Why Are you Blaming PTI?

[TeslaCoil]

In last week the economic experts and media is showing us that something big has done by PTI and many PTI followers are buying this false narrative without understanding the issue. I tried here explaining the situation; hope it will help

Approach # 1 PML(N):
There are two ways to run the country. One way which Mr. Ishaq Dar followed; borrow money and spend on infrastructure projects. This helps maintaining high GDP growth (for few years). In such a case, the current account deficit will remain very high. For this plan to be successful the country should have huge foreign currency reserves and there should be a continuous flow of Foreign Direct Investment (FDI). Countries like India and Bangladesh are showing high GDP growth because of this reason.
For PML (N) they took a Chinese bet; that Chinese money will come as FDI and International borrowers will help us following this plan. However the plan backfired since under CPEC the money did not flow to Pakistan (remained in China) and IMF declined to support as they thought their money will be used to pay Chinese loans.

Approach # 2 PTI
The other way to run a country by managing current Account Deficit (please see below to understand the current account). Here one needs to manage the payments. The countries who do not have high foreign currency and the level of FDI is low. This is a MANDATORY approach otherwise, the country will be defaulted. For countries like Pakistan this is not just hyper inflation it will be a National Security issue.
Sri Lanka, Maldives and Kenya lost their ports to Chinese. It is because of this reason that they blindly borrowed and ultimately have to give the pledged assets. Like you borrow to buy a house and in case of default, the bank confiscates the house. Countries like Argentina, Greece, Mozambique they defaulted because they didn’t manage the deficit (one of the factors among other factors).
Asad Umer is working on the Root Cause (not taking the cosmetic measures).

Why we should not blame Mr. Khan or Mr. Umer:

• Pakistan has to pay 9 Billion USD in 2019 (this is not borrowed by PTI)
• In 2012 ; Pakistan exports were 24+ USD in 2018 they remained at 24+ Billion USD (negligible/no increase in exports in 5 years)
• In 2012 Imports were 43 Billion USD and in 2018 it is 56 Billion USD (13 Billion USD) – (So Mr. Dar put this country in a default trap)

Why Not A Rocket Science (Just a Balance of Payments):
Based on raw data I got from google search; (for understanding only)

• 2018 - 19 (end of year); Exports + Remittances + payments = 48 Billion USD & Imports plus the payments will be around 58 Billion USD
• 2019-20 (based on data) it will be 50 Billion USD incoming and outgoing 54 Billion USD
• 2020-21 it is expected that the balance will be zero as it will be 52 Billion USD.

At that point, a country like Pakistan is capable of achieving 6% - 8% GDP growth rate.

Risks Factors:

• I do not understand why Media is trying hard to sell the wrong narrative. (This is a major risk as SME's buy this narrative consider you being an entrepreneur listen to media and do not invest)
• Banks are not happy off-course because interest rates are high during low GDP; borrowing remains low. For banks they make money if more people borrow.
• Banks like ADB and IMF do not like (balance of payments option) as they lose a market since the country does not need monetary support anymore.
• Rating agencies downgrade your bonds because if you are not borrowing for infrastructure your GDP is low and thus rating is low.
• CPEC added high loans on Pakistan without creating any economic boom. Pakistan should reconsider investments under it.

World Waiting for Financial Crisis:
Almost all global financial institutions are waiting for mega financial crisis. Globally $ trillions of borrowed money is spent on infrastructure promising them high return. All type of investors including Pensions funds have lend money to infrastructure projects however the returns are negative after adjusting inflation. In such times only the people like Asad Umer and Imran Khan are brave enough to take this approach.

