1 Question for PTI - Imran trash talks IMF & World Bank but his budget suggests otherwise

[Amjad Khan Afridi]

Brother as you said that 8.4% fiscal deficits will be brought down to 4.5% , which is not difficult at all and even this deficit can be deminiahed by using a simple monetory policy. As these days a small percentage of people are paying tax even Noora league and Zardari are not paying at all so if tax has been taken from such people the deficit will be finished by itself.if you know what is is fiscal policy then you may understand what i mean. Friends for those who have no idea about fisca deficit is that its defined as the difference between taxation and government expenditure. So if Noora pay 5000 rupees in tax and deficit is still 8.4% then imagine if he pay full tax as well as the other businesses too then think about it. It will be Billions . By the way i have seen Nooras twin towers in Ilferd by myself. you can check it on google earth.You can identify them as they are the longest towers in Ilferd. Lol

 

[Amjad Khan Afridi]

Govt: expenditure can be cut down by keeping ministorial cabinate small and with a little protocol. As Iranian did , why cant we. Dubai is a business centre because of its location. Oil is producing only a 4% of its GDP. it donot have any other natural resources. Brother we have gawadar port and indefinite resources. Atleast bee positive, not for IK but for Pakistan. I never support any politican because I support Pakistan.

 

[AsifAmeer]

Either

• PTI tells us that they will balance the budget (i.e. Govt should only spend what it collects as taxes)

OR

• It should tell us where it will finance an equivalent of $10billion per year..

They cant say they will borrow from the bond market as that will leave nothing for the private sector. And they cant say that they will borrow from the IMF coz they have shown their stand against International lenders (and I support them on this stand).

As a pure discussion (only trying to understand the problem), can you put your concern in simpler terms ?

 

[AsifAmeer]

Lekin thats already been accounted for when they projected the deficit will drop from supposed 8.4% to 4.x%. INcreased revenue, growth in remittances, FDI and GDP. All these factors have been accounted for in dropping the deficit to 4.x%. Sahi..?

Haan.. reading Economic history is so much better than reading economic theory. When you know what happened and what keynes proposed, even if one disagrees with his views, one can see why he's thinking the way he is. Another thing was that he was a political underdog. He understood the economics of politics. Lekin things are the same today in Global geo-politics. Folks talk about reducing debt without seeing the other side of the argument - that money would disappear if all debt is paid off. The whole modern money theory fed by central bankers has led mankind is a stinking rabbit hole!

If I am not wrong I can only see one question in your reply and that is how the private sector would see PTI policy, as you know that private sector on bond or which we often here in UK call Gilts is interested in yield or yield curve, more specifically real yield. If a government goes for fiscal consolidation for discipline, it influence he bond and well as stock market positively due to the reduction in default risk premium as well as inflation. A fiscal discipline or consolidation would be a good new for financial sector and definatly it would be transmitted to real economy Inshallah. In context of liquidity for private sector Banking of England has very interesting instruments in its tool box for instance a recent Funding for Lending Scheme and many others.

As you asked how P.T.I would be different from others, so I think you did not pay much attention towards their plan to increase revenues. So you have a gradual rebalancing. About SBP figures there might be some difference I did not check details but there is not doubt there is fiscal imbalance in Pakistan.

If you are interested in history of economics may I dare to suggest you to have a look into British history.

Regards

 

[arslan4u]

Why not ask a PTI official instead of calling Imran Khan a liar when you dont even know yourself where that 9.5 billion will come from? How can you just force your own answer by saying they will borrow more from IMF/World Bank so Imran Khan is a liar?
If you want an answer, ask the question, dont put your own conclusion before you get the answer. If you ask me (an average PTI supporter) we will get the money from taxes as PTI is going to get taxes from big fish who never pay tax, and raise Tax-to-GDP ratio to 18% within 5 years. Also i can guarantee that there will be a ton of foreign investment mainly from overseas Pakistanis when you give them a system where their investment will be safe and they wont have to fear land mafia or corrupt government servants.

 

[AsifAmeer]

Mansoor, honestly, this issue is not complicated. Let me share it with ya.

