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Who is responsible for Economic Crisis in Pakistan?

Media is taking revenge and creating fake stories about economy. Economy will need 24 to 48 months to fully recovered. I have mentioned that so many times that Pakistani economy was (and still in some sectors) in a mess and opposition is not helping. Opposition/corrupt mafia is trying to create uncertainty and chaos in Pakistan which is the worse thing for economy. We need stability and investment. PTI government has take measure to improve economy and some of them are already showing positive signs.
Government should reduce 50% tax until 2024 for all new IT companies. This will promote IT industry and economy.
 
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Please do tell what everyone knows. I, for some reason, do not know the obvious. Do educate us lesser mortals.

Some good data here:

https://www.dawn.com/news/1511314/too-early-to-celebrate


Too early to celebrate
Uzair M. Younus
October 17, 2019

TOUGH measures are having an impact. Good times are around the corner. The government’s policies are working. We have heard this time and time again. Every IMF programme in this century has led to the following: the currency depreciates, inflation peaks, and the fiscal and trade deficits narrow.

All of this occurs as the economy slows down, inflation inches up, and life gets harder for most citizens. That the stabilisation programme is having its intended effect — both good and bad — cannot be disputed. But does that mean that the government can pat itself on the back and start celebrating? To answer this, one must dig deeper, for the devil is in the details.

Let’s start with the first quarter’s revenue numbers. The government has said that revenue grew by 15 per cent in the first quarter of this fiscal year and that it was able to largely meet the IMF’s target. In fact, the finance secretary has reportedly said that while the IMF demanded a primary deficit of about Rs100 billion, the government was able to have a surplus of almost Rs200bn. Adviser to the Prime Minister on Finance Dr Abdul Hafeez Shaikh has proclaimed that the fiscal deficit is under control.

On the surface, this looks like quite an achievement, especially given the lacklustre level of growth in the economy. But look a little closer and you will see all sorts of creative ways being deployed to make the numbers look good.

On the revenue side, associations representing the export industry claim that the government has not refunded over Rs150bn to exporters in the last quarter. That’s a substantial sum that is creating all sorts of working capital issues for export-oriented businesses at a time when increasing exports is the need of the hour. This working capital crunch is leading to higher costs given the sky-high rates of interest.

In a slowing global economy, businesses are being forced to cut costs and compete for thinner margins — recent data shows that while the quantity of exports has increased, a decline in prices has led to flat revenues. Further compounding the woes is the fact that the government’s solution of issuing bonds instead of refunds has failed, primarily because there is no secondary bond market where exporters can sell off the bonds to meet their working capital needs.

Dr Shaikh also has not disclosed the funds released under the Public Sector Development Programme (PSDP), which is a significant chunk of money disbursed by the government for key infrastructure projects. These projects are critical for long-term growth in the economy as they build vital infrastructure necessary for sustained growth. Slowing these projects may yield benefits in terms of reducing the fiscal deficit, but it also lowers potential long-term growth of the economy.

Given the cash crunch being faced by the government, it would not be unwise to assume that the fiscal deficit improvement has been driven by reduced PSDP disbursements. Finally, the finance secretary has also reportedly said that the improvement in revenues is driven by increase in non-tax revenues, which are a one-off occurrence.

If we remove the pending refunds, reduced PSDP disbursement, and one-off revenue inflows, then the numbers look quite bleak, even though the quarterly revenue target was significantly lower than the 45pc annual increase agreed upon with the IMF.

While the fiscal deficit poses the biggest short-term risk to the stabilisation programme, medium-term growth wholly depends on the successful implementation of structural reforms. This is mentioned in the World Bank’s most recent report and has been mentioned in similar reports going back years. These reforms include privatisation of loss-making SOEs, resolving the circular debt in the energy sector, and improving competitiveness to boost exports and attract FDI inflows.

For various reasons, mostly political, successive governments have failed to push these reforms through. The story is similar under this government, where reports indicate that the cabinet is split on aggressively pursuing the privatisation programme. In fact, in a sea of taskforces and committees, we have yet to see a singular vision that elaborates on the economic vision and reforms that this government will push through in the coming months.