Read this to Understand the Current Account:

There are Four Current Account Components
Trade: Trade in goods and services is the largest component of the current account. Therefore, a trade deficit is enough to create a current account deficit. Exports‎: ‎$24.824 billion (FY 2018) Imports‎: ‎$56.002 billion (FY 2018)
Net Income = Income received by the country’s residents - income paid to foreigners. The country’s residents receive income from two sources. Frst is earned on foreign assets owned by a nation's residents and businesses. That includes interest and dividends earned on investments held overseas.The second source is income earned by a country's residents who work overseas. if the income received by a country's individuals, businesses, and government from foreigners is more than the income paid out, then net income is positive. If it is less, then it contributes to a deficit.
Direct Transfers: This includes remittances from workers to their home country. Pakistan received appx. 21 billion USD as remittances.
Direct transfers also include a government's direct foreign aid. A third direct transfer is foreign direct investments. That is when a country's residents or businesses invest in ventures overseas. The fourth direct transfer is bank loans to foreigners.
Asset Income: This is composed of increases or decreases in assets like bank deposits, central bank and government reserves, securities, and real estate.

 

[Imran the legend]

Pmln ppp have destroyed past 40 years of corrupt rule incompetence institutions. Many anchors are Pmln payrolls. Many media channels have looted the country like corrupt politicians now they all trying to protect and defend themselves selfs and trying to blame pti because they don’t care about Pakistan or its people. Fake news propaganda has become normal. Need hard and tough reforms it will take many years before these Daku in top positions are in contro.
Corruption in judiciary is helping corrupt mafia to get bails.

 

[Steyn]

 

[PIND-WALA]

In all honesty, govt needs to take steps on micro level to actually see the results, so far there is little activity but industrialization is only solution out of this mess.

 

[asifA1]

Some people in administrative management really need to wake up now before its ending story as venezuela

 

[liuali]

In last week the economic experts and media is showing us that something big has done by PTI and many PTI followers are buying this false narrative without understanding the issue. I tried here explaining the situation; hope it will help

Approach # 1 PML(N):
There are two ways to run the country. One way which Mr. Ishaq Dar followed; borrow money and spend on infrastructure projects. This helps maintaining high GDP growth (for few years). In such a case, the current account deficit will remain very high. For this plan to be successful the country should have huge foreign currency reserves and there should be a continuous flow of Foreign Direct Investment (FDI). Countries like India and Bangladesh are showing high GDP growth because of this reason.
For PML (N) they took a Chinese bet; that Chinese money will come as FDI and International borrowers will help us following this plan. However the plan backfired since under CPEC the money did not flow to Pakistan (remained in China) and IMF declined to support as they thought their money will be used to pay Chinese loans.

Approach # 2 PTI
The other way to run a country by managing current Account Deficit (please see below to understand the current account). Here one needs to manage the payments. The countries who do not have high foreign currency and the level of FDI is low. This is a MANDATORY approach otherwise, the country will be defaulted. For countries like Pakistan this is not just hyper inflation it will be a National Security issue.
Sri Lanka, Maldives and Kenya lost their ports to Chinese. It is because of this reason that they blindly borrowed and ultimately have to give the pledged assets. Like you borrow to buy a house and in case of default, the bank confiscates the house. Countries like Argentina, Greece, Mozambique they defaulted because they didn’t manage the deficit (one of the factors among other factors).
Asad Umer is working on the Root Cause (not taking the cosmetic measures).

Why we should not blame Mr. Khan or Mr. Umer:

• Pakistan has to pay 9 Billion USD in 2019 (this is not borrowed by PTI)
• In 2012 ; Pakistan exports were 24+ USD in 2018 they remained at 24+ Billion USD (negligible/no increase in exports in 5 years)
• In 2012 Imports were 43 Billion USD and in 2018 it is 56 Billion USD (13 Billion USD) – (So Mr. Dar put this country in a default trap)

Why Not A Rocket Science (Just a Balance of Payments):
Based on raw data I got from google search; (for understanding only)

• 2018 - 19 (end of year); Exports + Remittances + payments = 48 Billion USD & Imports plus the payments will be around 58 Billion USD
• 2019-20 (based on data) it will be 50 Billion USD incoming and outgoing 54 Billion USD
• 2020-21 it is expected that the balance will be zero as it will be 52 Billion USD.

