ISLAMABAD: Moody’s Investors Service has predicted that Pakistan’s external debt will grow to $79 billion by June this year, higher than initial estimates suggested, and the country’s weak fiscal strength will weigh in on its ability to afford the ever growing debt burden.
In its latest report, Moody’s Investors Service – the international credit rating agency – said that Pakistan’s challenges include a relatively high general government debt burden, weak physical and social infrastructure, a fragile external payments position and high political risk.
By the end of fiscal year 2016-17, Pakistan’s external debt will increase to $79 billion out of which the public sector component will be $77.7 billion, according to Moody’s. The forecast for the outgoing fiscal year is much higher than what was earlier assessed on the basis of data released by the State Bank of Pakistan. The central bank had shown total external debt and liabilities at $74.2 billion by the end of December 2016. This included $64.5 billion external debt.
Raja ji, apni Dihari laga kar so rahay hoon gay, Baghori ka Media cell 9 to 5 chalta hai, overtime k bhi paisye miltay hain par Raja ji nain bohat maal bana liya hai ab aaraam farmaatay hain, ya phir kissi aor ID sey kissi aor page par chalain maar rahay hoon gay
[FONT="]Gap between income and expenditure rises to Rs1.2tr, prompting heavy borrowing. PHOTO: AFP
ISLAMABAD: The budget deficit in first nine months of the current fiscal year widened to Rs1.238 trillion, almost equal to the full-year target, as rosy revenue and suppressed expenditure projections finally came to haunt the economic policy-makers. Owing to the higher-than-targeted budget deficit on the back of heavy spending, the federal government heavily borrowed from July through March, exceeding the annual domestic borrowing limit. It also nearly touched the annual external borrowing target, consuming 94% of the ceiling in the first nine months (July-March). In July-March FY17, the budget deficit stood at Rs1.238 trillion or 3.7% of gross domestic product, according to a summary of the Consolidated Fiscal Operations released by the Ministry of Finance. The deficit is close to the annual target of Rs1.276 trillion or 3.8% of GDP. Expenditures, mainly current, overshot the estimates while revenues remained far below the target. This highlights that the finance ministry has failed to manage its books according to the plan approved by the National Assembly in June last year. Details of revenues and expenditures of the federal and four provincial governments show that the finance ministry will have to release a huge supplementary budget this year, although the Supreme Court has barred the ministry from doing that without prior approval of the federal cabinet. Provinces fared far better than the federal government and remained by and large on track except for Khyber-Pakhtunkhwa that recorded a deficit instead of creating surplus. Other three provinces cumulatively recorded a cash surplus of Rs137 billion for the federal government, which restricted the overall deficit to 3.7% of GDP. Pakistan has already informed the International Monetary Fund (IMF) that the overall budget deficit will surge to Rs1.373 trillion or 4.1% of GDP by the end of this fiscal year.
However, the nine-month data suggests that even the revised 4.1% target will be missed by a wide margin and the IMF’s projections of 4.5% or Rs1.5 trillion will be true. Of late, the finance ministry has come under pressure to release funds to the power sector as the allocation of Rs118 billion for power subsidies appears highly understated. This year’s higher deficit will also affect next fiscal year’s deficit target and the government will have no choice but to set the new target at around 4% of GDP. Federal operations Against the annual revenue estimate of Rs3.956 trillion, the collection in the first nine months stood at Rs2.5 trillion or 62% of the target, according to the summary. The shortfall was on both tax and non-tax revenue sides. The Federal Board of Revenue (FBR) received Rs2.26 trillion or 62% of the annual target. Other taxes amounted to Rs203 billion or 60% of the target. The government took a major hit in non-tax revenue collection, which stood at Rs402 billion or just 42% of the annual target. Unlike the impression that the shortfall was mainly because of less receipts of the Coalition Support Fund (CSF) from the US, the receipts on account of interest payments by public sector enterprises, dividends, State Bank of Pakistan (SBP) profit and royalty on oil and gas also remained significantly low. The central bank gave Rs144 billion in profit, which was half of its annual target. CSF receipts were Rs64.4 billion or 37% of the annual target. Mark-up receipts stood at 15% of the target and dividends at only 25% of the target. Total expenditure stood at Rs2.8 trillion or 63% of the annual target. However, the major slip was on account of current expenditures that increased to Rs2.5 trillion or 72% of the annual target. In this category, the servicing of domestic debt consumed Rs1.1 trillion or 81% of the annual allocation. The external debt servicing amounted to Rs84.6 billion or 75% of the annual allocation. Development expenditures amounted to just Rs327 billion or 41% of the annual allocation – a direct result of higher current expenditures. The federal government booked Rs1.4 trillion budget deficit and in order to fill the gap it borrowed Rs1.245 trillion from the domestic market. Domestic borrowings were 119% of the annual target. Similarly, it obtained a net Rs220 billion in foreign loans for budget financing, which was 94% of the annual target. Published in The Express Tribune, May 7[SUP]th[/SUP], 2017. Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.
