Next year looks tough for Pakistan - World Bank

Discussion in 'Pakistan' started by IBM, Oct 30, 2009.

  1. IBM

    IBM Regular Member

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    Pakistan's macroeconomic medium term outlook is uncertain and remains fragile, the World Bank said late on Thursday, due to the uneven implementation of reforms, fiscal instability and a volatile political and security environment.

    "The fiscal year 2009/10 looks difficult," the World Bank said in Economic Update for Pakistan in September.


    The Bank said fiscal instability is likely to continue due to poor revenue collection, and the target for the budget deficit in the first quarter ending Sept. 30 is likely to be missed.

    "Failure to raise revenues going forward would further heighten Pakistan's vulnerability to shocks, and jeopardise country's development efforts by limiting resources available for planned investments in human and physical infrastructure," the Bank said.

    The International Monetary Fund came to the rescue with a $7.6 billion bail-out last November to help Pakistan avert a balance of payments crisis.

    In July, the IMF boosted the the package to $11.3 billion, of which just over $5 billion has already been disbursed. Pakistan officials are due to meet IMF officials in Dubai from Nov. 2 to Nov. 12 for a third review of the country's economic performance.

    In addition to the IMF cash, Pakistan has secured loans from multi-lateral donors such as the World Bank and Asian Development Bank.

    Pakistan achieved high economic growth earlier this decade partly due to heavy reliance on external finances, but failed to raise revenue and savings, which left the economy vulnerable to external shocks, the bank said.

    The World Bank is projecting GDP growth for fiscal year 2009/10 at 3.0 percent, lower than the government's target of 3.3 percent but higher from 2.0 percent achieved in the previous fiscal year.

    The current account deficit and fiscal deficit for the fiscal year ending June 30 is projected at 4.7 percent of GDP and 4.9 percent of GDP respectively.:help::help::help::help:

    Next year looks tough for Pakistan - World Bank | Reuters
     
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  3. IBM

    IBM Regular Member

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    Wat else you can expect, when you keep on lending loans from worldbank and IMF. Pak govt should initiate some strong steps .Example (lower millitary spendings) and others to come out of vicious circle of loans or expect worse from IMF and worldbank.
     
  4. Yusuf

    Yusuf GUARDIAN Administrator

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    One thing to get loans, but how the hell does it plan to repay the loan? Does it have any money to even pay the interest on all that loan?

    I really cant understand why it just cannot think of development and leave its terrorism aside. 60 years of terror has not got it anything, nor will it get in the next 60. But in the mean while it has lost a lot and if it doesnt take steps to gather itself, it will not be around in the next 60 years. How can one destroy itself is beyond me.
     
  5. thakur_ritesh

    thakur_ritesh Administrator Administrator

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    Yusuf,

    Loan recovery model is there in place and will be recovered till the time the imf/world bank/adb officials do not budge under pressure which is something the pak government will try to put in the name of wot and they will ask for a waiver like they have done successfully so many times in the past. Anyways the model in place is to cut subsidies which can be seen in the prices of fuel, electricity, etc, if I am not mistaken they have already taken a big hit on the development budget which will be used to repay the loan principle and interest.

    Come on mate what is 60 years, people are ready to sacrifice their tomorrow for the next 1,000 years and 60 years is just 6%, they are ready waste generations after generations for some false sense of bravado.
     
  6. Yusuf

    Yusuf GUARDIAN Administrator

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    TR, the IMF/WB will recover the money one way or the other. But the fact still remains how will Pak pay? in what manner and form?
    The future gen will have to suffer because of the policies of today.
     
  7. sky

    sky Regular Member

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    Pakistan is the epicentre for the war on terror, coupled with ecconomic mis managment is a potent mix .Looks like the friends of pakistan will need to keep there cheque book handy as they will come under more pressure to loan them money.
     
  8. sob

    sob Moderator Moderator

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    Reply to sky

    Their All weather friends refused to lend them money this time around as they knew that it is bottomless well and the money would just dissapear. The Saudis too have been very reluctant this time and had to be persuaded by both US and Japan to come forward for the emrgency loan which was disbursed following a meeting in Tokyo early this year.

    As Hillary Clinton has correctly pointed out that Pakistan will have to increase their tax collection base to keep their economy running. Also with the current climate they can kiss goodbye to any hopes of major FDI inflows. Whatever FDI inflows will be there IMO will be through state run Chinese entities.
     
