Pakistan Economy: News & Discussion

[Mikesingh]

Pakistan loses 50pc market share in Kabul

KARACHI: India has succeeded to penetrate in Kabul slashing the market share of Pakistan by more than 50 per cent in the last two years, Chairman Pakistan-Afghanistan Joint Chamber of Commerce and Industry Zubair Motiwala told Dawn on Friday.

Motiwala who recently visited Kabul said the penetration of India and China has limited Pakistan’s option to retain its market share while India subsidises heavily on its exports. He said Pakistan’s trade with Afghanistan fell to $1.2 billion from $2.7bn within in the last two years and the country has been losing even the traditional markets of flour, men and women’s clothes and red meat.

Kabul has been the natural market for Pakistani exports but that is changing as cheaper products from China and India flood the country. According to Pakistan Bureau of Statistics, exports to Afghanistan dropped to $1.271bn in FY17 from $1.437bn in FY16. Exports in the first quarter of 2017-18 stood at $319 million.

Each year thousands of Afghans used to visit Peshawar for medical treatment but now they prefer India due to cheaper treatments and other attractions like concessional treatments. “Medical tourism of Peshawar, which was mainly due to Afghans, is now at zero level; hospitals in Hayatabad are empty,” he continued.

He said Peshawar is the main victim of the declining trade with Afghanistan where people have lost their businesses on a large scale. Out of 200 flour mills, about 100 have been closed down due to a drastic fall in the export of flour to Afghanistan, he added.

He also referred to the decreasing containers’ traffic from Pakistan to Afghanistan. He said 70,000 goods containers were used to pass through between the two countries which has now dropped to just 7,000, reflecting the change of routes for imported goods to Afghans.

Chabahar was a masterstroke by India! Pak will now bleed like never before.

Their overall exports too have hit rock bottom, what with the EU, the US of A and Latin America preferring Indian and BD goods rather than the inferior and more costly Paki stuff. Their imports have increased exponentially, enormous loans have to be paid back to the IMF, WB and China and thus their CAD has hit the roof.

Those are the ingredients for a failed state! Time for celebration! :biggrin2:

 

[Butter Chicken]

Chabahar was a masterstroke by India! Pak will now bleed like never before.

Their overall exports too have hit rock bottom, what with the EU, the US of A and Latin America preferring Indian and BD goods rather than the inferior and more costly Paki stuff. Their imports have increased exponentially, enormous loans have to be paid back to the IMF, WB and China and thus their CAD has hit the roof.

Those are the ingredients for a failed state! Time for celebration! :biggrin2:

It has been falling before Chabahar innaugauration,reason is that Pukis have been closing border trade points with Afghanistan after every "bad terrorist" attack(even Wagah border is never closed for trade despite heavy LoC firing).This has built up frustration amongst Pashtuns on both sides of the Durand Line,and is going to play an important part in the coming years.

 

[ezsasa]

Chabahar was a masterstroke by India! Pak will now bleed like never before.

Their overall exports too have hit rock bottom, what with the EU, the US of A and Latin America preferring Indian and BD goods rather than the inferior and more costly Paki stuff. Their imports have increased exponentially, enormous loans have to be paid back to the IMF, WB and China and thus their CAD has hit the roof.

Those are the ingredients for a failed state! Time for celebration! :biggrin2:

Their exports are 20 billion $ and imports are 40 billion $. That means they are loosing billions by the year.

Their annual federal budget is equal to our defence budget.

Even if CPEC succeeds, very few people pay taxes. Which means perpetual debt cycle is not going to go away soon.

 

[Suryavanshi]

Their exports are 20 billion $ and imports are 40 billion $. That means they are loosing billions by the year.

Their annual federal budget is equal to our defence budget.

Even if CPEC succeeds, very few people pay taxes. Which means perpetual debt cycle is not going to go away soon.

If we succeed to block their water in time then we might just be able to cripple their agro based industry.
FYI 25% of Pakistan's economy is agro based

 

[ezsasa]

If we succeed to block their water in time then we might just be able to cripple their agro based industry.
FYI 25% of Pakistan's economy is agro based

I’ve been saying this since 2014..

When they are hell bent on shooting in their foot, why should we intervene.