The fact is that Pakistan’s economy is still a long way away from stabilising, while achieving sustainable growth in the medium term remains a pipe dream. The revenue being collected by the FBR is significantly below what was agreed to with the IMF, even if one ignores the creative means that have been used to pad these numbers. The revenue target remains the Achilles’ heel of the ongoing stabilisation programme and it is highly likely that these targets will be missed in the second and third quarters of this fiscal year. As the pressure mounts and the numbers do not add up, the government will have to further increase tariffs and raise taxes, while the State Bank will have to keep interest rates at a high level to stem inflation, resulting from a persistently high fiscal deficit and secondary effects of increased tariffs.

Given this backdrop, it is unwise for the government to yet again declare that victory is close at hand. Such proclamations were made at the end of last year, and the situation has only worsened since. While these claims lead to a short burst of optimism in the country, the gains quickly fade away and turn into a liability as economic pain mounts.

What the prime minister’s team should do is come clean about what is required to achieve key targets in the short term, why these decisions must be made, and disclose and execute a medium-term plan to reform this sickly economy. Tough decisions must be made, and the more honest the government is, the greater its ability to push through reforms in the face of an increasingly vocal opposition. If the government fails, then Pakistan’s economy will quickly find itself back in the emergency room soon after the stabilisation period is complete.
 
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People have right to criticize, but do us all a favor by doing constructive criticism with details so others can respond to it.

What the prime minister’s team should do is come clean about what is required to achieve key targets in the short term, why these decisions must be made, and disclose and execute a medium-term plan to reform this sickly economy. Tough decisions must be made, and the more honest the government is, the greater its ability to push through reforms in the face of an increasingly vocal opposition. If the government fails, then Pakistan’s economy will quickly find itself back in the emergency room soon after the stabilisation period is complete.

Increasingly vocal opposition???
Corrupt mafia and their friends want to stop the accountability. Why they failed to address economic issues in Last 10 years? What was their (PMLN & PPP) short term and long term economic goals?

There is no magic wand to fix the wrong economic polices and the mess it created in last 30 years.
 
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When musharraf left no deficit on PPP. When PPP left deficit was $2- $4 billion, when nawaz left this deficit went to $18-$20 billion.

Hope above should give you a tiny spot of light in the darkness of your brain.

View attachment 584646

How come Mushy 'left no deficit'?
1. Post 9/11 lots of worried Pakistanis bought property in Pakistan, thus contributing to an improvement in balance of Payments. Incidentally this created a property bubble that went bust in 2005.
2. Mushy encashed WoT, Pakistan got CSF payments. These sources dried up after OBL raid.
3. The worst impact of WoT via TTP happened during PPP years & two years of PML-N rule. No investment came due to bad press, bad perception of Pakistan as an unfavorable investment destination, & bad growth figures.

Perhaps now you would understand why Mushy's regime 'looks' better in contrast.

PPP left lower deficit, yes. But look at the growth figures, energy situation, investment climate, & perception of corruption (TI index). PPP foolishly thought that Thar coal would be the answer to all energy woes and could not get any project going. With little infrastructure investment there was no reason for deficit to increase beyond regular consumption.

PML-N knew where the bottle-necks were and set upon addressing them. The most difficult one was installation of energy projects, without which absolutely no long-term growth could be had, no export could improve, & nobody would consider Pakistan as a worthwhile investment destination. CPEC was responsible for a lot of the deficit figures. But with deficit, we also saw fast improvement in GDP growth, improvement in FDI, & improvement in sentiment. Where PML-N went wrong was that PRS should have begun to depreciate against USD in late 2016 to control ballooning of balance of payments deficit. PML-N held off on that because Services sector (Retail in particular) was the highest contributor to GDP growth. In retrospect, it was a mistake. In 2017 we saw a great deal of instability and resultant inertia from PML-N. Only in late 2017 did PML-N started corrective measures, but it was a bit late by then. However, in FY 2017-18 Pakistan had the highest GDP growth. Remember that every single percent of growth means creation of around 4 Billion USD worth of wealth and positive perception. In 2017-18 Pakistan could have encashed the growth in shape of FDI and covered part of the deficit, but the dharna instability & political interference from Establishment scared off FDI and the momentum was lost. PML-N was not responsible for this instability. Establishment & PTI were on same page and play Khatam-e-Nabuwwat card against the sitting government in every way possible. Do you remember TLYR's Faizabad dharna, where Punjab Rangers refused to obey government's orders? I remember it very very well. That was the time when GDP growth's coffin got nailed.