Whatever a country produces in 1 year is called GDP. So when we say Pakistan has a GDP of $211 billion, it means Pakistan's economy produced $211 billion worth of goods and services. Goods and services means stuff like Mangoes, Crops, cotton, textile, motor bikes, etc etc.. Theek? So far so good?

Now, Govt collects taxes and then spends those taxes on maintaining/upgrading infrastructure like roads, military, schools, water, hospitals. Fiscal deficit happens when Govt spends more than it collects in taxes.

PTI says that AFTER alll reforms have been implemented properly, (i.e. raising tax net, growth in FDI, Remittance, GDP, etc) it will project a deficit of 4.5% of GDP.

Yaani Govt will spend equivalent of $10 billion per year more than the govt collects in taxes. This amounts to around 1 trillion Rupees. So where is this money going to come from?

• Borrowing from Local Banks will lockout Private sector growth
• Borrowing from the State Bank will produce inflation (money printing)
• Borrowing from IMF/WB will cause international meddling.

Many have pointed here, and rightly so, that my charges against PTI's economy policy is more ideological than intellectual. PTI thinks they can print money and steer the economy out of a hole.

YOU CANT LIFT THE BUCKET YOU ARE STANDING IN.

Ustadje I can assure you that @AsifAmeer is not a noora guy. he is an economy expert. so his points are valid. I cant understand even a single word of it thats why i just watch all the reasoning and logics in a very boring way and go on. so he is a fair guy but a crack expert. he is very very straight

 

[mrk123]

کیا عمران خان نے مالیاتی خسارے کو کم کرنے کیلیئے کِسی معینہ وقت کا اِظہار کیا ہے؟
یہ اِرادہ پنج سالہ ہے ۔ ۔ ۔ کیا پانچ سال میں بھی یہ ممکن نہیں؟

رہنمائی فرمائی جاوے ۔ ۔ ۔ ۔ ۔
​

BuTurabi Bhai, I am not an economist so take whatever I say with a grain of salt or a bag of salt ;-)

I personally think that its not possible to achieve these goals in 5 years. Its just not realistic. This is too short of a time period and things have slid down a steep slope. If you look around things are in pretty bad shape - we don't have an educated and skilled labor force which is the engine that drives an economy, we have a severe energy shortfall - power and gas are in short supply - heck we don't even have enough water available, our infrastructure is old and inadequate. On top of all these worldly issues we have to deal with the negative attitudes prevailing in the society - intolerance, hate, ignorance, extremism, arrogance, indifference etc. Then there are the divisions among us that have deepened over the last 3 decades and now are too entrenched to be easily rooted out.

Look around the world and you will see countries that will score really high on some of the metrics that I listed above are really finding it hard to get out of an economic slump and you will see people struggling.

I know that I may come across as a messenger of doom and gloom but that's the reality. I am not saying that these goals are not achievable or impractical but the fact is that we will have to work too damn hard to achieve any of those in 15-20 years let alone in 5 years.

I appreciate that PTI has even laid out these goals. At least you know what you have to achieve but what I think @AsifAmeer wanted to point out was that in this state of euphoria some of us don't lose sight of what we are up against and manage the expectations appropriately. You don't want people demonstrating out on the streets against the power cuts 1 year from now because people expected that PTI would command a fairy to wave a magic wand and provide electricity to the grid. I believe having lofty goals is very important but you have to tamper that with some realistic path laid out to demonstrate how those objectives will be met. Using airy fairy language may get you votes but would not help solve the issues.

Again, I am very happy that PTI has shown at least the vision to identify the issues that we face and figured out what needs to be done. Some pragmatists are in a haste to find out a detailed plan that will accompany this vision but I think that is also not fair at this time but asking questions doesn't hurt as long as the discussion is two-way and constructive.

 

[Vitamin_C]

I remember once in 1990s Japans economy temporarily became this size of USA's economy. How is it going to help Pakistan if after 5 years of PTI govt the exchange rate of PKR doubles and equals INR. Does that mean the GDP will rise and with that the DEBT will also rise?