[/FONT]
[/FONT]
[/FONT]
Totally untrue. You guys are blinded to support your political party and do whatever it takes to undermine your political opponent. Shame on you!
[FONT=wf_segoe-ui_light]O you who believe! If a Faasiq (liar — evil person) comes to you with any news, verify it, lest you should harm people in ignorance, and afterwards you become regretful for what you have done”[/FONT][FONT=wf_segoe-ui_light][al-Hujuraat 49:6] [/FONT] Moody's: Pakistan shows strong growth and reduction in fiscal deficits. (link provided)
New York, May 07, 2017 -- Strong growth performance, fiscal deficit reduction and improved inflation dynamics underpin the Government of Pakistan's B3 rating with a stable outlook, says Moody's Investors Service. At the same time, credit challenges include a relatively high general government debt burden, weak physical and social infrastructure, a fragile external payments position, and high political risk. In particular, the government's very narrow revenue base weighs on debt affordability. Meanwhile, exports and remittance inflows have slowed and capital goods imports have risen, resulting in renewed pressure on the external account. Moody's conclusions are contained in its annual credit analysis of Pakistan, "Government of Pakistan -- B3 Stable". The analytical factors that are used in its Sovereign Bond Rating Methodology are: economic strength, which is assessed as "moderate"; institutional strength "very low (+)"; fiscal strength "very low (-)"; and susceptibility to event risk "high". Moody's notes that prospects for growth have improved following Pakistan's successful completion of its three-year Extended Fund Facility (EFF) program with the International Monetary Fund (IMF) in September 2016 and the launch of the China-Pakistan Economic Corridor (CPEC) project in 2015. Moody's notes that the implementation of the CPEC project has the potential to transform the Pakistani economy by relieving infrastructure bottlenecks, and stimulating both foreign and domestic investment. However, headwinds to further fiscal consolidation and renewed pressure on the external account present downside risks to the rating. "Since 2013, implementation of economic reforms and increased foreign investment flows have contributed to macroeconomic stability and higher GDP growth. However, government debt remains elevated and pressure on the external account continues. " said William Foster, a Vice President and Senior Credit Officer at Moody's. The stable outlook represents balanced upside and downside risks to the sovereign credit profile. Support from multilateral and bilateral lenders has bolstered Pakistan's foreign currency reserves and fostered progress on economic reforms. Meanwhile, implementation of the CPEC project has the potential to transform the Pakistani economy by relieving infrastructure bottlenecks, and stimulating both foreign and domestic investment. However, headwinds to further fiscal consolidation and renewed pressure on the external account present downside risks to the rating. Upward triggers to the rating would stem from sustained progress in structural reforms that would significantly reduce infrastructure impediments and supply-side bottlenecks. This would improve Pakistan's investment environment and eventually aid a shift to a sustained higher growth trajectory. A fundamental strengthening in the external liquidity position and meaningful reduction in the government deficit and debt burden would also be credit positive. Conversely, Moody's would view a stalling of the government's post-IMF program economic reform agenda, material widening of the fiscal deficit, a deterioration in the external payments position, withdrawal of multilateral and bilateral support, or a more unstable political environment as credit negative. Subscribers can read the full report at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1069322
NOTE TO JOURNALISTS ONLY: For more information, please call one of our global press information hotlines: New York +1-212-553-0376, London +44-20-7772-5456, Tokyo +813-5408-4110, Hong Kong +852-3758-1350, Sydney +61-2-9270-8141, Mexico City 001-888-779-5833, S�o Paulo 0800-891-2518, or Buenos Aires 0800-666-3506. You can also email us at [email protected] or visit our web site at www.moodys.com. This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.
Soon we will in chorus "Painda Tabinda Baad"
Thanks to
1. Iftikhar Ch
2. Gen Kayani
3. Zardari
4. Nawaz Sharif
5. Gen Raheel
6. Gen Bajwa
Pakistan Ka Allah hi Hafiz
Moody’s Investors Service has predicted that Pakistan’s external debt will grow to $79 billion by June this year, higher than initial estimates suggested, and the country’s weak fiscal strength will weigh in on its ability to afford the ever growing debt burden.
In its latest report, Moody’s Investors Service – the international credit rating agency – said that Pakistan’s challenges include a relatively high general government debt burden, weak physical and social infrastructure, a fragile external payments position and high political risk.
By the end of fiscal year 2016-17, Pakistan’s external debt will increase to $79 billion out of which the public sector component will be $77.7 billion, according to Moody’s. The forecast for the outgoing fiscal year is much higher than what was earlier assessed on the basis of data released by the State Bank of Pakistan.
The central bank had shown total external debt and liabilities at $74.2 billion by the end of December 2016. This included $64.5 billion external debt.