  9. Singh

    Singh Phat Cat Administrator

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    Pakistan will find it awfully tough to repay the loans but it doesn't mean it will implode. It is in a similar position as India, with astute fiscal policy mid-long term this could turn out to be a blessing in disguise for Pakistan.

    I have an interesting suggestion keeping in mind Hillary's advice: If Pakistani govt would be willing and if Indian govt is bold enough, let India cover Pakistan's debt and let Pakistan open up to Indian investment. We can use Pakistan as a transit point for ME and CAR and also as a market for our goods.
     
  10. F-14

    F-14 Global Defence Moderator Senior Member

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    Singhji to your proposal they will say like this

    " we will eat Grass but shall not let the Indians to trade through pakistan
     
  11. Singh

    Singh Phat Cat Administrator

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    I don't think Pakistanis are not for sale. At the end of the day the only Win-Win situation for India and Pak is a greater economic relationship. Look at Chindia, Japina.
     
  12. sky

    sky Regular Member

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    Why not aid diguised as investment,i keep hearing on pak forum's about the thar coal field's in sindh.billion's on tonnes of coal which are not even being developed.If its true i see a opportuninty for both pakistan and india.
     
  13. Ray

    Ray The Chairman Defence Professionals Moderator

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    Every year has been tough for Pakistan.

    What's new?

    Till salvaged by the US, WB and IMF!!
     
  14. Singh

    Singh Phat Cat Administrator

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    Why aid ? Aid can be misused. A 50-50 JV with a Gulf Investment Company will ensure security.
    Thar Field reserves are speculated-estimated not proven.
    We can also buy land just like the arabs.
     
  15. sob

    sob Moderator Moderator

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    Singhji,

    Even if the Thar reserves are proven to be promising there remains to be seen whta could be the use for the coal. The most obvious question would be power generation, but for that there must be a latent demand for power in Pakistan. In the absence of large scale industrilisaion in the country I do not see any immediate jump in demand for power. Moreover with the gas reserves in Sui and also Pakistan can source gas from Iran it is more beneficial for Pakistan to go in for Gas based plants.

    There has to be a significant mindset change in Pakistan that trade with India will be a winning proposition for them. The local business community will not allow it as they feel ( rightly so ) that the bigger and more efficient Indian industry will gobble them up or they will just fall by the wayside.

    Today Pakistan imports many Indian products notable are Tyres, Pan leaves auto components etc, which come via Dubai. This could be sourced directly resulting in savings of freight for the consumers in Pakistan.

    But the million dollar question is Whether false pride will make them eat grass or pragmatism will give them enough Kebabs on the platter to eat.
     
  16. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    Next year will not be tough this is just a hint to all the donors to put some money aside next year for the charity case, have your wallets wide open and your checkbooks ready.
     
  17. ppgj

    ppgj Senior Member Senior Member

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    agree with you but looking at the ground situation it looks like a dream.

    that sounds highly unrealistic. even pakistan's best friend is not investing in any worthwile way. infact they are shelving gwadar refinery project.

    Asia Times Online :: South Asia news, business and economy from India and Pakistan

    no country is investing in pakistan because of the security situation. covering for pakistan's debt will mean india putting away whatever growth it has seen out of the window.

    good in idea and even pakistan will earn revenues. but pakistan was not even allowing humanitarian material to a'stan via its land. it will be generations if that can take place.
     
  18. Singh

    Singh Phat Cat Administrator

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  19. ppgj

    ppgj Senior Member Senior Member

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  20. sob

    sob Moderator Moderator

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    This is the job of the political leadership to guide the nation to the next level, away from all that is wrong with Pakistan today. Sadly looking at the political leadership today in Pakistan I do not see a leader who can take the bit between his teeth and go on National Television and say that we are ready for a new begining for Pakistan and the first step is to normalise our realtionship with India and we should not look on to it as a an enemy.

    This first step will be the most radical step and there will be severe backlash. Decades of indoctrination will not be washed away in one go. It will take time and that is the future as I see it.
     
  21. ppgj

    ppgj Senior Member Senior Member

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    agree with you. unfortunately in pakistan civilian leadership does not have any power. the present president ZARDARI did make conciliatory gestures to that effect to india but was silenced. i think PA/ISI need to change their mindset because they set the agenda atleast wrt india.

    generations to be precise.
     

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