 

[rfarooqi]

[MENTION=24375]AsifAmeer[/MENTION] : Bro thank you for getting so many people involved in the topic. Your question is so spot on and logical that it has forced so many people to think about budgets and policies. Personally I did not expect PTI or any party, even JI if they were given full mandate somehow to break out of the vicious circle. The measures required to make a completely balanced budget would be such a tough pill to swallow that any political party, no matter how revolutionary its ideology is, would find it almost impossible to take. Take an example of the Muslim Brotherhood in Egypt. I read a news piece on this same forum a few days ago that even they have asked for some contribution from IMF, and have couthed the interest rate as service charge.

May I ask, given all the political, international, local business, bureaucratic and local interest group pressure, what would your suggestion be to balance the budget?

 

[mrk123]

Either

• PTI tells us that they will balance the budget (i.e. Govt should only spend what it collects as taxes)

OR

• It should tell us where it will finance an equivalent of $10billion per year..

They cant say they will borrow from the bond market as that will leave nothing for the private sector. And they cant say that they will borrow from the IMF coz they have shown their stand against International lenders (and I support them on this stand).

My guess given the ground realities they will keep borrowing but lay out a path to wean themselves off in the long term. I am sure if you pester them enough they will come back with this reply. There are two ways to look at it - one is that they are in denial and living in a fantasy land and the other scenario is that they know and realize the gravity of the situation and know what to do and know that the steps to get there will be painful and that this process will be long drawn out. I am hoping for everyone's sake that its the latter....

 

[AsifAmeer]

Just because Musharraf did it doesnt mean PTI can or even should do it. Back then Dollar was Rs60. Oil was from $30 to $60... There was a global expansion of commercial credit. Now we are looking a HUGE correction with severe monetary contractions.

Alot has changed since. Just because it worked then, doesnt mean it will work now. Plus Pakistan literally went bankrupt in Oct of 2008.

Let me share a fact with you. There's no such thing as a "Friend". Every country works in its interest. China wants access to the waters of the Arabian sea. Arabs want cheap slaves. Turks wants market for their lower end goods for the 3rd world. When China, Arabs or Turks lend you money, expect them to dictate your policies for you.

@AsifAmeer

I am not an economic expert or even student. But i have a very simple question
what i know is that in musharraf govt's last 4-5 years there was no imf or world bank program in pakistan
we got all our payments rescheduled and said bye bye to imf
Isnt it true?
and as i googled just now and found that there was fiscal deficit of around 4-5 billion dollar at that time each year. Even in 2006-2007 deficit was more than 7 billion


Lets ignore the percentage to gdp
You just tell me
if the fiscal deficit was there then
how did musharraf govt managed that fiscal deficit?
If musharraf can then why not pti?

Solutions are there:
There are our freind countries
like saudi arab, china etc. and i was listening to asad umer
he said that if we will show to the world that we are geniun leadership with a good and honest team surely these countries would help us out
if freinds of pakistan and america can help us in our rainy days why not our real freindly countries?

Likewise there are other means as well, and the top most one is overseas pakistanis... As imran says that we must not under estimate them. As they have alone more wealth then the whole pakistan. So if you make them believe that present govt is not corrupt i hope pakistan will be flooded with foreign remittances

​

 

[AsifAmeer]

The sole purpose of this thread is to force PEOPLE to think critically . I am trying to respond to every single post on this thread. Some replied as simply outstanding. Others arent worth reading.

Only reason I come to this site is to share a different prospective with people. Haan, I cant stand personality worshipers.

Dear, I appreciate your critical thinking (clap) and i want all other PTI supporters to follow the ethics of debate;) Now the @AsifMeer , Our Problem is not from where they are going to fill the deficit because any nation can take loan from IMF and WB otherwise there purpose would be dead the POINT is how you can judge them by what the said that they would be independent from WB and IMF ??? I request you to not to think like an IDEALIST. They(PTI Economic Team) meant by this that , they wouldn't be as mush dependent as status quo today and why you picked that point ?? why you didn't go for what they said about fall of deficit 4.5% of GDP form 8.4 % GDP . I think that is very challenging too because you should have in your mind the debts that government took under their regime. Think from a flexible perspective as compared to rigid and wise person speaks when he has something to say and a fool speaks when wants to say something :)

 

[Mansoor Khan]

Mansoor, honestly, this issue is not complicated. Let me share it with ya.