Sit back relax and enjoy the show.

 

[Suryavanshi]

I’ve been saying this since 2014..

When they are hell bent on shooting in their foot, why should we intervene.

Sit back relax and enjoy the show.

The entire green region is agro based LMAO.
If they get hit here they are gonna stay down.
The water table of Pakistan is already pretty screwed not to mention we are gonna need more water for ourselves as global warming increases.

 

[Villager]

Nobody posted this interesting news of Thari Hindu woman (right activist) elected to the Senate for the first time in Pakistan on seat reserved for woman as a candidate by PPP.

 

[Suryavanshi]

Nobody posted this interesting news of Thari Hindu woman (right activist) elected to the Senate for the first time in Pakistan on seat reserved for woman as a candidate by PPP.

In general it's not in Pakistan nature to allow these kind of liberal developments but this is most likely to rub it in our face.

 

[The Juggernaut]

One interesting thing people which fail to see the way things are happening.

1. Pakistan loses 50pc share of trade with Kabul. The chahbahar port deal was made in 2015, and in 2016 airbus service started, 2017 wheat sent to Afghanistan.About 55% of trade was lost.
2. Tehran has asked for payment of over $1.2 billion, as under the penalty clause from January 1, 2015, Pakistan is bound to pay penalty of $1 million per day if it fails to have intake of gas from Iran under the IP project. In latest development Iran after pause of 20 months has conveyed to Pakistan in plain words that it is going for arbitration seeking the huge penalty of $1.2 billion which is equal to almost the cost of the project.
3. Pakistan's free trade agreement talks with Turkey nearing collapse. Ankara’s refusal to grant GSP+ status at heart of simmering dispute. The FTA talks between Pakistan and Turkey have been extended twice. Originally they were supposed to conclude in 2016, but the date was extended to May 2017.

You may notice that these things are not happening suddenly, it is going through 2015. from 2015, 2016 and 2017, the things are heating up. Like a mill, while china for Pakistan inadvertently making economic worse. What is more amazing that they are putting national highways, Govt. buildings, airports and PTV as collateral for loan.

Quite amusing that while in 2016 nothing was making sense and things was haphazard, process was going on
The economic isolation is not an event, it is an ongoing process. This is more death by thousand debts.

 

[Villager]

In general it's not in Pakistan nature to allow these kind of liberal developments but this is most likely to rub it in our face.

Maybe I am very optimistic but I see a power struggle going on screen and behind between civilians, military and judiciary that's getting more and more intense and I think there is a section of ordinary civilian, it's elected leaders and Judiciary that's trying to bring actual democracy and establish parliament's supremacy in all national affairs. Nawaz Sharif seems to be leading the fight with PPP's help. I thought Imran Khan might be the one to bring this change but he appears to be playing in the hands military and militants. If Nawaz or his daughter manages to get clear majority in next elections, the military establishment will lose its grip in country and we will see more such developments.

Also they are facing increasing pressure to get rid of the image of being terrorists funding nation from almost every nation including China.

 

[Butter Chicken]

Maybe I am very optimistic but I see a power struggle going on screen and behind between civilians, military and judiciary that's getting more and more intense and I think there is a section of ordinary civilian, it's elected leaders and Judiciary that's trying to bring actual democracy and establish parliament's supremacy in all national affairs. Nawaz Sharif seems to be leading the fight with PPP's help. I thought Imran Khan might be the one to bring this change but he appears to be playing in the hands military and militants. If Nawaz or his daughter manages to get clear majority in next elections, the military establishment will lose its grip in country and we will see more such developments.

Also they are facing increasing pressure to get rid of the image of being terrorists funding nation from almost every nation including China.

Hopefully economic issues will force Punjabistan to surrender its nukes in return for IMF loans and avoiding UN sanctions.It will be cheaper than strike on Pakjabi nuclear sites by international forces.

 

[LordOfTheUnderworlds]

Pakistan's free trade agreement talks with Turkey nearing collapse

KARACHI: The commerce ministry has asked the government for clearance to take a long simmering dispute with Turkey to the World Trade Organisation (WTO) after prolonged discussions on a Free Trade Agreement (FTA) between the two countries have hit an impasse.

