PM Nawaz Sharif turns around Pakistani Economy

[A1Kaid]

Bombs, Protests, Blackouts Fail to Cripple Pakistan Economy

Faseeh Mangi, March 16, 2015

Bloomberg) -- Pakistani Prime Minister Nawaz Sharif has had a rough six months. He’s seen street protesters nearly oust him, some of the worst fuel shortages in recent memory and a child massacre that shocked the world.

Beyond the negative headlines, he’s also managed to start turning around the economy. Lower oil prices, higher remittances and increased consumer spending are pushing growth toward a seven-year high. Corporate earnings are soaring, stocks have surged and the currency is among the world’s top performers.

The steady economic upturn as growth prospects weaken in many emerging markets has underpinned Sharif’s political support, with his party gaining in a Senate election held this month. While much more needs to be done to fix an economy dependent on financing from the International Monetary Fund, the perception of Pakistan is starting to change.


“Sharif’s government has improved things with the help of the IMF,” Sayem Ali, head of investments strategy and advisory at Standard Chartered Plc’s Karachi unit, said by phone. “They have put Pakistan back on the radar in terms of international investors.”

When Sharif took power in May 2013, he faced a balance-of-payments crisis that forced him to seek help from the IMF. Foreign exchange reserves have doubled in the past year to $16 billion, the budget deficit has narrowed and inflation is easing as global oil prices fall.

Pakistan last month said it regained its eligibility to borrow from the International Bank for Reconstruction and Development, making it eligible for $2 billion of credit over the next four years. The IMF also is optimistic it will meet the conditions of the $6.6 billion loan it received two years ago.

.....

Collecting Taxes

Sharif is looking abroad for help. He’s asked the Chinese to help set up coal-based power plants to reduce reliance on imported oil. The nation’s first liquefied natural gas terminal is expected to receive its first shipment this month from Qatar.

One key test will be Sharif’s ability to boost one of the world’s lowest tax collection rates. Government data show that less than 1 million people, or 1 percent of the world’s sixth-largest population, file tax returns.

In the 12 months through June, Sharif’s first full-year in office in this term, Pakistan earned about $9 billion from direct taxes. Of that, the nuclear-armed nation spent more than two thirds on defense. The budget for the fiscal year that begins July 1 will probably be presented in the last week of May or early June, according to a statement from the Finance Ministry on Monday.



Excerpt: Bombs, Protests, Blackouts Fail to Cripple Pakistan Economy - Bloomberg Business

 

[rockstar08]

Imran will get a Heart Attack ... hahahahah
Dharna goes

 

[A1Kaid]

@Dr. Stranglove

You really should read this since you seem to be so misinformed and saying Pakistan does not have any money for recent defense deals.

With new economic growth and new tax policies. It should not come as a surprise that Pakistan could reach a GDP nominal of $500+ billion and per capita income is more than doubled if PM Nawaz Shari is re-elected and serves a total of 10 years. PML-N has brought much needed economic recovery and stability in Pakistan.

Also, KSE is one of the best performing stock markets in the world right now. Inflation CPI is also down to 2.5%, that is the lowest in 13 years.

 

[Viper0011.]

@Dr. Stranglove You really should read this since you seem to be so misinformed and saying Pakistan does not have any money for recent defense deals.

Also, KSE is one of the best performing stock markets in the world right now. Inflation CPI is also down to 2.5%.

Whoever said Pakistan can't buy weapons between 3-5 billion is smoking some seriously illegal stuff. The trade and the GDP growth over the past two years has been around 10% (7-8% GDP + FI/ Stock profits, etc). So if Pakistan's economic size was say 500 Billion, it added 50 billion worth of expansion, if the PPP was 850 billion, that means the new PPP would be 935 billion). So the additional 50-80 billion, can easily provide 5% of it (IF needed, not recommended), for defense acquisitions and that, in this case amounts to between 5-8 billion, depending on how you count it. '

The current government indeed has turned the economy around Pakistanis need to realize it, appreciate it and work hard to take their country into top 20 economies of the world in the next 10 years. Its all doable if the country remains peaceful, tolerant, without terrorism and politically stable!!

 

[Muhammad Omar]

 

[Green Arrow]

LOL. Nightmare for IK surly

 

[A1Kaid]

No need to make this thread about Imran Khan, this thread is about the Pakistan economic recovery and growth we are currently witnessing.

 

[A.M.]

It's a good start but he needs to continue for the rest of his term and do much more. The main focus should be on better Tax collecting. The current figures are sad to say the least.

Once we have a sustainable amount of revenue intake, we can begin to pay off the IMFs and World Banks of the world.

Aside from the tax collection, the next big focus should be maintaining security around the Country. Having security brings about confidence, having confidence leads consumers to spend, spending by consumers attracts investors from around the world.

All of this is learned in your basic finance course. Its ridiculous that it has taken Pakistan this long to realize how the entire game works. Investing in non state actors has never worked to the benefit of any nation. The only thing that works is whether or not you are economically strong enough to get what you want.

 

[Dalit]

I wonder how much the common man has benefited from the so-called turning around of the economy. Everyone knows what the answer is to that question. That's all I care about.

 

[SHAMK9]

*patiently waits for @Leader 's reply*

 

[Winchester]

Ok i am not an economy buff but i want to raise some points here and if someone has an answer to them i would be more than willing to listen
First with the direct taxes
I don't know how the guy got his $ 9 bn figure but according to the government's own Fiscal Policy statement 2013-14 it was around Rs. 736 bn which would make around $ 7 bn
"Direct tax constituted 38 percent of the total FBR tax revenue for the year and stood at Rs.736 billion. This represented a mere 0.5 percent growth over the previous year’s tax collection of Rs.732 billion. This trend is consistent with the overall slowdown in tax revenue growth.In addition, the direct taxes collection reflects 79 percent of the target fixed in the budget which leaves a wide scope for improvement in the estimation, administration and collection of these taxes."

