No, Prime Minister, the economy is not collapsing

jeaybhutto

Senator (1k+ posts)
KARACHI: The next prime minister of Pakistan inherits an economy on the cusp of a recovery.

We will let that sentence sink in for a couple of minutes. The largely economically illiterate media has been portraying a vision of doom to be inherited by whoever becomes the next prime minister. But in our special report this week, The Express Tribune lays out the evidence that while some headline numbers are indeed rotten, the economy is far from being on the verge of collapse.
Quite the opposite, the next prime minister will get to take credit for his or her predecessors efforts. All they have to do is not panic, not screw up, and not try to reinvent the wheel.
Let us start with the bad news first. By now, several numbers have come out that show just how badly the Pakistan Peoples Party-led administration managed the government finances. Horrendous numbers are being released about how big the budget deficit is likely to be, how much the inter-corporate circular debt that is crippling the energy sector has risen to, and how much the government is borrowing to pay it all.
All of those numbers are true, but they are presented without context. Yes, the governments finances are in terrible shape, but the underlying factors that got them there primarily the bad management of the energy sector are on the verge of mending themselves. The next administration simply needs to accelerate the process in order to aid a faster recovery.
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As we examine in our special report, the fundamental problem of the energy sector is that the cost of producing electricity in Pakistan is greater than the government is willing to charge consumers. The private sector in Pakistan aided by encouraging government policies appears to be helping take care of that problem, by investing more than $14.3 billion to increase the nations electricity production capacity by nearly 46% over the next five years.
And the investment appears to be taking place almost entirely in the cheapest fuel sources: hydroelectricity and coal. The government can aid this process along by converting the production capacity owned by state-owned utilities to cheaper sources as well.
Given the fact that the single biggest source of the governments fiscal deficit is the subsidies it insists on spending on electricity, lower energy costs should help the problem.
But energy is not the only area where there is progress. After the central bank started squeezing their spreads, the banking sector has started to lend to the private sector more, particularly in manufacturing. Machine imports are up, which suggests that much of the borrowing is going towards capital expansions, likely to lead to job growth. And foreign investors appear to once again have Pakistan on their radar screens after the stellar run on the Karachi Stock Exchange last year.
In a nutshell, while the picture is far from rosy, there is plenty of reason to hope. More importantly from the perspective of the electorate, there is absolutely no reason to accept the excuse from the next prime minister that he or she inherited a mess from the last administration. They are not. They are being handed an economy with enough in it for them to build a robust turnaround from the day they are sworn into office.
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There is much that the next administration needs to do and none of it is easy. It needs to rein in the deficit to manageable levels. It needs to improve law and order and the general climate of investment. It needs to cut back on red tape in some areas and strengthen regulations in others.
But this is very much a workable inheritance. Our special report focuses on the areas that provide the most room for optimism, because the civil servants who begin to advise the prime minister when he or she arrives into office will be the bearers of plenty of bad news.
The government will try to set a low bar by announcing all of it in the first few days, aiming to look good by comparison. And that is fine. But just because they are badmouthing their predecessors does not mean they should not be aware of the few positives it has left behind for them.
 

mrk123

Chief Minister (5k+ posts)
Jeaybhutto, just for the record could you please provide the link to the source.
 

NaveedAli

Politcal Worker (100+ posts)
well i am an Accountant and has knowledge of economics too, 9% increase in manufacturing imports would lead to reduction of foreign reserves cuz we have to pay them and FVI pakistan has only 3 months of foreign reserves remaining and declining at rapid pace. FDI is very subjective towards pakistani political and economical situation and FDI has many basis of calculation which also include stock exchange trading, any one can invest in karachi stock exchange in foreign currency and earn either a short term profits or sell their interest in days, so in my opinion it is not a credible if FDI increase is just exclusively because of Stock purchase by foreign entities.
 

Expatriat

Councller (250+ posts)
There are three parties in Pakistan which were formed on ideological basis (correct or wrong - that is another debate), however all of them has got some baggage:

a. PPPP (democratic mistakes and corruption charges - yet to be proven in the court)
b. JI (democratic mistakes, serious ones are supporting dictators)
c. PTI (supporting LFO which can be forgiven considering inexperience, however moral turpitude of it's leaders is a big challenge for party)


The above economic report does make sense to quite an extent. The problem with PPPP is that they don't know how to sell their work and progress. Iran gas pipeline, China-Gawadar port ownership, Maintaing an international coalition and alliance even after Laden's capture, Multiple constitution amendments, Smooth transfer from dictatorial to democratic era - were to name a few ! However, personal corruption and incompetence of a vast number of members of this party has caused a significant damager to the overall party - but they are still very very strong federal party.

