What happens when your foreign reserves are depleted: A real world example.

[Crimson Blue]

So foreign reserves of Sri Lanka have declined from $8 billion two years ago to about $2.8 billion now. May be they have their own version of Ishaq Dar. Now they are facing food shortages and started rationing food items which are imported for most part.

They also do not have friends like Saudi Arabia & UAE to shore up their foreign reserves like they did for Pakistan in 2018.

There are some clowns on this board who keep spewing outlandish economic prophecies stating that foreign reserves have no impact on economy or prosperity. They can also learn a thing or two from this example ( and they are also free to look @ Lebanon and Venezuela) .


SriLanka declares economic emergency | Inside Story by Al Jazeera


Sri Lanka foreign reserves drop to US$2.83bn after bond repayment, liquidity injections


I am just puzzled, why our news media does not cover this story in Pakistan? Its not like Kashmir where supporting Kashmir cause would be like supporting PTI government, so most of media channels avoid that.

 

[Pandora]

I am just puzzled, why our news media does not cover this story in Pakistan? Its not like Kashmir where supporting Kashmir cause would be like supporting PTI government, so most of media channels avoid that.

Our News outlets churn nothing but masala news. They simply dont have Intellectuals or Intellectual capacity to debate such complex issues. Can you imagine Shahzeb Khanzada, Hamid Mir, Kashif Abbasi, Tala Ch and others doing a show on sirilanka as case study? Only person who might be able to do coordinate this debate would be Moeed Pizada.

 

[Black.Mamba]

Our News outlets churn nothing but masala news. They simply dont have Intellectuals or Intellectual capacity to debate such complex issues. Can you imagine Shahzeb Khanzada, Hamid Mir, Kashif Abbasi, Tala Ch and others doing a show on sirilanka as case study? Only person who might be able to do coordinate this debate would be Moeed Pizada.

Until we have a few Moeed Pirzada's in journalism we should not be expecting anything productive from our media houses. All they do is waste time on non-issues.

 

[blueazure]

There are some clowns on this board who keep spewing outlandish economic prophecies stating that foreign reserves have no impact on economy & prosperity. They can also learn a thing or two from this example ( and they are also free to look @ Lebanon and Venezuela) .

for now, sbp is content with letting PKR free fall ( mkt forces at work) .

however, at a certain point in near future, SBP will have to intervene and burn reserves ( aka ishaq dar formula) othersiwe 171-175 PKR


where will inflation go from here ?


pti 's dismal performance in cantonment board elections is an eye opener -

 

[Pandora]

Until we have a few Moeed Pirzada's in journalism we should not be expecting anything productive from our media houses. All they do is waste time on non-issues.

Although i hate Fawad Ch but he was right when he said that Media houses need to change their buisness model. They seriously need to switch from all masala to more intellectual debate. They need to stop bringing politicians on TV for debate where they get free reign on barking like mad dogs. Start inviting subject experts and not jugadi experts or jack of all trades like pervez Hodboy who is expert on everything but his own subject. Not a single news achor has done a detailed session of SNC. Even the ones they did they called in people like Hoodboy to derail discussion. We seriously need to move away from Indian style media buissness model.

 

[Nyayadhikari]

It was forex crisis in India that resulted in ground breaking Economic Reforms of 1991. It was opposed by all the quarters but the economy really picked up. Hoping the same for Pakistan. Privatising the non sovereign functions must be the priority. The government has no business in doing business.

 

[Crimson Blue]

pti 's dismal performance in cantonment board elections is an eye opener -

I kind'a agree with you. Its unfortunate for PTI to come in to power in 2018. We should have had another go around with PML(N) in 2018.
With another 5 years of PML(N), we would not be talking about example of Sri Lanka, but instead other countries would be talking about us as an example.

 

[Imran Khan]

It was forex crisis in India that resulted in ground breaking Economic Reforms of 1991. It was opposed by all the quarters but the economy really picked up. Hoping the same for Pakistan. Privatising the non sovereign functions must be the priority. The government has no business in doing business.

i am forced to be agreed

 

[sparten]

pti 's dismal performance in cantonment board elections is an eye opener -

You mean the elections they won?

 

[MH.Yang]

Foreign exchange reserves should be higher than 23% of GDP.

 

[Zibago]

pti 's dismal performance in cantonment board elections is an eye opener -

Dismal? They are still the biggest party in Pakistan

 

[Crimson Blue]

Foreign exchange reserves should be higher than 23% of GDP.

Sheesh .... do not tell it to Pakistanis. They already thinks that current foreign reserves which amounts to 10% (or less) of GDP are just too excessive.

You would see one clown after another on this board stating their opinion as to why SBP need to sell these foreign reserve to buy PKR so that value of PKR against USD can be supported. And then they proceed to turn discussion which was supposed to be about how depletion of foreign reserves are effecting economy of Sri Lanka, around to national politics of Pakistan.

 

[m52k85]

It was forex crisis in India that resulted in ground breaking Economic Reforms of 1991. It was opposed by all the quarters but the economy really picked up. Hoping the same for Pakistan. Privatising the non sovereign functions must be the priority. The government has no business in doing business.

Thank you.

See guys, Indians can have a positive contribution and that too on pdf.

 

[MH.Yang]

Sheesh .... do not tell it to Pakistanis. They already thinks that current foreign reserves which amounts to 10% (or less) of GDP are just too excessive.

You would see one clown after another on this board stating their opinion as to why SBP need to sell these foreign reserve to buy PKR so that value of PKR against USD can be supported. And then they proceed to turn discussion which was supposed to be about how depletion of foreign reserves are effecting economy of Sri Lanka, around to national politics of Pakistan.

You may forget that Pakistan and China have an agreement to exchange 20 billion CNY and equivalent PKR at the beginning of each year. This means that Pakistan has a foreign exchange reserve fixed growth of 20 billion CNY a year.

 

[Crimson Blue]

You may forget that Pakistan and China have an agreement to exchange 20 billion CNY and equivalent PKR at the beginning of each year. This means that Pakistan has a foreign exchange reserve fixed growth of 20 billion CNY a year.

Wait a second. Hey folks, has any one ever heard of such an arrangement?

That amounts to $3 billion per year for Pakistan. Do you have a link to a news or an article where such an arrangement is mentioned?

It must be a part of a trade agreement where China pays Pakistan back in USD for the excessive trade deficit between Pakistan and China, right....?