Pakistan’s trade deficit declines by 9.93 percent

Discussion in 'Pakistan' started by farhan_9909, Dec 17, 2012.

  1. farhan_9909

    farhan_9909 Tihar Jail Banned

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    ISLAMABAD: The Pakistani economy has racked up $8.168 billion of goods trade deficit (an excess of imports over exports) during the first five months of the current fiscal. However, there has been a decline of 9.93 percent since the same period last year when the deficit stood at $9.069 billion, the Pakistan Bureau of Statistics (PBS) reported on Wednesday.

    According to the PBS monthly trade bulletin, Pakistan exported goods worth $10.082 billion while imports stood at $18.25 billion from July-November 2012-13. In the corresponding period of 2011-12, exports stood at $9.348 billion and imports at $18.417 billion.

    During this five-month period, cumulative exports rose by 7.85 percent and imports dipped by 0.91 percent, compared to the same period last year. It was encouraging to see Pakistan’s exports exceed its imports. Economic experts say this provides a good cushion on the external front, especially in the balance of payments, currency stability and other macroeconomic indicators.

    Moreover, data shows that in November 2012, $1.896 billion worth of products were exported while in November 2011 the figure was $1.533 billion, which depicted 23.68 percent growth in the sale of goods abroad.

    Imports stood at $3.609 billion during November 2012 while in they were $3.693 billion in November 2011 – thus registering a decline of 2.33 percent. During the same month, the export-import gap fell by 20.8 percent to $1.711 billion over $2.16 billion recorded in the same month last year.

    Comparing the trade performance of November 2012 with that of October 2012, exports registered a decline of 5.95 percent and imports declined by 4.83 percent in November 2012 over October 2012, as exports in October 2012 stood at $2.016 billion and imports at $3.79 billion.

    In the last fiscal, the economy accumulated a trade deficit of $21.27 billion, which was 36.32 percent more than what was recorded in the previous fiscal. Exports during FY12 totalled $23.64 billion, compared with $24.81 billion in the same period last year. Furthermore, imports rose by 11.13 percent to $44.91 billion from $40.41 billion a year ago.

    Pakistan
     
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  3. farhan_9909

    farhan_9909 Tihar Jail Banned

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    we are indeed getting it hard to return the loan to IMF

    bt we must nt forgot that economy is indeed doing better after 5 rough years
     
  4. Blackwater

    Blackwater Veteran Member Veteran Member

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    can u explain this


    Dollar reaches all time high of Rs99.25


    Dollar reaches all time high of Rs99.25 - geo.tv
     
  5. farhan_9909

    farhan_9909 Tihar Jail Banned

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    that is because of depleting reserves

    will recover after repayment in feb 2013

    remember that after repayment in feb this year.rupee reversed from 96 to 91 again
     
  6. Blackwater

    Blackwater Veteran Member Veteran Member

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    wish u good luck
     
  7. Rage

    Rage DFI TEAM Stars and Ambassadors

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    I beg to differ with that statement. I'd be happy to start a discussion about it if you want to. But only because I feel that carrying around such a premature and ill-conceived conclusion based on consumer spending reports and stock market indices is dangerous.
     
    Last edited: Dec 18, 2012
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  8. farhan_9909

    farhan_9909 Tihar Jail Banned

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    why is Economy doing better compaed to the past 4-5 years

    *Economic growth improved(3.7% in 2012 from 2.4% in 2011)
    *INflation at 6.9% in the past even reached 25%
    *KSE close to 17k mark
    *Trade deficit decline from the past few months
    *Export incirease(struck for the past few years b/w 20-24billions) this year expected to reach 28-30billions


    i will advise you to visit pdf economy section for more detail.
     
  9. sukhish

    sukhish Senior Member Senior Member

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    you are quoting figures from your finance minister. I think they lie, plan and simple.
     
  10. farhan_9909

    farhan_9909 Tihar Jail Banned

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    ok brother
    you provide me the figures than :)

    thanks in advance
     
  11. blank_quest

    blank_quest Senior Member Senior Member

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    Pakistan: inflation reality check | beyondbrics

    with high inflation and weakening of Currency Loan Interest goes down and thus reflects in form of less fiscal deficit , so overall less trade deficit is NOT anything out-of-the-box. :rofl:
     
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  12. blank_quest

    blank_quest Senior Member Senior Member

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  13. blank_quest

    blank_quest Senior Member Senior Member

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    Interesting thing is that the Inflation rate and decline in trade deficit is almost equal in % :rofl: Is Pakistan trading in currency !!
     
  14. Rage

    Rage DFI TEAM Stars and Ambassadors

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    -- Doppelpost --
     
    Last edited: Dec 21, 2012
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  15. Rage

    Rage DFI TEAM Stars and Ambassadors

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    @farhan_9909, I'm going to answer each of your points individually.

    So, saddle up for the ride.

    First, just to clarify:

    Daily Times - Leading News Resource of Pakistan

    N.B. These figures are based on provisional data for the first nine months and do not include the last three winter months, during which energy and power crises are generally more acute.
    ---

    Moreover, I assert that Pakistan's GDP growth figures are fudged, and are likely to have been fudged for the current fiscal year.