Whatever a country produces in 1 year is called GDP. So when we say Pakistan has a GDP of $211 billion, it means Pakistan's economy produced $211 billion worth of goods and services. Goods and services means stuff like Mangoes, Crops, cotton, textile, motor bikes, etc etc.. Theek? So far so good?

Now, Govt collects taxes and then spends those taxes on maintaining/upgrading infrastructure like roads, military, schools, water, hospitals. Fiscal deficit happens when Govt spends more than it collects in taxes.

PTI says that AFTER alll reforms have been implemented properly, (i.e. raising tax net, growth in FDI, Remittance, GDP, etc) it will project a deficit of 4.5% of GDP.

Yaani Govt will spend equivalent of $10 billion per year more than the govt collects in taxes. This amounts to around 1 trillion Rupees. So where is this money going to come from?

• Borrowing from Local Banks will lockout Private sector growth
• Borrowing from the State Bank will produce inflation (money printing)
• Borrowing from IMF/WB will cause international meddling.

Many have pointed here, and rightly so, that my charges against PTI's economy policy is more ideological than intellectual. PTI thinks they can print money and steer the economy out of a hole.

YOU CANT LIFT THE BUCKET YOU ARE STANDING IN.

now i understand it yaar. istarha easy easy likha karoo. by the way i think in initial years they have to go for IMF but during later parts when it is on the track they will slowly and slowly detach from them. like egypt. i think that may be the idea

 

[Mansoor Khan]

now i understand it yaar. istarha easy easy likha karoo. by the way i think in initial years they have to go for IMF but during later parts when it is on the track they will slowly and slowly detach from them. like egypt. i think that may be the idea

its very sad. since i m not an expert so can't be a part of discussion. but i wish u get a good company of expert and have some good discussions here.

 

[AsifAmeer]

Asif, did you just create an account to respond to this? lol.. well Welcome! If I have forced some knowledgeable people to join this site, I would gladly take credit for it. [MENTION=10205]Waseem[/MENTION], am I hearing a thank you? See I got you guys AsifShiraz, I got you'll Ali-Economist. And a few I know personally who I do not see on this site.

Asif this is what we need. Bring out the sensible guys! Yes, I threw a stone in the pond and yes I stirred the fishes.. But you are right, its not completely fair to call IK a liar. Lekin there is a shred of truth here. Question is, did he lie knowingly or unknowingly. If its unknowingly, then I hopes this questions (how will they finance the $10billion deficit?) makes it to him and he gets a chance to think it thru.

I want this whole Modern Money theory tossed out the window. I want Pakistan to charge forward and take the lead. Look at all my articles, I have attacked this center of this MMT from all sides, Central Banking, Currency, Commercial Banking, Interest Rates, Credit creation.. everything. Instead of just patching up, PTI should take charge in shredding this economic policy. Afterall, if they wanna call themselves revolutionist, who better to perform this act?

This is PURELY A CONSTRUCTIVE criticism. This shouldnt just be allowed but encouraged. Dont for a second think the laural n hardy brothers or charlie chaplin will be doing point scorings on my back. I was born to offer Fatiha on the graves of dead politicians before spitting there.

Let PTI not be just political but an Intellectual powerhouse. Lets encourage CONTRUCTIVE CRITICISM. IK hai to kiya huwa, no holy cows. If Asad sahab or Tareen Sahab make more sense, let them have a more say. And lets give them a chance to speak their minds rather than dictate team policies.

My main goal to post this question here was to engage people into a critical thinking. And I have attracted more intellectual inputs than I could have dreamed of. Absolutely delighted! And hey... welcome to this site! Hope you'll share some insights too.

Asif,

It would have been more appropriate for you to state your doctrinal difference of opinion, instead of trying to attract attention to that difference of opinion by calling Imran a liar merely for its "shock value" as you have admitted.

This is especially true because you were extrapolating and making assumptions on whether the deficit will be met by an IMF loan or not. Even if he does take an IMF loan, it is not inconsistent with his claim to free Pakistan of IMF slavery. The former could be a tactical step, while the later, a long term strategy.

