SBP reserves critically low at $6.9 billion (practically zero)

[Ssan]

If you see https://www.macrotrends.net/countries/PAK/pakistan/external-debt-stock

For the last 10 years, Pakistan has been accumulating net new debt at a steep clip. This is a fundamental structural defect that can't be covered with a band-aid. Put simply, Pakistan has been living way beyond its productive capacity (from external perspective) for too long. The alternatives are greatly enhance exports + remittances or greatly diminish imports.

Yes, this is true only in as much as our primary CAD has been negative and this we take out loans to pay off the old loans and to finance the negative primary CAD. This is why people like us were screaming against Ishaq Dar but all the Noonies were high on the heroin of cheap dollars.

 

[epebble]

Yes, this is true only in as much as our primary CAD has been negative and this we take out loans to pay off the old loans and to finance the negative primary CAD. This is why people like us were screaming against Ishaq Dar but all the Noonies were high on the heroin of cheap dollars.

Again, if you see the chart, only in a couple of years you see red, showing a reduction in net debt. This may be due to large inflows of Coalition Support Funds due to Afghanistan war. If so, it is a wartime aberration that does not disprove the primary thesis. Rest of the 40 plus years going to 1970 show net positive increase in debt. I am in agreement that Dar seems to be a moron in economics, but the problem has been there far longer, two generations in fact. Looks like the game of "we take out loans to pay off the old loans and to finance the negative primary CAD" is coming to an end. Pakistan may have to face the bitter realities of no negative primary CAD.

 

[Ssan]

You are missing the Forest for the trees. First you should look at debt as percent of GDP. Musharraf may have run several years of slightly positive overall CAD but as long as, it is small enough, he brought overall debt ration down successfully from over 90% to less than 60%- as did US in the 60s. But that is overall debt- we are looking at foreign debt.

In fact, depends on how you calculate this, as long as you have some stability, you can handle this if your CAD is not crazy. Refer to this- even in horrible for our total nation debt eta of PPP and PMLN total debt as per GDP came down. https://www.ceicdata.com/en/indicator/pakistan/external-debt--of-nominal-gdp

Anyways, if you have a primary CAD surplus, you will get an opportunity if nothing else to a revolving door for your fresh debt to service other outstanding debt obligations.

 

[Riz]

Please see the above. The Americans really do not care who the PM is, as long as they can work with the real power center in Pakistan. IK was just as disposable as all his predecessors, and thus no need to get rid of him by conspiracy.

Im sorry but it was US conspiracy that caused the removal of the khan govt , i know this will increase the of your backside but this is the truth , even a barber of my town better aware of the master slave relationship of US and our generals

 

[-blitzkrieg-]

Kidhar gia madar chood bajwa ?? Kidhar gay usky kuttay ? View attachment 903096

What?! No fricking way, our competent army and PDM are much better than IK, so how is it possible that our economy has suffered so much? I think the numbers must be wrong, because lumber is the best agency in the world, and our country is under their protection.

The economy will take atleast 5 years to correct its course.

Maybe another 5 years to start growing.

Best case scenario.

Dollar in black market ?

Have some self reflection first Naa muraadon.
Just see what happened between August 2021 and April 2022.

 

[epebble]

You are missing the Forest for the trees. First you should look at debt as percent of GDP. Musharraf may have run several years of slightly positive overall CAD but as long as, it is small enough, he brought overall debt ration down successfully from over 90% to less than 60%- as did US in the 60s. But that is overall debt- we are looking at foreign debt.

In fact, depends on how you calculate this, as long as you have some stability, you can handle this if your CAD is not crazy. Refer to this- even in horrible for our total nation debt eta of PPP and PMLN total debt as per GDP came down. https://www.ceicdata.com/en/indicator/pakistan/external-debt--of-nominal-gdp

Anyways, if you have a primary CAD surplus, you will get an opportunity if nothing else to a revolving door for your fresh debt to service other outstanding debt obligations.

debt as percent of GDP is an excellent metric, in a normal healthy economy. But if there are severe distortions, like when the expansion is mostly financed by borrowing, this can get tricky. The much touted 6% growth during IK's tenure was mostly consumption based on borrowing + remittances without a whole lot of increase in production. Now that inflow has gone down, everyone is shocked that there is no growth. If Pakistan had a large GDP and CAD was a small part of tradeable, that wouldn't be a problem. The present situation is the extreme example when external debt gets unsustainable: Simply no new dollars available and the economy comes to a screeching halt for lack of imports.

You should read the Our Dutch Disease by SBP Deputy Governor; https://www.dawn.com/news/1724225/our-dutch-disease
Put in simple terms, what he says is, borrowings + remittances have bred a sort of Welfare Dependency that we see in Western societies where some people are simply not interested in working and subsist on transfer payments.