At issue is grant of GSP+ status by Turkey that Pakistan argues is an obligation given that Turkey and the European Union are part of a customs union. The ministry is arguing that out of the countries that enjoy GSP+ status with the EU, Turkey has extended the same status to all except Armenia and Pakistan.

Also, Pakistan has asked for a reversal of a set of additional duties that the Turkish government imposed on Pakistani products having high export potential in the Turkish market back in 2011.

Ankara’s refusal to grant GSP+ status at heart of simmering dispute

In the seven rounds of FTA talks held since February 2015, Pakistan has repeatedly raised the matter of additional duties but no breakthrough has been achieved.

The products in question are cotton fabrics, apparel and home textiles, carpets, manmade fibres, plastics and footwear. The additional duties range from 20 to 50 per cent, bringing the total duties on these critical products to between 28 and 67pc when combined with other duties also applicable on them.

As a result, Pakistan’s exports to Turkey plummeted from $906 million in 2011 to $282m in 2017, a decline of 69pc.

The commerce ministry believes that the Turkish government is under an obligation to extend GSP+ status to Pakistan because the former is a member of the EU customs union, a demand that was first presented to the Turkish authorities in 2014. It was in response to this demand that the Turkish government proposed an FTA instead, talks for which were launched the following year.

In the seventh round of FTA talks in June 2017, Pakistan asked either for an extension of GSP+ status by Turkey or for the two countries to grant tariff concessions to each other, extending the lowest tariff that they may have granted to any other country under any FTA. For its part, the Turkish side, according to a source from the Pakistani team present at the meeting, proposed a 25pc reduction in the additional duties imposed in 2011, with the reductions spread over a five-year period and some of the duties possibly phasing out over 11 years.

Pakistan rejected that proposal, and the commerce ministry asked the top political leadership to intervene and press the Turkish side to show greater flexibility.

It suggested that if the intervention failed retaliatory tariffs could be imposed on Turkish products. None of the two recommendations were, however, adopted.

In December last year, the matter was again discussed at the meeting of the Pakistan-Turkey Joint Working Group, which is different from the FTA talks.

The Turkish side, according to the source present at the meeting, said it is not offering GSP+ status to other countries beyond those that already enjoy it.

Another attempt was made to achieve a breakthrough on the sidelines of the WTO ministerial meeting later that month in Buenos Aires, Argentina, again without any success. In fact at that event no meeting between the Pakistani and Turkish trade delegations could take place.

The FTA talks between Pakistan and Turkey have been extended twice. Originally they were supposed to conclude in 2016, but the date was extended to May 2017.

At present, no further meetings are scheduled, and the commerce ministry has formally asked the cabinet for permission to take up the Turkish refusal to either reduce its additional duties or extend GSP+ status in line with the EU, with the WTO, thereby elevating the issue to a trade dispute between the two countries.

Published in Dawn, March 3rd, 2018

Ya Allah, paise ki baat aa jaaye toh Bhai bhi Bhai ka saga nahi hota.

 

[mayfair]

Maybe I am very optimistic but I see a power struggle going on screen and behind between civilians, military and judiciary that's getting more and more intense and I think there is a section of ordinary civilian, it's elected leaders and Judiciary that's trying to bring actual democracy and establish parliament's supremacy in all national affairs.

Let me reiterate, no section in Pakistan wants ACTUAL democracy. They all want democracy on THEIR terms. Nawaz Sharif's version envisages him as Ameer-ul-Momineen that no one can question; Zardari's version- Him free to loot; Imran's version- Him free to fornicate and spend half the time in England, Musharraf's version- A return to him as the CEO of Shitistan.

If Nawaz or his daughter manages to get clear majority in next elections, the military establishment will lose its grip in country and we will see more such developments.

This has been claimed for a long long time- when ZAB won the elections in 1972, when BB won in 1988, when Nawaz won in 1996 and when democracy was "restored" in 2007. The establishment will NEVER, I repeat, NEVER EVER lose its grip on the Shitistan because the ESTABLISHMENT IS Shitistan. The politicos and establishment ALL come from the SAME background- the landed, feudal gentry.

