Borrowing up, exports down by Farrukh Saleem

[xiaahmad]

Capital suggestion

In July-September 2014-15, the Government of Pakistan borrowed Rs110 billion from Pakistani banks. According to the State Bank of Pakistan’s monetary aggregates data, in July-September 2015-16, the Government of Pakistan borrowed Rs402 billion from Pakistani banks.

Red alert: the Government of Pakistan’s borrowing from Pakistani banks has gone up nearly four-fold.

What does that mean? Answer: The Government of Pakistan is borrowing -borrowing every rupee it can from wherever it can – to bridge its revenue-expenditure gap. Obviously, budgeted revenues are not up to expectations. Obviously, the Government of Pakistan has no will, or capacity, to cut its expenditures. The only option left is to borrow.

Pakistani banks are having a field day. They have invested a wholesome Rs5.6 trillion – almost all their capital – into government securities. That’s riskless investing. Net profit at MCB, for instance, is up a whopping 43.5 percent. For the half year ending June 30, MCB made Rs13.5 billion after taxation. For the April-June quarter the banking sector (all banks put together) recorded profits of Rs41.2 billion.

The Government of Pakistan is borrowing heavily and Pakistani banks are happily lending all they have to the government. That is not good, not good at all. Pakistan’s private sector – the real engine of growth – is getting ‘crowded out’. Bank credit to the private sector is down an alarming 54 percent from Rs325 billion last year to Rs149 billion this year.

What’s wrong with the private sector getting ‘crowded out’? Answer: What the Government of Pakistan borrows it throws it into the deficit gutter. What the private sector borrows it invests into plant and machinery – and investment into plant and machinery means economic growth and additional employment.

Lo and behold, exports are down a shocking 20 percent from $2.1 billion in September 2014 to $1.7 billion in September 2015. Red alert: Our exports are now at a four-year low (Vision 2025 promises a six-fold increase in exports in the next 10 years).

For the record, 52 percent of our exports are cotton-textile related and the All Pakistan Textile Mills Association (APTMA) claims that one out of five of its member mills has already shut down and more are thinking along those lines. APTMA claims that it now has an additional burden of Rs181 billion in the form of gas infrastructure development cess, electricity surcharges and new taxes.

The World Bank has now warned the Government of Pakistan to “address key growth constraints like electricity shortages, cumbersome business climate, complex trade regime and low access to finance.”

Borrowing is easy; cutting expenditures is tough. Borrowing is easy; economic restructuring is tough. We are already in a hole where 45 percent of government revenue is going into debt servicing. Even scarier is the fact that we are now borrowing just to pay back our old loans – and that path leads right into a debt trap.

“I not only use all the brains that I have, but all that I can borrow” – Woodrow Wilson

http://www.thenews.com.pk/Todays-News-9-346362-Borrowing-up-exports-down

 

[Admiral]

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??? ?? ????/???? ?? ?? ??? ???? ?? ?? ???? ??? ?????? ??????? ?? ?? ????? ???? ?? ????

 

[such bolo]

​Alarming indeed!!!!

 

[Sher_ka_Shakari]

So make PK bankrupt and then Uncle Sam will tell you, to survive Roll back your Nuclear Programme.

Nooras are perfectly obeying orders from there boss. In fact BaaP.

 

[SSR_31952]

یہ آرٹیکل کسی پٹواری کی سمجھ میں نیہں آے گا۔ لکھوا لو۔

 

[Usman Muhammad]

Investment and boost in manufacturing field is a key to economic growth. China is following this rule.
China wants us their ally in region but why not share of manufacturing load with Pakistan? Everyday companies are outsourcing their manufacturing plants in China and India, why not Pakistani government ask Chinese to share it with Pakistan.
There is no contribution of Pakistani services in CPEC, as all work will be done by Chinese contractors, no PAKISTANI firm will be shortlisted for CPEC construction. Is it not unfair? PML N only wants to make CPEC slogans in next elections like they did in 2013 election for 1998 atomic tests?

 

[Sham khan 1]

 

[kkkkk]

Systematically all infrastructure, industry, agriculture and public organizations like railways, PIA, Steel Mills etc have been destroyed. The Debt trap is not compulsive and neither there is any lack of intelligence, expertise or even resources, but once the agenda is suicide, probably at the gunpoint of international mafias. Nothing can be done. Corruption by our criminals and blackmail by international mafia are two pillars or cancers which are active and very strong. Who did not know that hydel potential of Pakistan is more than 120,000 Mega Watt but we installed thermal power plants and now cannot run them, as mafias are paid and their power plants show the supply of electricity, but that is all done on paper only, while on the ground nothing is done - free money! May God saves Pakistan.
Shame, fear of God and absence of sense to realize the pain inflicted on others for self-power and comfort are all missing. Intelligence is not absent but is in oversupply to have turned into criminality. Is it Islam? Does this what mean to be Muslim? Being Muslim and human only means to contribute and give for the good of society not steal and destroy. The religion is seen everywhere, heard everywhere but being practiced nowhere! Alas, these are all signs of coming disasters and pains. Unfortunately, we will not be able to avoid that. God clearly says that whatever problems you face are in fact your own doing. The future is very clear. The seed of destruction cannot grow into the seed of prosperity: we shall reap what we have sown! The question is, can we accept to stop all the negativity?

 

[kkkkk]

yes, an excellent depiction of the reality, but still we can deal with everything if enemies within can either have a change of heart or can be eliminated by somehow.

 

[Bourne]

Any patwari,, noora with a logical answer??? please enlighten us.

 

[kkkkk]

یہ آرٹیکل کسی پٹواری کی سمجھ میں نیہں آے گا۔ لکھوا لو۔

Not be mistaken. Given their intelligence, they could understand these things even before birth. All PATWARIS of our societies are vultures who only understand their own share, they feed on dead bodies, no matter if that be the dead body of Pakistan. Half was literally eaten by 1971! There were people like Quaid, his team and his voters who could grab pakistan from the jaws of lions and here are people vultures only who have left the skeleton!