At that point, a country like Pakistan is capable of achieving 6% - 8% GDP growth rate.

Risks Factors:

• I do not understand why Media is trying hard to sell the wrong narrative. (This is a major risk as SME's buy this narrative consider you being an entrepreneur listen to media and do not invest)
• Banks are not happy off-course because interest rates are high during low GDP; borrowing remains low. For banks they make money if more people borrow.
• Banks like ADB and IMF do not like (balance of payments option) as they lose a market since the country does not need monetary support anymore.
• Rating agencies downgrade your bonds because if you are not borrowing for infrastructure your GDP is low and thus rating is low.
• CPEC added high loans on Pakistan without creating any economic boom. Pakistan should reconsider investments under it.

World Waiting for Financial Crisis:
Almost all global financial institutions are waiting for mega financial crisis. Globally $ trillions of borrowed money is spent on infrastructure promising them high return. All type of investors including Pensions funds have lend money to infrastructure projects however the returns are negative after adjusting inflation. In such times only the people like Asad Umer and Imran Khan are brave enough to take this approach.

Read this to Understand the Current Account:

There are Four Current Account Components
Trade: Trade in goods and services is the largest component of the current account. Therefore, a trade deficit is enough to create a current account deficit. Exports‎: ‎$24.824 billion (FY 2018) Imports‎: ‎$56.002 billion (FY 2018)
Net Income = Income received by the country’s residents - income paid to foreigners. The country’s residents receive income from two sources. Frst is earned on foreign assets owned by a nation's residents and businesses. That includes interest and dividends earned on investments held overseas.The second source is income earned by a country's residents who work overseas. if the income received by a country's individuals, businesses, and government from foreigners is more than the income paid out, then net income is positive. If it is less, then it contributes to a deficit.
Direct Transfers: This includes remittances from workers to their home country. Pakistan received appx. 21 billion USD as remittances.
Direct transfers also include a government's direct foreign aid. A third direct transfer is foreign direct investments. That is when a country's residents or businesses invest in ventures overseas. The fourth direct transfer is bank loans to foreigners.
Asset Income: This is composed of increases or decreases in assets like bank deposits, central bank and government reserves, securities, and real estate.

Apki mehnat ka shuriah magar PATWARI itni tafseelat me nahi jatey... un ke liye jo dikhta hai wo bikta hai... Hum logo ne to panch saal ke liye Imran Khan ko mauqa dia hai aur utne hi saal intizar karenge koi jaldi nahi...

 

[GreenMaple]

ساون کے اندھوں کو ہریاول ہی نظر آٓتی ہے ـ اپنی عینک بدل کے دیکھو

 

[ahameed]

اس نے تو الیکشن سے پہلے ہی بتا دیا تھا کہ آئی ایم ایف کے پاس جانا پڑے گا، شاید آپ نے پی ٹی آئی الیکشن کے بعد جوائن کی ھے???

 

[Eyeaan]

In all honesty, govt needs to take steps on micro level to actually see the results, so far there is little activity but industrialization is only solution out of this mess.

In all honesty, the government should take 'what steps' on micro level.
Further what is the best timing to give incentives at micro level - or is it better when the macro indicators are a bit stable.
Is there any better investment than the housing project to inject gov. funds for both growth and for employment? Or investments in Tourism sector or in agricultural sectors or exploration/mining sectors?
What may realistically be achieved by putting loans by manipulating interest rates and subsidies in the hand of our investors - right now? Look at what's been the experience in the recent past. Or you suggest investments in government owned industrial sectors (which I personally don't oppose much -rather favor)

About taxes and reforms in FBR :: How much taxes (as %age of gdp) can be collected without economic slow down and increases the capital flight? With all talk of more taxes, corruption and black money--- the tax growth at this time has to come from real economic growth. With all honesty I think these aren't the times (nor we have capacity if we wish) to go after the black money and tax evaders - Wait for a few years and then with minimal adverse effects - for which, I assume, we again need macro stability.