I have conclusively proved that your statement was absolutely wrong, biased, & based on only balance of payment figures. You have totally ignored the factors that ensured that fruits of deficit spending were lost. You have made absolutely no reference to the disastrous handling of economy by PTI's government. You have totally ignored the role of FDI that shrunk very rapidly in 2018 & 2019; this in particular is the proverbial elephant in the room that newbie faux economists do not know about.

I could go on, but I think you need time to digest the above information.

Just to summarize:

Look at CPEC investment
Look at improved growth figures
Look at FDI improvement & then drastic shrinkage
Look at the role of Services sector that grew due to PRS:USD exchange rate stability
Look at the level of your ignorance. This last one is most important. Now watch PTI flail, lash-out, & fail. So much for effing tabdeeli & its ignorant supporters.

Pakistan needs a Mao !

You need an education.

Media is taking revenge and creating fake stories about economy. Economy will need 24 to 48 months to fully recovered. I have mentioned that so many times that Pakistani economy was (and still in some sectors) in a mess and opposition is not helping. Opposition/corrupt mafia is trying to create uncertainty and chaos in Pakistan which is the worse thing for economy. We need stability and investment. PTI government has take measure to improve economy and some of them are already showing positive signs.
Government should reduce 50% tax until 2024 for all new IT companies. This will promote IT industry and economy.

Your mind is playing tricks on you because the cognitive dissonance is too much for you. You should have questioned PTI & Establishment propaganda a bit while it was being fed to you.
 
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How come Mushy 'left no deficit'?
1. Post 9/11 lots of worried Pakistanis bought property in Pakistan, thus contributing to an improvement in balance of Payments. Incidentally this created a property bubble that went bust in 2005.
2. Mushy encashed WoT, Pakistan got CSF payments. These sources dried up after OBL raid.
3. The worst impact of WoT via TTP happened during PPP years & two years of PML-N rule. No investment came due to bad press, bad perception of Pakistan as an unfavorable investment destination, & bad growth figures.

Perhaps now you would understand why Mushy's regime 'looks' better in contrast.

PPP left lower deficit, yes. But look at the growth figures, energy situation, investment climate, & perception of corruption (TI index). PPP foolishly thought that Thar coal would be the answer to all energy woes and could not get any project going. With little infrastructure investment there was no reason for deficit to increase beyond regular consumption.

PML-N knew where the bottle-necks were and set upon addressing them. The most difficult one was installation of energy projects, without which absolutely no long-term growth could be had, no export could improve, & nobody would consider Pakistan as a worthwhile investment destination. CPEC was responsible for a lot of the deficit figures. But with deficit, we also saw fast improvement in GDP growth, improvement in FDI, & improvement in sentiment. Where PML-N went wrong was that PRS should have begun to depreciate against USD in late 2016 to control ballooning of balance of payments deficit. PML-N held off on that because Services sector (Retail in particular) was the highest contributor to GDP growth. In retrospect, it was a mistake. In 2017 we saw a great deal of instability and resultant inertia from PML-N. Only in late 2017 did PML-N started corrective measures, but it was a bit late by then. However, in FY 2017-18 Pakistan had the highest GDP growth. Remember that every single percent of growth means creation of around 4 Billion USD worth of wealth and positive perception. In 2017-18 Pakistan could have encashed the growth in shape of FDI and covered part of the deficit, but the dharna instability & political interference from Establishment scared off FDI and the momentum was lost. PML-N was not responsible for this instability. Establishment & PTI were on same page and play Khatam-e-Nabuwwat card against the sitting government in every way possible. Do you remember TLYR's Faizabad dharna, where Punjab Rangers refused to obey government's orders? I remember it very very well. That was the time when GDP growth's coffin got nailed.

I have conclusively proved that your statement was absolutely wrong, biased, & based on only balance of payment figures. You have totally ignored the factors that ensured that fruits of deficit spending were lost. You have made absolutely no reference to the disastrous handling of economy by PTI's government. You have totally ignored the role of FDI that shrunk very rapidly in 2018 & 2019; this in particular is the proverbial elephant in the room that newbie faux economists do not know about.

I could go on, but I think you need time to digest the above information.