    In order to evaluate this, we will take a two-step approach: 1) historical trends, 2) means and motivation

    1) First, let's take a look at the historical evidence of Pakistan's Government fudging economic data to support claims about economic growth and/or poverty reduction.

    Dr. Shakeel Ahmad is a former member of the Civil Services, Pakistan and Advisor to the Additional Secretary, Economic Committees and Regulatory Authorities (EC&R) of the Federal Cabinet. The flwg. is a brilliant article written by the Doctor that makes the following assertions:

    I) Economic statistics are being fudged willy nilly.
    II) There is a serious loss of credibility of government statistics since 2000.
    III) Poverty & illiteracy levels are much higher than the massaged numbers indicate.
    IV) Pakistan is now a laughing stock at international financial institutions
    V) IMF/WB/UN are now questioning authenticity of Pakistani economic data
    VI) Growth of the last 10 years was not driven by higher investment
    VII) The national savings rate fell from 15% in 2001 to 9% in 2011.
    VII) Low savings and low investments have created a future poverty trap
    IX) More importantly, stagnant savings is explained by a negative contribution of household savings in physical assets, increase in deficit financing by the government and non-consequential savings by the corporate sector as a percentage of GDP. This latter phenomenon can be attributed to loss in profitability, repatriation of profits by multinational companies and closure of businesses due to their inability to compete in the external markets
    X) Vulnerability & dependence on external assistance (Aid/IMF) has increased
    XI) Pakistan in now caught in a vicious circle of low investment, low growth, low productivity.​

    Institutions to invest | The Nation

    Do read the rest of the article.

    Dr. Shakeel Ahmad is not the only distinguished individual making claims about the falsification of Pakistani economic data. Dilawar Hussain is Senior Economics reporter at Dawn, who quoted economist Nadeem Naqvi, and made the same assertion about the historical fudging of economic data not long ago:

    Fudged GDP growth numbers | Latest news, Breaking news, Pakistan News, World news, business, sport and multimedia | DAWN.COM

    From the above, it is evident that historically, Pakistani bureaucrats have been accessories to the embellishment of economic data to substantiate the totally concocted claims of some Pakistani politicians.


    2) But, what about more recently? Is there cause to believe that Pakistan's economic data may be falsified owing to certain politico-economic motivations: to mask underlying economic weaknesses, for example, in order to match donor expectations such as the IMF's; or to provide solicitation for the politically rambunctious statements of Pakistani statesmen? There certainly is, as this article indicates:

    Asia Times Online :: Pakistan revenues fudge deepens IMF loan doubts

    Key points from the article:

    - Background: IMF-stipulated Govt. debt-GDP ratio as a precondition for Pakistani securing of a multi-billion dollar bailout package
    - An admission that Pakistan's tax receipts fell well short of their target in the financial year ending June, 2011 after earlier reports that Govt. revenue and tax receipts had exceeded their target by fudging debt-GDP ratios.
    - The target for revenue collection was previously thrice revised, and the failure to meet the (third) revised revenue target prompted Pakistani economic managers to massage the economic figures, as debt-GDP was a core IMF demand for retrieving the current ~$11.3 billion bailout program.
    - After the IMF “appeared to have got wind of the real figures”, the authorities officially conceded the revenue shortfall.
    - Had the latest debt-GDP figures, still hovering around 60%, been initially declared to the IMF, it would have led to the imposition of stiff penalties. The only way to avoid those penalties was to reduce the debt, by:- 1) inflating tax revenue; or 2) inflating GDP.
    - The pressurized “reconciliation of figures” led to the resignation of the central bank governor, the chief economist and auditor general all in the same month.
    - Achieving the new debt-GDP targets will be difficult as the [revenue] base has been reduced by 38 billion rupees, making inflating GDP the only viable method of debt-GDP ratio target achievement.​

    The fact that Pakistan also has no independent regulatory watchdog with teeth, such as the CAG of India, also subjects the Pakistani Government's statistics to further incredulity.

    Much of the inflated GDP owes itself to large public spending through the PSDP by a federal government mired in political expediency. This article from the Business Recorder, in Oct 2012, is instructive:

    Unjust use of development resources | Business Recorder


    Owing to this inflated expenditure by a Government gearing up for elections, which in turn is inflating the Federal Govt.'s debt, the embellishment of GDP statistics by the GoP in order to achieve indispensable IMF-prescribed debt:GDP ratios is all but necessary.

    The above clearly indicates that Pakistan has a strong incentive to fabricate this year's GDP growth rate, the means to achieve it and no independent regulatory body to detect and confront it, unless brought to the notice of the IMF through some fortuitous concourse of circumstances.

    The expansion of Govt. debt both as a means to finance the ever-growing deficit and as part of PPP-inspired, PSDP-routed urban-rural redistribution policies has led to an ever widening revenue-spending deficit, which is impacting adversely the debt:GDP ratio, a key barometer of IMF tranching. Given the short-term nature of this problem, the Govt. sees fudging revenue [and fiscal deficit] or GDP statistics as the only viable solution.