Also they are facing increasing pressure to get rid of the image of being terrorists funding nation from almost every nation including China.

As long as the Napaki fauj is supported by Cheen, Saudia and Amreeka, nothing will change. The support will not vanish anytime soon.

 

[Berkut]

A few points though:
1. Paki is an artificial entity and will dis-integrate. It is only held in together because some policy maker somewhere in the US Establishment thinks that it staying together serves some US interests(which is so Chankiyan that at least I cannot understand it)

2. Brace yourselves for Paki sympathisers within Indian media n Champaigne class to slowly increase the volume for India to rescue the Paki people under some Aman ka tamasha part 2. Think Syria but at your door step, the fence won't stop the hordes once they start to walk towards the border with their belongings.
( It is the great Hindu ethos for giving shelter to all who came to us bla bla bla... without mentioning duties for the new settlers)

3. Paki may give nukes for "rent" as collateral to keeping the world "safe" n the world, like in the past fall for this snake oil ( I believe they don't have nukes but that's another debate)

 

[Mikesingh]

If we succeed to block their water in time then we might just be able to cripple their agro based industry.
FYI 25% of Pakistan's economy is agro based

I think we're already at it......

Dip in Jhelum water flow: Mangla Dam reached dead level by Feb 24

Owing to ever reducing water inflow in the River Jehlum, Mangla Dam is feared to reach dead level by February 24 exposing Punjab to 70-80 percent water shortage putting the food security in jeopardy.

Punjab, the food basket of the whole country, is all set to face water deficit up to 80 percent if flows are not improved and country receives no rains.

https://www.thenews.com.pk/print/28...-flow-mangla-dam-reaches-dead-level-by-feb-24

This is most likely due to the Wullar Barrage and water being diverted to Wullar Lake through the tunnel from the Kishanganga Dam.

The Pakis are pissed off at this development and have raised the issue with India!

So yes! The process has already started.

 

[Butter Chicken]

Pakistan’s debt obligations(full list of baki loans.Do read)

WITH total debt servicing projections at $31.3 billion until 2022-23, Pakistan expects a balanced report today from the International Monetary Fund, notwithstanding America’s adversarial stance, seen at its peak during the recent meetings of a global money-laundering watchdog in Paris.

This will be the first post-programme monitoring (PPM) report from the IMF executive board after the completion of $6.4bn Extended Fund Facility in September 2016.

Pakistan has to undergo annual PPM reviews in addition to usual Article-IV consultations until 2023 for borrowing significantly higher than its quota. The threshold for Pakistan to move out of the PPM is estimated at 1.4bn special drawing rights (SDRs) of the IMF ($2bn), currently estimated at around 4bn SDRs ($5.8bn).

It is against this backdrop that the government has made foreign debt servicing projections until 2022-23 to all creditors starting November 2017 including $4.2bn payable to foreign creditors during the current fiscal year. The current year would also see the beginning of debt servicing of the China-Pakistan Economic Corridor (CPEC) loans with less than $80m repayments.

The debt servicing cost is estimated to increase to $6.42bn during the next fiscal year

The debt servicing cost is estimated to increase to $6.42bn during the 2018-19 fiscal year, including $1.76bn to multilaterals, $1.76bn to commercial banks and up to $1.34bn to international capital markets against bonds.

Repayments to Paris Club and non-Paris Club creditors for the next year are estimated at $900 million and $600m, respectively.

For the 2019-20 fiscal year, the government has projected foreign debt servicing cost at about $7bn, including $2.23bn to commercial banks, $1.9bn to multilaterals, $1.24bn to bond investors and $1.6bn to Paris and non-Paris Club members.

Similarly, the government estimates the debt servicing cost to come down significantly to $4.4bn in 2020-21 led by about $2bn to multilaterals, followed by about $1.6bn to bilateral creditors (Paris and non-Paris Club) and bond servicing declining to just $204m.

The debt repayment would again increase to $5.2bn in 2021-22 including more than $2bn to multilateral lenders, $1.9bn to bilaterals and $1.2bn as bond servicing.

The 2022-23 fiscal year is expected to see a decline in debt servicing to $4.2bn including $2bn to multilaterals, $1.9bn to bilaterals and fewer ($320m) repayments to commercial banks and bond investors put together.