My personal view; our main problem is neither the tax collection nor lack of industrial growth - but both are the symptoms of other chronic political problems of the last 30 years. Rampant capital flight, inefficiency (corruption/utter stupidities) of public sector development investments and culture of loan defaults and squandering of subsidies by private sector have led to lack of growth. It would take time to somewhat remedy these factors - maybe a few years. Deficits (low taxes) are not that bad if the profits to the private sector are reinvested, and not laundered out of country or are primarily a result of loan payments.

 

[Eyeaan]

Apki mehnat ka shuriah magar PATWARI itni tafseelat me nahi jatey... un ke liye jo dikhta hai wo bikta hai... Hum logo ne to panch saal ke liye Imran Khan ko mauqa dia hai aur utne hi saal intizar karenge koi jaldi nahi...

Kashaf abbasi jaison ko buhut aasani hai - jo whatsapp pe milta hai sham ko bol deta hai - phir aajkal malik riaz bhi active hai sabaq ratwane ko.

 

[PIND-WALA]

In all honesty, the government should take 'what steps' on micro level.
Further what is the best timing to give incentives at micro level - or is it better when the macro indicators are a bit stable.
Is there any better investment than the housing project to inject gov. funds for both growth and for employment? Or investments in Tourism sector or in agricultural sectors or exploration/mining sectors?
What may realistically be achieved by putting loans by manipulating interest rates and subsidies in the hand of our investors - right now? Look at what's been the experience in the recent past. Or you suggest investments in government owned industrial sectors (which I personally don't oppose much -rather favor)

About taxes and reforms in FBR :: How much taxes (as %age of gdp) can be collected without economic slow down and increases the capital flight? With all talk of more taxes, corruption and black money--- the tax growth at this time has to come from real economic growth. With all honesty I think these aren't the times (nor we have capacity if we wish) to go after the black money and tax evaders - Wait for a few years and then with minimal adverse effects - for which, I assume, we again need macro stability.

My personal view; our main problem is neither the tax collection nor lack of industrial growth - but both are the symptoms of other chronic political problems of the last 30 years. Rampant capital flight, inefficiency (corruption/utter stupidities) of public sector development investments and culture of loan defaults and squandering of subsidies by private sector have led to lack of growth. It would take time to somewhat remedy these factors - maybe a few years. Deficits (low taxes) are not that bad if the profits to the private sector are reinvested, and not laundered out of country or are primarily a result of loan payments.

Improve law enforcement, safety standards in industries (this will bring many new jobs as well as imrove standards and quality). Seminars , trainings and ideas for new and small businesses, in addition lot of industries need tweeking in rules to benefit local worker. Training of folks to better jobs overseas, there is not much training in blue collar category.

 

[desan]

Concerted media campaign, after the successful bail of NS on health grounds, is quite effective.

When educated PTI supporters on this forum are starting to buy this propaganda, then imagine the uneducated masses on the streets!!!

 

[adeel.zafar]

Concerted media campaign, after the successful bail of NS on health grounds, is quite effective.

When educated PTI supporters on this forum are starting to buy this propaganda, then imagine the uneducated masses on the streets!!!

Yeah Nawaz Sharif has immediately ordered to increase petrol prices, devalue rupee and release BRT corruption report as soon as he got bail.

 

[Steyn]

اس نے تو الیکشن سے پہلے ہی بتا دیا تھا کہ آئی ایم ایف کے پاس جانا پڑے گا، شاید آپ نے پی ٹی آئی الیکشن کے بعد جوائن کی ھے???

Lagta hai aap nay election kay baad join ki hai. I was a staunch supporter of PTI since 2014

 

[desan]

Yeah Nawaz Sharif has immediately ordered to increase petrol prices, devalue rupee and release BRT corruption report as soon as he got bail.

NS was lucky as the oil prices were the cheapest when he took over and was able to generate revenue on those cheap prices.

PTI on the other hand is subsidizing oil with rising prices in the world market.