 

[Riz]

Have some self reflection first Naa muraadon.
Just see what happened between August 2021 and April 2022.View attachment 903217

Dude, pak imported huge machinery and raw materials in 2021 , that effected the import cover , but now since the past 6 months govt banned all kind of business transactions , ab samjah ai k agli ve gai ?

 

[Olympus81]

Have some self reflection first Naa muraadon.
Just see what happened between August 2021 and April 2022.View attachment 903217

Apples and Oranges.

This time the forex reserve includes a heavy chunk of deposits from Saudi Arabia and China.

And the GDP growth trajectory in 21-22 was much better. Not painting a very rosy picture in 21-22, but the situation then, was much better.

And this time, Dar, a thief, is Pakistan’s finance minister. Nothing good can come out of it Mr. Na Muraad.

 

[Ssan]

debt as percent of GDP is an excellent metric, in a normal healthy economy. But if there are severe distortions, like when the expansion is mostly financed by borrowing, this can get tricky. The much touted 6% growth during IK's tenure was mostly consumption based on borrowing + remittances without a whole lot of increase in production. Now that inflow has gone down, everyone is shocked that there is no growth. If Pakistan had a large GDP and CAD was a small part of tradeable, that wouldn't be a problem. The present situation is the extreme example when external debt gets unsustainable: Simply no new dollars available and the economy comes to a screeching halt for lack of imports.

You should read the Our Dutch Disease by SBP Deputy Governor; https://www.dawn.com/news/1724225/our-dutch-disease
Put in simple terms, what he says is, borrowings + remittances have bred a sort of Welfare Dependency that we see in Western societies where some people are simply not interested in working and subsist on transfer payments.

Oh I totally agree with this. Remittances have made people in Pakistan lazy. People in Pakistan think it is normal to have gas be so cheap, etc. They live in the cheapest country on earth and complain about mehengai.

Part of the reason is that we don’t have a market economy that can find the right price for things. Instead the government of the day actively gets involved to drive prices down and make most business activities unprofitable. Which is why we import even food now. Because food prices are set by governments who set it so low so that producing food is not profitable anymore. Then you will have to import food anyways. At prices that are much higher and without CAD pass down these higher prices to people one way or the other.

People in Pakistan need to understand that this is the problem with a command economy that Bhutto introduced.

As far as IKs tenure of 6%, part of that is consumption driven- about 25% off it. The other is actually okay. Exports boomed. IT was going places. Startups. Etc. stark difference from then and now

 

[-blitzkrieg-]

Dude, pak imported huge machinery and raw materials in 2021 , that effected the import cover , but now since the past 6 months govt banned all kind of business transactions , ab samjah ai k agli ve gai ?

What exactly were u importing in Feb and March? I know there are import bills, Guage them against revenues against exports..
The range I gave was to get an idea of ceiling and how they couldn't recover.

Apples and Oranges.

This time the forex reserve includes a heavy chunk of deposits from Saudi Arabia and China.

And the GDP growth trajectory in 21-22 was much better. Not painting a very rosy picture in 21-22, but the situation then, was much better.

And this time, Dar, a thief, is Pakistan’s finance minister. Nothing good can come out of it Mr. Na Muraad.

It was there back then as well.. just search up and you will find saudia allocating funds for our reserves
Nowhere did I say daar will do anything good..

Only called for some Introspection.

 

[kursed]

This is a good indication of what happened with our exports. And while the author tried really hard to not hold PDM responsible for all the crap that's been going on, he could not help citing basic facts, as they are.

Political uncertainty hits tech exports in Pakistan

Pakistani players in IT services are still hiring and expanding their sales offices abroad.

www.dawn.com

 

[RealNapster]

Majority of reserves are deposit from China, KSA, cannot be spent.

View attachment 903095

Since Last February, we are neutral in the battle of Dollar incoming and outgoing and hence won't interfere is depleting Reserves. Head SBP

 

[AZ1]

Have some self reflection first Naa muraadon.
Just see what happened between August 2021 and April 2022.View attachment 903217

رجیم چینج آپریشن کی وجہ سے پاکستان کو تقریباً 12 ارب ڈالر کا نقصان ہوا ہے۔ ماہر معیشت ڈاکٹر اشفاق حسن خان

 

[-blitzkrieg-]

رجیم چینج آپریشن کی وجہ سے پاکستان کو تقریباً 12 ارب ڈالر کا نقصان ہوا ہے۔ ماہر معیشت ڈاکٹر اشفاق حسن خان

I would like to see where he said that, the context and what period he is referring. I would also love to know what policy he thinks Imran had to avert the crisis of Feb 2022. And what was the actual composition of the Internal destability being cause to international factors.

 

[HAIDER]

Have some self reflection first Naa muraadon.
Just see what happened between August 2021 and April 2022.View attachment 903217

Just see what happened between August 2021 and April 2022... check the facts again.