    Unfortunately for the GoP, revenue statistics and revenue sources are far less opaque and far more easily auditable; the GoP discovered this when it tried to fudge those figures before. On the other hand, GDP statistics are much more complex; and are therefore easily obscured, especially in the absence of an independent, regulatory financial watchdog.

    So, given that achieving required debt:GDP ratio targets is imperative, and that in the presence of a ballooning fiscal deficit and no real tax reform, massaging the GDP numbers is the only option, how does the GoP go about evincing that:

    Well, the following article provides a brief glimpse:

    Double-counting: GDP overestimated, may be slashed by 10% – The Express Tribune

    So, double counting has traditionally been the méthode de choix for fudging economic data.

    Moreover, the following article also make it apparent that re-basing has enabled Pakistani economic managers to revise economic growth in subsequent years downward, and thereby claim higher growth rates [year-on-year] for the current year:

    Daily Times - Leading News Resource of Pakistan

    Some key points:

    - The base year revision from 1999-00 to 2005-06 enabled the downward revision of subsequent fiscal growth rates and an upward revision of the current [year-on-year] growth rate.
    - In the new base year: 2005-06, the share of agriculture in GDP went up from 19 to 23 per cent; while for mining, manufacturing, construction and energy, gas and water supply, the rebasing resulted in a lower share in the economy, going down to 21 per cent from 25 per cent.
    - The overall GDP at market prices for the new base year has slightly decreased by 0.4 per cent. As a result, the average annual growth rate between 2005-06 and 2010-11 decreased from 3.7 per cent to 2.9 per cent [in real terms].
    - Despite this [at constant 2005-06 prices] the Government missed its target growth rate of 4.0% and clocked 3.2% for the current fiscal.


    A third and perhaps unique method of inflating GDP has been the arbitrary retaining of old base year values in certain sub-sectors of the service sector, by far the biggest component of GDP:

    Reverting to old base year: Economy grows by 3.67% this year, but misses target – The Express Tribune

    ---

    Just a word of caution: the large payments to the IMF that you are currently seeing and that are being celebrated by the Pakistani Government as being indicative of their repayment-ability, are in fact payments enabled by the taking of even more loans: including about $60 million in soft loans from Saudi Arabia, $200 million in short-term loans from the Islamic Development Bank and about $180 million in loans from the United States. $2.8 billion are due to the IMF by the end of this fiscal, and not repaying them will lead to the imposition of even more penalties and a worsening B-o-P crisis.​
     
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  16. Rage

    Rage DFI TEAM Stars and Ambassadors

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    ---

    The 2nd and 3rd parts are to follow.
     
  17. illusion8

    illusion8 Regular Member

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    One thing going good for Pakistan is your ex pat remittances have increased.
     
  18. farhan_9909

    farhan_9909 Tihar Jail Banned

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    @Rage

    In Pakistan even if the economy grow by 8%.
    there are economist who will claim no the growth rate was just 2%...this was even the case in musharaf era

    well i correctly remember in feb 2012 IMF claimed pak economy will grow by 2.8% in 2012.bt check imf official site.even they changed there own figure.

    Pakistan and the IMF -- Page 1 of 14

    3.7% for 2012

    above 4% is expected for 2013
     
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  19. Rage

    Rage DFI TEAM Stars and Ambassadors

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    @farhan_9909,

    In Pakistan, even if a politician says the economy will grow 6% this year, there are people who believe it will and bureaucrats ready to doctor figures to authenticate that purely baseless claim.

    The IMF merely accepts and publishes figures the head of its country mission gives it until it finds reason to believe otherwise. In the absence of an independent auditor, this is difficult. The figures are only partially or entirely rescinded, when it is found that these were untrue or purposely doctored, and when that happens it imposes a huge blot on the credibility of any country and its agencies. Remember this is the same IMF that had been lied to and then imposed stiff penalties when it found out the revenue-doctoring by the PBS, to your country's detriment. The following is in the aftermath of that incident:

    Pakistan: IMF demands brutal restructuring in return for further funding - World Socialist Web Site

    One fallout from the revenue-embellishing undertaken by your PBS is that the country will now have to eliminate, in a phased manner, all support prices for petroleum and natural gas products. Without the economic capacity to absorb such fiscal shocks, expect some pain in the coming months: unless your country can find a way to stave off this "wrenching policy change".

    Also, note that the 3.7% figure (actually 3.2%) is a provisional figure based on the first nine months of this accounting year, which has not taken into consideration the worst of the winter months during which energy and food crises typically occur. The 3.7% figure has also been made possible by the rebasing of Pakistani statistics: changing of the GDP base from lower 1999-00 prices to higher 2005-06 prices, so that subsequent growth rates are deflated and the present [year-on-year] growth rate inflated.

    In the next posts, I'll be showing how Pakistani economic fundamentals are weak, and that no matter how much massaging and embellishing is done, that situation will linger unless serious reforms are undertaken.
     
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