The repayments due to the IMF are estimated at about $740m in 2019, $1.06bn in 2020, $1.19bn in 2021 and $1.08bn in 2022.

Government projections also include CPEC-related repayments on account of loans without taking into account repayments on account of return on investments. The government told the IMF during December consultations that $23bn worth of CPEC projects were under implementation, including $17bn in the energy sector by the private sector.

About $6.035bn worth of projects were in the road sector and funded through loans at a weighted average rate of interest at about 2.4pc. These include $1.315bn phase-II of the Karakoram Highway, $1.626bn Lahore Metro Orange Train and $2.9bn Sukkur-Multan Motorway.

This, however, does not include key projects on which agreements have yet to be signed, such as $8.2bn railway line from Karachi to Torkham on the Afghan border.

The flow of funds from not only the multilateral lenders like the World Bank and the Asian Development Bank (ADB), but also from some major bilateral lenders would depend on the clean chit of economic health from the IMF.

The draft report has already been shared with Pakistani authorities as required before putting it up consideration of the executive board, but adverse comments from some directors could not be ruled out in the aftermath of Pakistan being put on the terror financing watchlist of the Financial Action Task Force (FATF). Islamabad says the move was politically motivated and intended to embarrass the country globally.

While the IMF has been appreciative of government policies under its three-year programme, things that may attract negative marking include some loosening of the fiscal side, inability to carry forward structural reforms to address energy sector losses, poor health of public sector entities, and limited success on tax base.

The IMF staff and Pakistan authorities have reportedly revised fiscal deficit limit to 5pc of GDP for the current fiscal year instead of 4.1pc despite a Rs200bn cut to the development programme. The current account deficit would remain challenging, as it soared 48pc to $9.2bn — almost 3.1pc of GDP — in the first seven months of the current fiscal year.

The flow of the World Bank assistance is normally linked to Pakistan’s ability to maintain official foreign exchange reserves sufficient to finance at least two months of the import bill, but it can sometimes be influenced by political dimensions.

The ADB has been a different case in the past that helped Pakistan in difficult situations despite US opposition and could find some support from newly established China-sponsored Asian Infrastructure Investment Bank.

The timing is of critical importance and a reminder of a 2007-08 situation when the Musharraf-led administration was pushed to the wall for political reasons and the subsequent PPP-led coalition government decided at the last moment to put on hold launching of a few transactions in the international capital market, followed by an IMF programme on tough conditions that could not survive the test of time beyond few initial tranches.

Ahead of FATF meetings in Paris, the Miftah Ismail-led Ministry of Finance withdrew from the cabinet meeting a case for launching another $1bn plus bond at the last moment. This was done even though the federal cabinet had already authorised a $3.5bn fund raising from the international market last year when the government stopped at $2.5bn bonds to avoid price escalation.

The ministry had announced at the time it could go for another bond launch for the remaining lot within 45 days. How things unfold going forward would be seen with interest, as the country traverses through diplomatic challenges and political transition.

 

[The Juggernaut]

The entire green region is agro based LMAO.
If they get hit here they are gonna stay down.
The water table of Pakistan is already pretty screwed not to mention we are gonna need more water for ourselves as global warming increases.

Just look around 31% percent of their export is cotton and textiles. And europe is main market. If FATF black listing became successful then there main chunk of export will evaporate. If it happened then "Pakistan will bleed without bullet."

 

[kamaal]

Just look around 31% percent of their export is cotton and textiles. And europe is main market. If FATF black listing became successful then there main chunk of export will evaporate. If it happened then "Pakistan will bleed without bullet."

If you want to kill their Textile market just request the Gujjus not to supply Pakistan with raw material. The biggest factor is the people to people contact which saved many Pak trader after Uri incident. But now Indian traders have found new buyers in Bangladesh & Vietnam, and if everything as it is going currently then 3-4 years down the line Pakistani will loose their jobs in larger amount.
https://propakistani.pk/2016/09/22/half-million-jobs-billions-lost-textile-industry-faces-crunch/
Here are numbers :
https://www.businesstoday.in/curren...rror-what-does-india-export/story/237589.html

But I think it is more important for us to save our people from the recent developments in BD & Vietnam, we have lost huge market share to these two countries. Even GoI's 1-1.5 $ billion package doesn't look enough to protect the sector which is job intensive and must be protected for ensuring smooth 2019 elections.