PTI on other hand has a great membership base with presence in urban cities and social media. With millions and trillions of funds pouring in from overseas Pakistanis, the PTI is trying its best to reach out and educate 'real' masses that will play a crucial role on election day.

However, if same set of tools as used by PTI are given to PPPP, I am sure Zardari & Co. will pocket the election in an instance. PMLN on other hand is gaining momentum in Punjab just because the 'wind' is blowing in its direction - and they really have a few face-saving projects versus PPPP which only do the work on mega-scale projects such as the ones mentioned above.
 

Darik

MPA (400+ posts)
This is another Day dream about this analyst. It is also a disinfomation where PPP and PMLN is given credit for economy, which is getting better. How about 18000 Billion debt, who is going to pay, don't clame it is not in a mess.
 

MHAMZA

Minister (2k+ posts)
You make it seem so easy for the new government. If it where so easy why didn't the PPPP government do it by it self. Maybe they where too busy robbing the country blind and protecting the billions stashed by Mr 10% in Swiss banks.
Signing the contracts (for Iran gas pipe line and Gawader port leasing to China ) at the end of the term is like putting your name on the foundation plaque and leaving the real execution and headache to some one else.
It is like me claiming that I have gifted you a bicycle by giving you a pedal and asking you to put the rest!!
 
Main parrha likha nahin hoon is liye Roman Urdu ka asra le raha hoon-Aap muje Educated Jiyala lagte hain(By the way,most jiyalas are extremely jahil)--Aap PPP ke most corrupt aur awam dushman Govt ko defend karne mein buri tarah nakam rahe--PPP ke baaray sirf perception hi nahin, Facts bhi yehi hain--Railway,PIA,OGDC,NICL,OGRA,PEPCO,Steel Mill etc cheekh cheekh ke apni barbadi ki kahanian suna rahe hain,,Jo PPP ka sab se ziada shareef leader hai Amin Faheem ,,us ke account se loot ke 4 crorr bar-amad ho gaye--Yousuf Gilani jo Suzuki Alto mein phirta tha aur apne ghar ka 1 hisa baich kar election contest kiya,,aaj kharab pati ban chuka hai,,yehi kuch Raja Rental ne kiya,,Kal ka Kangla aaj ka Arab pati--Sirf Ogra mein 82 arab ka daka--Rental power mein triolions ki daketian--PPP sirf Sindh ke jahileen aur Saraiki Area ke Maha Jaahileen mein thorri bohat popular reh gayi hai--2013 eletion mein inshallah is watan dushman party ko tareekhi shikast ho gi;)
There are three parties in Pakistan which were formed on ideological basis (correct or wrong - that is another debate), however all of them has got some baggage:

a. PPPP (democratic mistakes and corruption charges - yet to be proven in the court)
b. JI (democratic mistakes, serious ones are supporting dictators)
c. PTI (supporting LFO which can be forgiven considering inexperience, however moral turpitude of it's leaders is a big challenge for party)


The above economic report does make sense to quite an extent. The problem with PPPP is that they don't know how to sell their work and progress. Iran gas pipeline, China-Gawadar port ownership, Maintaing an international coalition and alliance even after Laden's capture, Multiple constitution amendments, Smooth transfer from dictatorial to democratic era - were to name a few ! However, personal corruption and incompetence of a vast number of members of this party has caused a significant damager to the overall party - but they are still very very strong federal party.

PTI on other hand has a great membership base with presence in urban cities and social media. With millions and trillions of funds pouring in from overseas Pakistanis, the PTI is trying its best to reach out and educate 'real' masses that will play a crucial role on election day.

However, if same set of tools as used by PTI are given to PPPP, I am sure Zardari & Co. will pocket the election in an instance. PMLN on other hand is gaining momentum in Punjab just because the 'wind' is blowing in its direction - and they really have a few face-saving projects versus PPPP which only do the work on mega-scale projects such as the ones mentioned above.
 

AsifAmeer

Siasat.pk - Blogger
Vitamin, tell me u dont like my cap, tell me you dont like the way I smile or the way I look.. But Do NOT call me an economist. I have no interest in intellectual masturbation. & Bhutto's son is right.. I am not an authority on Economics. Fcvk economics and its authorities..

About commenting on this news, my comment was posted in the comment section of that very news article.