The Prophet (sm) told Muslims that they will visit the Kaaba. But they came back without doing it. At the time it was declared as the intention, it was the intention. When situation on ground changed, the decision was postponed for 1 year. Some opportunist at that time also must have come in to say.. oh this was a lie.... but the it is the leader's decision to see what is most appropriate. Tactically, it made sense for the Prophet (sm) to withdraw without Hajj.. so they did.

We are in a situation where we are heavily reliant external capital injection. It cannot be brought to an abrupt end, just like the prohibition of Wine did not bring its usage to an abrupt end. It was declared that is it bad. Eventually, when people were at a stage to stop using it, it was declared prohibited.

We have declared our intention to free ourselves from debt and IMF. We will get rid of the IMF as soon as possible. We will get rid of all debt-dependence as soon as possible. This does not mean it will be done in 1 budget cycle. This does not mean that in those budget cycles in which we are unable to do that, we will necessarily "beg the IMF", which is again a pure assumption made on your part.

The best course of action was to raise this question to your own friend Akbar, who is both an Austrian and a PTI supporter. The second course of action was to approach Dr. Asad or the Economics team, whom you know personally. The last course of action was to come decrease this debate from an intellectual level and bring it down to politics.... at which point bring it out in the gallery and start calling IK as a liar....

IK is not infallible. But criticize where criticism is due. He has not lied in this matter. Besides... lying in Islam is based on intention... you are forgetting that wonderful verse... "These people say that you are the Prophet of Allah, Allah declares that you are indeed a Prophet of Allah... and Allah discloses that these people are lying...."

Anyways... I'm a great fan of your economic analysis and opinions.... You are true gem of a person... As honest and upright as most Austrians are... So let us maintain that image :-)

 

[Vitamin_C]

Fiscal deficit of $17.7bn. 8.4% of $211bn. If the Gdp is to grow at an average of 6% a year for 5 years. GDP now $211bn At end of first year. Growth: $12.66bn. Total at end of year: $223.66bn End of 2nd year. Growth $13.42bn. Total Gdp: $237bn End of 3rd year. Growth $14.22bn. Total Gdp: $251.22bn End of 4th year. Growth $15.07bn. Total Gdp $266.3 bn End of 5th year. Growth $16bn. Total $282.3bn If deficit remained the same throughout the 5 year period 17.7 bn. it is now 6.27% of Gdp $282.3 bn. To achieve fiscal deficit of 4.5%. The deficit has to be reduced to $12.7bn. A reduction of $5b/year at the end of the 5th year. Revenue from taxes at the end of the 5th year should be $42.3bn.. I think we are going to depend on IMF for at least another 5 years. Another thing that we missed is trade, we have to finance our trade deficits, but if the govt can put up a surplus in trade like in Mush govt, it might help us.

 

[AsifAmeer]

Support an IDEA. Support a philosophy. Not a nation, tribe, creed, party, color, even religion.


I am humbled to be a Muslim.

PK economy has structural issues. Cant be solved via cyclical solutions.

Govt: expenditure can be cut down by keeping ministorial cabinate small and with a little protocol. As Iranian did , why cant we. Dubai is a business centre because of its location. Oil is producing only a 4% of its GDP. it donot have any other natural resources. Brother we have gawadar port and indefinite resources. Atleast bee positive, not for IK but for Pakistan. I never support any politican because I support Pakistan.

 

[AsifAmeer]

Arsalan, all those things you mentioned about raising taxes, have already been accounted for to bring the deficit from 8.4% to 4.1%. All that's already been counted into it.

I personally do not want to believe that Imran is "lying". Lekin having a fiscal deficit of $10 billion and not sharing with us how that will be financed, you tell me what I am supposed to make of this.

Why not ask a PTI official instead of calling Imran Khan a liar when you dont even know yourself where that 9.5 billion will come from? How can you just force your own answer by saying they will borrow more from IMF/World Bank so Imran Khan is a liar?
If you want an answer, ask the question, dont put your own conclusion before you get the answer. If you ask me (an average PTI supporter) we will get the money from taxes as PTI is going to get taxes from big fish who never pay tax, and raise Tax-to-GDP ratio to 18% within 5 years. Also i can guarantee that there will be a ton of foreign investment mainly from overseas Pakistanis when you give them a system where their investment will be safe and they wont have to fear land mafia or corrupt government servants.