Just to summarize:

Look at CPEC investment
Look at improved growth figures
Look at FDI improvement & then drastic shrinkage
Look at the role of Services sector that grew due to PRS:USD exchange rate stability
Look at the level of your ignorance. This last one is most important. Now watch PTI flail, lash-out, & fail. So much for effing tabdeeli & its ignorant supporters.



You need an education.



Your mind is playing tricks on you because the cognitive dissonance is too much for you. You should have questioned PTI & Establishment propaganda a bit while it was being fed to you.

maybe you should run for MNA so you can one day become the PM to fix all the problems of Pakistan.
Maybe you can use the attached magic wand. It has 5 modes of play.

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My 2 cents.

All in all, till today, Pakistan has borrowed around SDR 13.79 billion from the IMF, out of which 47% of the loans were secured by PPP, followed by PML-N at 35%, while the military dictatorships lag behind with a mere 18%. Pakistan have taken 22 loans in 61 years.

@Chak Bamu

Sorry but sometimes it helps if one do proper research on the subject.

That said, looking at Pakistan's history, nobody should even ask this question - "who is responsible of Pakistan's economic crisis". Khan/PTI doesnt have magic wand which he will swing in the air and make all this mess go away.

More to the point, with the help of above data we can see who are the culprits (PPP & PML-N). Ironically, Pakistan have seen its best years under dictator (i.e. Musharaf) - which is a tight slap in the face of those who whine & criticize 24x7 about establishment & Army. Did Army & establishment asked Nawaz and Zardari to inflict damage to Pakistan? Hell no. What have these two done for Pakistan, beside building their own empires of Pakistani tax payer's money.

These two have always brought bad name to Pakistan. Its due to these two there is no respect of Pakistan in Intl and Islamic countries.

Now finally we have Khan, who has taken a stand for Pakistan and Muslims of the world. Its Khan and Pakistan establishment who are playing role of mediator in between KSA and Iran. I bet if Nawaz or Zaradi would've been at the helm, they would've give two hoots about the regional situation.

Khan is earning respect at almost all diplomatic fronts for Pakistan and working closely with Army and establishment, which is very difficult for PML-N and PPP supporters to swallow, therefore, they call him puppet/selective PM.

Apparently if you support your country, Army and establishment than you're a puppet, however, you will be called a leader if you're in bed with Indian and badmouth Pakistan Army and establishment.

Thanks for a more reasoned post that what has become the norm.

You must be able to put things in perspective before you declare a verdict. For perspective, you have to know a bit about history. In context, your post seems heavy on superficial views.

Let me explain & provide some context:

During the first martial law (imposed by Ayub Khan), Pakistan joined CENTO & SEATO and effectively became a state aligned with US-led Western world as opposed to the Soviet bloc or a part of the non-aligned movement. This meant support for loans, military equipment & training support (F-86, artillery guns, Patton tanks, etc...), a bit of investment, etc... USA effectively subsidized Pakistan's military Capital Expenditure. Pakistan saw 6%+ growth for a few years, which was the so-called golden era that masked the dynamics that led to events of 1971.

During the second martial law, Pakistan was the front-line state in the cold-war. A lot of goodies, similar to the ones described above came Pakistan's way. After the difficult years (1971-1977) during which Bhutto implemented the disastrous policy of nationalization of private businesses, Pakistan again saw 6%+ growth. After Soviet withdrawal in 1988, Pakistan fell out of favor and was at the receiving end of sanctions (F-16 embargo, eg). The price of martial law was paid in form of immature politics by PPP & PML with incomplete tenures, conflicting policies, & interventions by Establishment.

During the 3rd martial law, Pakistan was the front-line state in WoT. Pakistan received investment, loans, CSF, etc... But this martial law gave Pakistan a really bad security situation, insurgency in Balochistan, biting energy scarcity & NRO. The price of this martial law was paid by the country in the shape of a very bad federal government stint by PPP and murder & mayhem at the hands of TTP. The only good thing that happened during PPP tenure was 18th amendment & subsequent NFC award. During this time Establishment pumped its support to create support for PTI - a process led unashamedly by Gen Shuja Pasha.