Source :http://www.finance.gov.pk/publications/FPS_2013_14.pdf

It seems clear from Nawaz Sharif's previous record that he doesn't have the political will to push for these improvements

The growth rate was measured to be 4.3 % and the World Bank forecasts Pakistan's GDP to grow by around 4.8 % in the years 2015,16 and 17
Compare that to India and even Bangladesh who are forecasted to be growing above 6 % and eventually reach 7 %
Forecast Table

So better than PPP yes
But hardly a complete turnaround as some are claiming

 

[TheNoob]

Well, wont really credit him alot but the fact hes getting easy credit is because PPP was really sh*t xD

 

[Viper0011.]

Ok i am not an economy buff but i want to raise some points here and if someone has an answer to them i would be more than willing to listen
First with the direct taxes
I don't know how the guy got his $ 9 bn figure but according to the government's own Fiscal Policy statement 2013-14 it was around Rs. 736 bn which would make around $ 7 bn
"Direct tax constituted 38 percent of the total FBR tax revenue for the year and stood at Rs.736 billion. This represented a mere 0.5 percent growth over the previous year’s tax collection of Rs.732 billion. This trend is consistent with the overall slowdown in tax revenue growth.In addition, the direct taxes collection reflects 79 percent of the target fixed in the budget which leaves a wide scope for improvement in the estimation, administration and collection of these taxes."

Source :http://www.finance.gov.pk/publications/FPS_2013_14.pdf

It seems clear from Nawaz Sharif's previous record that he doesn't have the political will to push for these improvements

The growth rate was measured to be 4.3 % and the World Bank forecasts Pakistan's GDP to grow by around 4.8 % in the years 2015,16 and 17
Compare that to India and even Bangladesh who are forecasted to be growing above 6 % and eventually reach 7 %
Forecast Table

So better than PPP yes
But hardly a complete turnaround as some are claiming

You expect him to fix 70 years of shiit that your generals put your system through, along with a few unsuccessful civilian terms???? You should try to find a Jeannie in the bottle for that, open up the bottle and tell her to go fix the entire economy.
Before discrediting someone's hard work, let's see some facts, which I know by sitting in the US, and you guys ignore due to your political affiliation, even sitting INSIDE the country!

1) Tax reforms: These are step by step procedures. The tax net is growing since these guys came in and the growth is significant. They are launching key changes soon so the tax net should further increase by many billions.

BUT, to take the tax net to where a modern country should be, you have to have people earning like a modern country too. Average Pakistani salary is $ 3100.00 (I think this was for 2013 or 2014 per the CIA's fact book). So how much tax do you expect from so little per year income?

So to fix that, you need investments and projects, which, upon completion will generate tremendous amounts of income and thousands of higher paying jobs. This is why these guys focused on getting investments and have started seriously large projects.

2) Never in the history of Pakistan has anyone investment $ 10 billion at a time. You have confirmed investments for over $ 100 billion. That's A lot of money and can help Pakistan create millions of jobs and billions in additional revenue and taxes.

3) Based on Pakistan's history till 2012, Pakistan would barely qualify for extremely high risk loans, no one would loan a dime to Pakistan due to Corrupt-Dari's government. The savings account had a few hundred million at times and the world was waiting on a default. Today, you're credit rating is just as good as any other developing country (may be slightly behind), and Pakistan has about $ 16 Billion in her checking account, which has never happened in the history before.

4) Billions have been poured into supporting the military's operations, advancing security apparatus across the country, buying new, advance weapons and all. Ordering 8 new submarines, buying more AWACS, building JFT, JV'ing Z series heli's, looking into more advanced jets ALL at once......when in the ENTIRE history of Pakistan, has ANY government been able to do so many defense procurements in ONE term. 8 New Submarines ......ALONE is a huge deal, add Frigate JV's, Jet JV's Heli JV's, etc,etc. Where do you think the money is coming from? Its coming from the revenue that the Federal gov't has generated.

This isn't the right time to put that money into defense, but due to improve the law and order situation, ops in FATA, and to give parity with India, it was needed.
I can go on and write a LOT more about it. But your current government is working for Pakistan. They don't have American or British loyalties like IK or Mullah or Zardari do. Their generations lived and are living in Pakistan. So see the amount of work they are doing for the place they call their country. Not sure why the criticism or meaningless identification of wrong doing, 0 appreciation of so much hard work!!!

 

[Menace2Society]

Yes PMLN has done great work on macro economic issues.

But they are not doing anything to bring up the standard of living or quality of surroundings. Everything being done is for benefit of business owners and tycoons.

Where is focus on education, healthcare and sanitation? Pakistan is so dirty, why can't they just spend a bit money on cleaning up.

 

[A1Kaid]

I wonder how much the common man has benefited from the so-called turning around of the economy. Everyone knows what the answer is to that question. That's all I care about.

That's a perfectly valid question, if you read my earlier post the inflation CPI has been reduced to 2.5%, which is the lowest it's been in 13 years. That's good news for "common man". Not to mention energy issue is being solved as well, as more power plants are being constructed and more MW added to the national power grid.

Yes PMLN has done great work on macro economic issues.

But they are not doing anything to bring up the standard of living or quality of surroundings. Everything being done is for benefit of business owners and tycoons.

Where is focus on education, healthcare and sanitation? Pakistan is so dirty, why can't they just spend a bit money on cleaning up.

They have reduced the Inflation CPI to 2.5%, which is the lowest in 13 years, that is a good achievement. As for those issues you mentioned, you can only do something about them with additional government revenue, and that is true for any country. So as the government widens the tax net you'll see further investment in other sectors.