Devaluation of rupee is inevitable, otherwise, you have to spend billions of dollars of precious reserves and then keep going to IMF for bailouts.

 

[adeel.zafar]

NS was lucky as the oil prices were the cheapest when he took over and was able to generate revenue on those cheap prices.

PTI on the other hand is subsidizing oil with rising prices in the world market.

Devaluation of rupee is inevitable, otherwise, you have to spend billions of dollars of precious reserves and then keep going to IMF for bailouts.

Thats a seperate topic - but you linked all this to Nawaz Sharif Bail ... how is that linked?

 

[desan]

Thats a seperate topic - but you linked all this to Nawaz Sharif Bail ... how is that linked?

Linking it to media propaganda, not NS...

 

[Sonya Khan]

A comprehensive analysis..... Since this concerted campaign against IK and his team has malafide intention so you won’t see any solution for economic mess being put forth in all these talk shows....nor by the critics here .... A gross injustice to Pakistan.....

 

[umer_javed]

In last week the economic experts and media is showing us that something big has done by PTI and many PTI followers are buying this false narrative without understanding the issue. I tried here explaining the situation; hope it will help

Approach # 1 PML(N):
There are two ways to run the country. One way which Mr. Ishaq Dar followed; borrow money and spend on infrastructure projects. This helps maintaining high GDP growth (for few years). In such a case, the current account deficit will remain very high. For this plan to be successful the country should have huge foreign currency reserves and there should be a continuous flow of Foreign Direct Investment (FDI). Countries like India and Bangladesh are showing high GDP growth because of this reason.
For PML (N) they took a Chinese bet; that Chinese money will come as FDI and International borrowers will help us following this plan. However the plan backfired since under CPEC the money did not flow to Pakistan (remained in China) and IMF declined to support as they thought their money will be used to pay Chinese loans.

Approach # 2 PTI
The other way to run a country by managing current Account Deficit (please see below to understand the current account). Here one needs to manage the payments. The countries who do not have high foreign currency and the level of FDI is low. This is a MANDATORY approach otherwise, the country will be defaulted. For countries like Pakistan this is not just hyper inflation it will be a National Security issue.
Sri Lanka, Maldives and Kenya lost their ports to Chinese. It is because of this reason that they blindly borrowed and ultimately have to give the pledged assets. Like you borrow to buy a house and in case of default, the bank confiscates the house. Countries like Argentina, Greece, Mozambique they defaulted because they didn’t manage the deficit (one of the factors among other factors).
Asad Umer is working on the Root Cause (not taking the cosmetic measures).

Why we should not blame Mr. Khan or Mr. Umer:

• Pakistan has to pay 9 Billion USD in 2019 (this is not borrowed by PTI)
• In 2012 ; Pakistan exports were 24+ USD in 2018 they remained at 24+ Billion USD (negligible/no increase in exports in 5 years)
• In 2012 Imports were 43 Billion USD and in 2018 it is 56 Billion USD (13 Billion USD) – (So Mr. Dar put this country in a default trap)

Why Not A Rocket Science (Just a Balance of Payments):
Based on raw data I got from google search; (for understanding only)

• 2018 - 19 (end of year); Exports + Remittances + payments = 48 Billion USD & Imports plus the payments will be around 58 Billion USD
• 2019-20 (based on data) it will be 50 Billion USD incoming and outgoing 54 Billion USD
• 2020-21 it is expected that the balance will be zero as it will be 52 Billion USD.

At that point, a country like Pakistan is capable of achieving 6% - 8% GDP growth rate.

Risks Factors:

• I do not understand why Media is trying hard to sell the wrong narrative. (This is a major risk as SME's buy this narrative consider you being an entrepreneur listen to media and do not invest)
• Banks are not happy off-course because interest rates are high during low GDP; borrowing remains low. For banks they make money if more people borrow.
• Banks like ADB and IMF do not like (balance of payments option) as they lose a market since the country does not need monetary support anymore.
• Rating agencies downgrade your bonds because if you are not borrowing for infrastructure your GDP is low and thus rating is low.
• CPEC added high loans on Pakistan without creating any economic boom. Pakistan should reconsider investments under it.

