th largest in the world.

Pakistan's exports in the first two months of the current fiscal year (2011-12) surged by 20.26 percent over the corresponding period of last year. Exports during July-August (2011-12) were $4,167 million as compared to the exports of 3,465 million during July- August (2010-11, according to a GeoTV report citing data from Federal Bureau of Statistics (FBS).

According to official data as reported by Reuters, remittances rose 40.45 percent to $1.31 billion in August 2011, compared with $933.06 million in the same period last year.

Currency traders reacted negatively to the government's decision to part ways with the IMF as the Pakistani rupee hit its second record low against the dollar in two days on Friday, touching 87.92 before firming to 87.75/78 at the close.

Some analysts believe that the timing of the decision to free itself from the IMF is motivated by the ruling party's desire for more spending on populist programs to impress its voters before the coming elections. This is likely to make the budget deficits worse in the absence of IMF's demands for reforms to cut spending and raise revenues to narrow Pakistan's budget deficits to 4.5% of GDP.

Haq's Musings: Pakistan to Terminate IMF Bailout Early

I say good riddance.

Get out of Pakistan, IMF and stay out. We don't need you and we are better off without you.

 

[Rafi]

Hehe.. What exactly has he seen?

Riaz Haq
Mr. Haq, President and Chief Operating Officer, has over 22 years of high-tech experience including 15 years at Intel Corporation. Mr. Haq has served in a variety of marketing, sales, engineering, operations, and program management and senior management positions with P&L responsibility. While at Intel, Mr. Haq was honored by the PC Magazine as PERSON OF THE YEAR for 1988 to recognize Mr. Haq's management and leadership leading to the phenomenal success of the Intel 80386 microprocessor line.

Prior to working for Intel, Mr. Haq was on the faculties of Rutgers University and NED Engineering University. Mr. Haq holds an MSEE from New Jersey Institute of Technology and a BSEE from NED Engg University.

 

[Vassnti]

Get out of Pakistan, IMF and stay out. We don't need you and we are better off without you.

Yes the IMF with their unresonable demands like stop steel subsidies and tax the rich.

Almost no one pays tax expecially the rich. Most dont seem to pay for electricity again it helps if your rich. 1/3 goes to the army 1/3 seems to go in bribes/special payments and outright theft.

Europe is on hold and guess which workers are going to be the first to lose their jobs, the Dubai boom is gone so dont count on record remitances.

World trade will be down so expect a drop in exports and if some one like Perry gets in say bye bye to any US aid.

So the PPP is going to print money and promise every one every thing with no new taxes.
The income from all sources will at best be stable but probably falling and Pakistan gives the finger to the last person willing to lend it money.

Pakistanis were willing to eat grass for the bomb are they willing to eat grass for the PPP?

 

[SMC]

I don't understand why so many bharatis are replying in this thread. Most of the posts in fact seem to be from bharatis. This thread has absolutely nothing to do with Bharat, so please. You guys claim you do not care about Pakistan's internal issues. WTF is this then?

 

[Rafi]

I don't understand why so many bharatis are replying in this thread. Most of the posts in fact seem to be from bharatis. This thread has absolutely nothing to do with Bharat, so please. You guys claim you do not care about Pakistan's internal issues. WTF is this then?

You know it, I know it, and the whole world knows they suffer from a certain complex, they can't help themselves.

 

[bandit]

Please study the work on twin deficits and how the two affect each other to assess which nation is closer to Greece.

India's total fiscal deficit including fed and states is over 11%, far higher than Pakistan's 5-6% of gdp. This deficit spending feeds into the the rising trade deficits by stimulating consumption and increasing imports.

Assess what?
He made that as simple as is possible .
India has it's debt covered. That alone makes it a better investment than Pakistan or Greece .

I wouldn't even trouble myself with explaining about the deficit accounting because all you would do is copy paste a link you think is a decent reply.
I have never seen a logical post from you, I hardly can expect a rebuttal.

 

[notsuperstitious]

Assess what?
He made that as simple as is possible .
India has it's debt covered. That alone makes it a better investment than Pakistan or Greece .

I wouldn't even trouble myself with explaining about the deficit accounting because all you would do is copy paste a link you think is a decent reply.
I have never seen a logical post from you, I hardly can expect a rebuttal.

1) What matters is the ability and willingness to repay, thats how creditworthiness is determined.

2) Deficit spending is a theory too, but then starting at ABC is a waste of time, particularly with ideological and illogical economists.

3) Posting only current account numbers is just the kind of mumbo jumbo that zaid hamid uses for political issues, pick up some data in isolation, paint it green and fool the fools.

 

[Luftwaffe]

IN a recent ag survey in Sukkur district, the surveyors found that all 300 farmers interviewed were using tractors for cultivation and preparing land for crops, and some were using tractors for fetching their crop produce to market.

It is not enough not even 3%, whole Pakistan need to go on the lines of Agriculture modernization, it should have been done 50 years ago, from cultivation to cutting to storing to labs.
Do you have large elevated godowns all across close to agriculture lands, to save and protect your agri products, a Big No from all sorts of disasters. Inshort we are not true agriculture country, we are chalta hai nation. Had our farmers not been so hard working we would have been even a few decades more backward thanks to a common farmer who is doing everything in his power.

 

[Mike2011]

Riaz Haq
Mr. Haq, President and Chief Operating Officer, has over 22 years of high-tech experience including 15 years at Intel Corporation. Mr. Haq has served in a variety of marketing, sales, engineering, operations, and program management and senior management positions with P&L responsibility. While at Intel, Mr. Haq was honored by the PC Magazine as PERSON OF THE YEAR for 1988 to recognize Mr. Haq's management and leadership leading to the phenomenal success of the Intel 80386 microprocessor line.

Prior to working for Intel, Mr. Haq was on the faculties of Rutgers University and NED Engineering University. Mr. Haq holds an MSEE from New Jersey Institute of Technology and a BSEE from NED Engg University.

Whats big deal. now writing blogs for living............

 

[karan.1970]

Please study the work on twin deficits and how the two affect each other to assess which nation is closer to Greece.

India's total fiscal deficit including fed and states is over 11%, far higher than Pakistan's 5-6% of gdp. This deficit spending feeds into the the rising trade deficits by stimulating consumption and increasing imports.

Is Fiscal deficit the only parameter to judge how an economy is doing.. INstead of complicating things, keeping them simple generally works better..

At the end of the day, the numbers that matter are that India has enough reserves to pay off its debt and then some..

On the other hand, Greece and Pakistan dont..

Thats generally enough for me.. Add to that the credit rating (the assessment of the ability of the borrower to pay the borrowed amount back) of the three countries and I am pretty sure its Pakistan that is closer to Greece.. Last I saw, Pakistan was 1 notch above the junk bonds and that too after the IMF bailout..

 

[karan.1970]

I don't understand why so many bharatis are replying in this thread. Most of the posts in fact seem to be from bharatis. This thread has absolutely nothing to do with Bharat, so please. You guys claim you do not care about Pakistan's internal issues. WTF is this then?

When all other arguments fail