When PML-N came to power, it set itself the task of reviving the economy, ending rolling loadshedding, & improvement in law & order situation. It succeeded in the three sectors. During this time, however, it was beset by political instability engendered by PAT & PTI, both Establishment proxies. TLYR joined the fray in 2017 with Establishment's full support, which was very much visible during Faizabad dharna - Rangers refused to obey orders of the Interior minister, who in turn had been ordered by Islamabad High Court to remove the dharna. We also saw a Major General distributing Rs. 1,000 notes to the participants.

So you see my friend, you can not simple throw a few percentages up in the air and call it analysis. This is not analysis but display of programming that you have received over the years. Generally each civilian government left something good in its wake:

Purchase of Gwadar by PM Feroze Khan Noon in 50s
Constitution of 1956 by PM Chaudhry Muhammad Ali
Securing release of POWs by Bhutto in 1973
Constitution of 1973 by Bhutto
Launch of Atomic program by Bhutto
Benazir's government 1988-91 that reduced the rifts created in Sindh province
Policy of deregulation by NS government of 1991-1993
18th Amendment by PPP government in 2009 & new NFC award that gave provinces more resources

Let us look at what military governments left in their wake:

Abolishment of 1956 constitution in 1958
Joining of US-led Western Camp by joining CENTO & SEATO
Rigged elections in 1964
1962 'basic democracy' constitution based on laughable ideas of Ayub Khan, which was shown its worth by Gen Yahya Khan
The tragedy and break-up of Pakistan in 1971
90,000 POWs in Indian jails in 1971
Jihad policy, which saw ISI grow its role exponentially from 1978-87 (I have mixed feelings, but that is a separate debate - we see its long-term effects until today).
Kargil & its aftermath.
Sham referendum, PML-Q, & rigged elections in 2002.
Insurgency in Balochistan, starting from 2005.
Lack of a coherent energy policy during Mushy years that led to extreme energy starvation that killed small & medium industry in the long run.
Back-lash of WoT that is still visible & has started rising after having been largely subdued in 2015-16.
Patronage of non-state actors that has landed Pakistan in FATF grey list.

Your percentages are nothing when you compare the two lists.

If you still think that there is any comparison between civilian & martial governments, then you need to read some serious & impartial history.

Present PTI government is just a proxy that has not worked according to plan because the plan was flawed from the start. IK is blaming everyone left, right, & center, but the situation is actually out of control.

More later....
 
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Present PTI government is just a proxy
PTI is most popular party of Pakistan and Imran Khan is most popular leader Pakistan ever had
And people like you who were beneficiaries of ganja rule are crying
Rotay raho ganja sari Zindagi jail main rahay ga
 
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Who is responsible? The army/establishment!

Governments have come and gone, but the army/establishment have remained in power for decades - bringing in whatever policies or politicians they wanted and shifting the blame whenever it suited them.

Let's look at the past two decades alone:

- Musharraf: Army
- PML-Q: Musharraf/Army
- PPP: after deal with Musharraf / Army/ Kiyani
- PML: After deal with Army / then destroyed by Army
- PTI: :sarcastic:

Even MQM: created by, then kept in power, and then destroyed by the Army.

Fazlu: pakka Army man, and even now I'm sure hes supported at some level by the same.

So let's all remember who is actually responsible. The likes of NS and Zardari and IK are just pawns. And in the words of IK - "umpire ki ungli", controls them all.
 
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Who is responsible?
220 million Pakistanis are responsible
Biggest problem of Pakistan is overpopulation and common people are responsible for it
Pakistan is going in right direction government is doing whatever it can
 
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Thanks for a more reasoned post that what has become the norm.

You must be able to put things in perspective before you declare a verdict. For perspective, you have to know a bit about history. In context, your post seems heavy on superficial views.

Let me explain & provide some context:

During the first martial law (imposed by Ayub Khan), Pakistan joined CENTO & SEATO and effectively became a state aligned with US-led Western world as opposed to the Soviet bloc or a part of the non-aligned movement. This meant support for loans, military equipment & training support (F-86, artillery guns, Patton tanks, etc...), a bit of investment, etc... USA effectively subsidized Pakistan's military Capital Expenditure. Pakistan saw 6%+ growth for a few years, which was the so-called golden era that masked the dynamics that led to events of 1971.