Moody’s report has shown external debt at $64.4 billion by the end of fiscal year 2013. If the debt grows to $79 billion, it means that an additional $14.6 billion in debt has been added in the past four years alone.
The PML-N government is facing criticism for increasing the country’s debt burden, which is a direct result of low levels of exports and foreign direct investment.
The government’s narrow revenue base weighs on debt affordability and the level of external public debt poses a moderate degree of credit risk, according to the report. Meanwhile, exports and remittance inflows have slowed and capital goods imports have risen, resulting in renewed pressure on the external account.
Moody’s assessed Pakistan’s fiscal strength at negative “(-) Very Low”, which it said was hindering debt affordability and increases the debt burden. It said Pakistan’s limited tax base restricts its fiscal space, while low savings and shallow capital markets hinder stable domestic financing of sizeable budget deficits.
“Very Low (-)” score is below the indicative score of “Very Low”, which reflects that the material foreign currency portion of outstanding government debt (about 30% of total debt) exposes the government’s balance sheet to greater foreign exchange rate risks than currently captured by scorecard metrics,” it said. The government’s debt burden has steadily increased in the past four years from 63.5% of GDP to 66.5%, Moody’s said. “At 66.5% of GDP, the debt stock is higher than the 52.6% median for B-rated sovereigns and remains a constraint on Pakistan’s fiscal strength.”
Moody’s has retained Pakistan’s position at B3 rating.“Approximate 30% of foreign currency debt does expose the sovereign (Pakistan) to marked changes in the cost of refinancing debt should the currency weaken abruptly,” according to the report.Debt affordability metrics, which include interest payments as a percentage of revenues and GDP, have been high in Pakistan relative to the median for B-rated sovereigns, which is a key constraint on the sovereign credit rating.
The credit rating agency acknowledged that Pakistan was addressing this weakness by lengthening debt maturities, through increasing the share of permanent debt and reducing that of floating debt.However, it said that foreign remittances have so far declined 2.4% and “if remittances continue to decline, it would likely have a negative credit impact by dampening consumption and widening the current account deficit”.Moody’s has also assessed Pakistan’s susceptibility to event risk as “High,” driven by political risks and government liquidity risks stemming from high gross borrowing needs, due to the government’s large rollover requirements.
It said that large fiscal deficits and a reliance on short-term debt have contributed to very high gross borrowing requirements, which is a key rating constraint. At 32% of GDP, Pakistan’s gross borrowing need in 2017 is the largest among all rated sovereigns, after Egypt.Like external debt, Moody’s has also projected higher budget deficit for the outgoing fiscal year. “We expect that the fiscal deficit will widen further to about 4.7% of GDP in fiscal year 2017 and 5% in FY 2018 despite the government’s intention to advance fiscal consolidation.”
The National Assembly had approved the budget deficit target at 3.8% of the GDP, which the finance minister has already termed unachievable.At 4.7% of GDP, budget deficit forecast is even higher than the International Monetary Fund’s (IMF) estimates of 4.5%.The Moody’s said that the wider deficit will be driven by revenue shortfalls due to political pressure to keep current temporary tax breaks in place for the agricultural sector and exporters, and reluctance to increase the sales tax on petroleum products amid rising global oil prices.
In addition, the need to increase development spending – particularly related to CPEC power infrastructure investments – combined with political pressure to maintain power subsidies in advance of the 2018 general election, will likely weigh on the deficit, it added.The rating agency has also said that the reforms agenda initiated under the IMF programme could be stalled ahead of elections. “We believe structural reforms to PSEs will continue to face political opposition in parliament and through potential labour strikes, therefore, we do not expect the government to follow through with an ambitious post-IMF programme structural reform push in advance of the 2018 general election.” Source
Moody’s Investors Service has predicted that Pakistan’s external debt will grow to $79 billion by June this year, higher than initial estimates suggested, and the country’s weak fiscal strength will weigh in on its ability to afford the ever growing debt burden.
In its latest report, Moody’s Investors Service – the international credit rating agency – said that Pakistan’s challenges include a relatively high general government debt burden, weak physical and social infrastructure, a fragile external payments position and high political risk. By the end of fiscal year 2016-17, Pakistan’s external debt will increase to $79 billion out of which the public sector component will be $77.7 billion, according to Moody’s. The forecast for the outgoing fiscal year is much higher than what was earlier assessed on the basis of data released by the State Bank of Pakistan. The central bank had shown total external debt and liabilities at $74.2 billion by the end of December 2016. This included $64.5 billion external debt.
Nawaz Mafia's plan is to take the debt to 100 billion dollars to declare Pakistan a bankrupt state as it will be impossible for Pakistan to return the loan.
Nawaz Mafia's plan is to take the debt to 100 billion dollars to declare Pakistan a bankrupt state as it will be impossible for Pakistan to return the loan.