World Waiting for Financial Crisis:
Almost all global financial institutions are waiting for mega financial crisis. Globally $ trillions of borrowed money is spent on infrastructure promising them high return. All type of investors including Pensions funds have lend money to infrastructure projects however the returns are negative after adjusting inflation. In such times only the people like Asad Umer and Imran Khan are brave enough to take this approach.

Read this to Understand the Current Account:

There are Four Current Account Components
Trade: Trade in goods and services is the largest component of the current account. Therefore, a trade deficit is enough to create a current account deficit. Exports‎: ‎$24.824 billion (FY 2018) Imports‎: ‎$56.002 billion (FY 2018)
Net Income = Income received by the country’s residents - income paid to foreigners. The country’s residents receive income from two sources. Frst is earned on foreign assets owned by a nation's residents and businesses. That includes interest and dividends earned on investments held overseas.The second source is income earned by a country's residents who work overseas. if the income received by a country's individuals, businesses, and government from foreigners is more than the income paid out, then net income is positive. If it is less, then it contributes to a deficit.
Direct Transfers: This includes remittances from workers to their home country. Pakistan received appx. 21 billion USD as remittances.
Direct transfers also include a government's direct foreign aid. A third direct transfer is foreign direct investments. That is when a country's residents or businesses invest in ventures overseas. The fourth direct transfer is bank loans to foreigners.
Asset Income: This is composed of increases or decreases in assets like bank deposits, central bank and government reserves, securities, and real estate.

Asslam-u-Alaikum,

Masha'Allah very good piece of work, on top of it your research is very good and your explanation is detailed. As i understand you've missed something which i would like to highlight here.

Kindly read my comments in blue colour and as an unbiased person.

Why we should not blame Mr. Khan or Mr. Umer:

• Pakistan has to pay 9 Billion USD in 2019 (this is not borrowed by PTI)
• In 2012 ; Pakistan exports were 24+ USD in 2018 they remained at 24+ Billion USD (negligible/no increase in exports in 5 years)
• In the above point where are the foreign remittances? if we add those then our total will be 20 + 24 = 44 Billion US$.
• In 2012 Imports were 43 Billion USD and in 2018 it is 56 Billion USD (13 Billion USD) – (So Mr. Dar put this country in a default trap)
• in 2012 Total Import was 43 - total foreign Exchange 44 = 44 FE - 43 IM = 1 Billion surplus, so it proves that PPP have done great job.
• in 2018 Total Import was 56 and total Foreign exchange was 44 = 56 - 44 = 12 billion total deficit so PMLN had done bad.

Again i'm writing this comment as unbiased person but the energy crisis started during Musharaf's tenure then PPP inherited and added more to it and in PMLN tenure energy crisis was pretty much controlled. So one can say that PMNL plan was to overcome the energy crisis then do progress, which could be right decision now PTI has only financial crisis but they can boost the economy in a very short time following are the benifits for PTI.

-All infrastructure projects which were started by PMNL/PPP are at the edge of completion.
-All energy projects which were started by PMLN are at the edge of completion.

On the other hand its time to cut the fruit but here comes the politics, if PTI start cutting the fruit from the garden of PPP/PMLN then who will recognize their success. As we've seen some of the project completions were inograted by PTI was badly criticized by everyone because that were started by PMNL. So now its time for PTI to blame earlier governments again and again on every stage so people will really think that its only the PTI who is doing all good and rest all were wrong from the past +70 years.

May Allah give us hidaya for wise judgement.
One should follow a leader who stand with right and for right.

Regards,

 

[Fawad Javed]

reforms are needed desperately, with out this nothing will change in Pakistan

In all honesty, govt needs to take steps on micro level to actually see the results, so far there is little activity but industrialization is only solution out of this mess.