Consider the 3 highlighted figures in this articles.
1. I am assuming the 9% increase in Machinery Imports overlaps the Imports of the Power Sector machinery
2. KESC does not cover Punjab. The industrial hub of manufacturing is Punjab which will still be getting the more expensive power, hence more theft + subsidies.
3. The FDI of $688million. Thats the Coalition Support Fund amount.
The bright side is that SBP has reduced its frequency of reverse repos which indicates that SBP has changed its mind on its low interest rates policy. Maybe they are figuring out that rates are reduced when there is a glut of savings and the money velocity is decreasing.

Tag a few economists to the this thread like AsifAmeer and see what they have to say


i dont tag any one in my posts...and although i respect asif i dont think he is an authority on economics....
 
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Syed Haider Imam

Chief Minister (5k+ posts)
Here are my two cents.

When Nawaz Sharif left and Musharraf took over,,,,,Pakistan had only 400 million dollars in foriegn currency reserves.

PPP Government has done only one thing right....They have tighten currency dealers like K&K and streamlined the foreign remittances system. As an overseas Pakistani, i see lots of improvement in foreing remittances transactions. US certainly have influenced them so that they could have better idea weather funds are not going in wrong hands. So, Pakistan has made improvement in these three sectors.

1- ID card
2- Passport system
3- Foreign Remittances.

They only improved above systems for their own benefits so that they could track Pakistani's physical and financial movements. This has impacted GOP foreign reserves and overall financial health of Pakistan. Pakistan has got record legal remittances in recent times enabled Government to run their business, otherwise these retards turned this country into a Banana republic with the brain like Zardari , Gilani , Malik and Rental and associates.

2- Second Major factor was devaluation of currency. China has gone in value added services while we are still selling raw material and bringing them back with finished products.

This has also helped Pakistan for the short term but .............we should get ready for the cost.

These are two major factors which helped this retarted Government to survive. Since we have very short memory but let me remind you that ...................Most of the professional State Bank Governers resigned during PPPP era...............Why?

Why they were not ready to take this assignement when all was going well?

 
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Syed Haider Imam

Chief Minister (5k+ posts)
About the article...
You can get matric pass journalist, non professional TV anchors and Criminals media Groups in Pakistan.
I know you will hate me with passion.
But this is only possible in Banana Republic. In a sovereign country,
you can not think of this BS business. Here TV anchors, politicians, Judiciary, Army.............an office peon.............caught "RED HANDIDLY" but they get away with pride. This is only possible in a Banana Rupublic where a Politician said on TV.....Rishwat lenna hamara HAQ hey....and he is still a politician..........
still party like PML-N has adopted him..............

Time has arrived that we should turn Pakistani into a sovereign country.....Zardari and Nawaz Sharif will convert this country into Banana republic...........Over and Over.................With their and their sponser money, they can buy anything.....Phir jub kuwi gora kehta hey,,,Pakistani pessey key li-ey apni Ma bhee bech sakta hey....Tu hum LAL PILLEY ho jattein heiN..................

I am also a dual National..................How the hell on earth a dual National can safeguard a country interest?
He/She knows, in case of problem, he will go into the safe heaven. Once you have peace of mind then why would you keep your country interest first.

Once MNA's ? MPA"s are investing their money....How come an investor will keep the country interest first?

The whole system is obsolete...............You can not have consistancy in your policies based on the existing political structure.

I have not finished yet..........................Off the topic comments due to this fabricated article.
 
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Syed Haider Imam

Chief Minister (5k+ posts)
We had touched 20 billions dollars in foreign reserves. I believe when Musharraf Left, we had 13 billions dollars in reserves.
We kept getting consistant remittances ( On Average 10-12 billion dollars per year for the last 5 years ) but after two years, reserves started declining. We are again sitting on 12-13 billion mark.

I believe that Government has 4-5 billion dollars while Banks got rest of the money. After paying coming installments, Government will go into Nawaz Sharif era........................How the hell on earth, Pakistan's balance sheet look nice.

What about domestic loans and printing of money?
What about payment of debts servicing ?

" Pakistan's Government Bond Yield for 10 Year Notes declined 0 basis points during the last 30 days which means it became less expensive for Pakistan to borrow money from investors. During the last 12 months, Pakistan government bond yield declining 1.16 percent. Historically, from 2002 until 2013, Pakistan Government Bond 10Y averaged 10.1 Percent reaching an all time high of 16.7
Percent in December of 2008 and a record low of 4.2 Percent in March of 2003.
 
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