 

[Corrupt]

I guess they are relying on Foreign investments (which is currently around 300-400 million USD) and increase in foreign remittances...and one thing more i want to add that as our currency in Dollar backed, we should move towards Gold standard.... i know ppl will disagree but i think it will still be better option than Dollar...

 

[Muhammad Umar Farooq]

While presenting the policy, Umar maintained that all state-owned institutions are at a disaster and the loss is so huge that it cannot be estimated.
To reform the institutions, Umar said that the Railway Ministry will be abolished and it will work under an autonomous board instead of the government. He added that the Pakistan International Airlines (PIA) will also be taken out of the control of the Ministry of Defence if PTI chief Imran Khan comes into power after the next elections.
Governance reform
Stressing the need for a local government system in Pakistan, Umar said that the current governance in the country is very centralised and weak. Imran Khan, as the prime minister, will devolve all power from his hands down to the grass-root, village level to decentralise power.
He added that there should be district finance commissions so that every district in Pakistan gets its due share of expenditure.
A few other points for governance reforms included:
- Implementation of Civil Service Reforms
- Direct funding for every district to ensure equal distribution of funds to districts and villages
Expenditure reform
Umar said that the party will aim to reduce the number of federal ministries to 17 from the current 37 to cut down the expenditure of the government.
Other points included:
- Limit perks enjoyed by ministers, MNAs, MPAs and civil and military bureaucrats
- All state institutions, including defence to participate in expenditure reduction campaign
- Eliminate all discretionary funds
- No development funds for parliamentarians
On the right hand, Imran Khan will be taking his oath as the prime minister, while on the left hand, such (lavish) buildings will be bulldozed, said Umar.
Revenue collection
Presenting the partys policies for the collection of revenue in Pakistan, Umar said that the tax rates, especially the GST, is very high and it should be reduced.
He added that some time will have to be given to the tax evaders to come clean.
A few other points included:
- Making FBR fully autonomous
- Government to make tax policy, FBR to implement independently
- Raise revenue by ensuring tax collection without raising tax rates
Health reform
The party vice-president stated that during the partys tenure, health spending will be increased from 0.86% of the GDP to 2.6% in a span five years, and primary health care to the poor people of Pakistan will also be ensured.
All DHQ/THQ hospitals will be modernised and jobs will be created in the health sector, Umar detailed.
Education emergency
Maintaining that the country cannot progress in any sector nor can justice be attained unless education is reformed in the country, Umar said, We want one education system for one nation.
The PTI will also focus on girls education by doubling the number of girls high schools in five years, as there is no better investment in Pakistan than to invest in girls education, he said.
It is not possible that Imran Khan becomes the prime minister and nothing is done about sports These days, there is no productive activity available for children, said Umar adding that the PTI will focus on sports and extra-curricular activities in educational institutes.
Education does not only teach functional skills, but also builds up character We want to provide the opportunity to every child to become a future leader.
The education reforms also included:
- Increase in spending from 2% of GDP to 5% in five years
- Voucher system to fund students to go to private schools to fill gaps where government schools are not enough
A few other points from the presentation are listed below:
Skill development
- Leverage private/public/NGOs for mega skill development program
Foreign exchange
- Export strategy to boost FX earnings
- Fix flawed energy policy to reduce large trade deficits
External vulnerabilities
- Give confidence to overseas Pakistanis to invest at home
Growth strategy
- Investment spending to rise to 21.4% of GDP by FY18 (12.4% in FY12)
- Fully exploit the ignored indigenous natural resources of Pakistan
- Boost agriculture output and farm incomes
- Rapid industrial growth for generating jobs, boosting exports
- Regional trade to diversify markets
- Jumpstart economic growth to absorb two million youth to labour force every year
Agriculture
- Reducing cost of production
- Using farmers to fight inflation
- Community Dairy Farming in every village of Pakistan
Energy secure state
- Resolve Circular Debt through moving to lower cost production
- Divert all resources to maximizing energy production
- Bring loadshedding to manageable proportions urgently
Accountability emergency
- NAB to have its own investigative and prosecution arm outside the purview of the executive
- Special Task Force to recover looted national wealth stashed outside the country
- All recovered assets of corruption to be used for educating the youth of Pakistan