During the second martial law, Pakistan was the front-line state in the cold-war. A lot of goodies, similar to the ones described above came Pakistan's way. After the difficult years (1971-1977) during which Bhutto implemented the disastrous policy of nationalization of private businesses, Pakistan again saw 6%+ growth. After Soviet withdrawal in 1988, Pakistan fell out of favor and was at the receiving end of sanctions (F-16 embargo, eg). The price of martial law was paid in form of immature politics by PPP & PML with incomplete tenures, conflicting policies, & interventions by Establishment.

During the 3rd martial law, Pakistan was the front-line state in WoT. Pakistan received investment, loans, CSF, etc... But this martial law gave Pakistan a really bad security situation, insurgency in Balochistan, biting energy scarcity & NRO. The price of this martial law was paid by the country in the shape of a very bad federal government stint by PPP and murder & mayhem at the hands of TTP. The only good thing that happened during PPP tenure was 18th amendment & subsequent NFC award. During this time Establishment pumped its support to create support for PTI - a process led unashamedly by Gen Shuja Pasha.

When PML-N came to power, it set itself the task of reviving the economy, ending rolling loadshedding, & improvement in law & order situation. It succeeded in the three sectors. During this time, however, it was beset by political instability engendered by PAT & PTI, both Establishment proxies. TLYR joined the fray in 2017 with Establishment's full support, which was very much visible during Faizabad dharna - Rangers refused to obey orders of the Interior minister, who in turn had been ordered by Islamabad High Court to remove the dharna. We also saw a Major General distributing Rs. 1,000 notes to the participants.

So you see my friend, you can not simple throw a few percentages up in the air and call it analysis. This is not analysis but display of programming that you have received over the years. Generally each civilian government left something good in its wake:

Purchase of Gwadar by PM Feroze Khan Noon in 50s
Constitution of 1956 by PM Chaudhry Muhammad Ali
Securing release of POWs by Bhutto in 1973
Constitution of 1973 by Bhutto
Launch of Atomic program by Bhutto
Benazir's government 1988-91 that reduced the rifts created in Sindh province
Policy of deregulation by NS government of 1991-1993
18th Amendment by PPP government in 2009 & new NFC award that gave provinces more resources

Let us look at what military governments left in their wake:

Abolishment of 1956 constitution in 1958
Joining of US-led Western Camp by joining CENTO & SEATO
Rigged elections in 1964
1962 'basic democracy' constitution based on laughable ideas of Ayub Khan, which was shown its worth by Gen Yahya Khan
The tragedy and break-up of Pakistan in 1971
90,000 POWs in Indian jails in 1971
Jihad policy, which saw ISI grow its role exponentially from 1978-87 (I have mixed feelings, but that is a separate debate - we see its long-term effects until today).
Kargil & its aftermath.
Sham referendum, PML-Q, & rigged elections in 2002.
Insurgency in Balochistan, starting from 2005.
Lack of a coherent energy policy during Mushy years that led to extreme energy starvation that killed small & medium industry in the long run.
Back-lash of WoT that is still visible & has started rising after having been largely subdued in 2015-16.
Patronage of non-state actors that has landed Pakistan in FATF grey list.

Your percentages are nothing when you compare the two lists.

If you still think that there is any comparison between civilian & martial governments, then you need to read some serious & impartial history.

Present PTI government is just a proxy that has not worked according to plan because the plan was flawed from the start. IK is blaming everyone left, right, & center, but the situation is actually out of control.

More later....
Keep crying patwari.... Your Nawaz Sharif will remain in jail and IK will not only finish this term he will be re-elected 2023. Stop eating that donkey and don't you dare wish ill for my country just because your god isn't at the PM seat.
 
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220 million Pakistanis are responsible
Biggest problem of Pakistan is overpopulation and common people are responsible for it
Pakistan is going in right direction government is doing whatever it can

Bangladesh has about the same number of people but less resources. India has 6 times the people in 4 times the land.

Dont blame the people. What were people of Karachi to do when Army brings in and strengthens MQM? What is a poor farmer in Sindh to do when a wadera tells him to vote for him or die after his party makes a deal with and is allowed to flourish by the establishment? What was someone in Sui or Dera Bugti to do when a sitting PM (forgot his name, he was from Balochistan and belonged to Q) would visit Dera Bugti and touch the feet of Bugti?

The people are not to blame! Give them better candidates and protection for their vote and watch what happens.
 
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