 

[ezsasa]

State budget expenditure of J&K 76000 crores(excluding of central govt infrastructure projects) is more than annual defence budget of Pakistan.

And as I said before, Pakistan annual federal budget is equal to our defence budget.

Inko Kashmir chahiye.

 

[AMCA]

THE EXPRESS TRIBUNE > BUSINESS

Pakistan in talks with China to borrow $1b
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Pakistan in talks with China to borrow $1b
By Shahbaz Rana
Published: March 6, 2018
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The government was ready to float bonds but reversed the decision after financial advisers informed it that the 10-year bond may cost it 7.3%. PHOTO: REUTERS

ISLAMABAD: Pakistan is in talks with a Chinese financial institution to obtain $1 billion as a foreign commercial loan, as its recent internal assessment revealed that inflows from traditional lenders would fall below budgeted projections.

The World Bank and the Asian Development Bank (ADB) have already withheld $700 million as balance of payments’ policy loans due to deterioration in macroeconomic indicators in the past one year.

Pakistan borrows another $500m from Chinese bank




Amid declining foreign exchange reserves, the government is now in the process of scrutinising the loan term sheets and the agreement is expected to be reached this month, said sources in the finance ministry. The country has already obtained $1 billion as foreign commercial loan from the Industrial and Commercial Bank of China (ICBC) in the past three months.

The cost of borrowing from the Chinese bank could go over 5% this time due to increase in the London Interbank Offered Rate (Libor), said the sources. The six-month US dollar Libor was 2.228% on March 2, which would push the overall borrowing cost for the government in the range of 5.1% to 5.3%, said the sources. Last year, the Libor remained around 1.5%, which kept commercial borrowing cost below 5% for most of the deals.

During the last fiscal year, the government had also borrowed $2.3 billion from three Chinese financial institutions at three- to six-month Libor plus 2.7% to 3.02% spread, according to the finance ministry publication.

In addition to the upcoming borrowing, the government is also expecting to receive $200 million from a Chinese bank immediately to support foreign currency reserves, said the sources. The State Bank of Pakistan’s (SBP) official foreign currency reserves slipped to $12.4 billion last week, which are now close to the minimum threshold of two and half months of import bill cover.

For the last four years, the government has shifted its focus towards easy but relatively expensive source of financing. These commercial deals normally do not get much public attention, unlike the case of foreign bonds.

The decision to get $1 billion has been taken after the government last month called off the $1-billion Eurobond issue, said the sources. The government was ready to float bond but reversed the decision after financial advisers informed it that the ten-year bond may cost it 7.3%, said the sources.

In November, the government generated $1.5 billion through the 10-year Eurobond at a fixed rate of 6.875%, which was 455 basis points above the corresponding 10-year US Treasury benchmark rate. Since the start of the current fiscal year, total foreign commercial borrowings have already surged to $1.8 billion – far higher than $1 billion budgetary estimates.

Financing requirements

Last month, the Ministry of Finance informed the National Assembly Standing Committee on Finance that its gross external financing requirements for the remainder of this fiscal year were $9.5 billion.

The $9.5-billion financing requirement for February-June period has been worked out on the assumption of a possible $7-billion current account deficit and $2.5-billion debt servicing cost.

Total gross financing requirements for the fiscal year have now been revised upward to $24 billion as against the earlier estimates of $17 billion.

It had also informed the panel that the government was expecting $3.8 billion from traditional multilateral and bilateral lenders. However, a fresh assessment by the finance ministry over the weekend revealed that lending from the World Bank, the ADB and Islamic Development Bank would fall short of budgeted projections.

Against the budgetary estimates of $1.228 billion, the ADB is now expected to disburse around $925 million, said the sources. The Manila-based lender has already disbursed $498 million for projects’ financing in the first seven months. It dropped $200 million energy loan.

Despite promises, Pakistan unlikely to get heavy funding by June

The World Bank is now expected to give only $790 million even after making some extra efforts, which was far below the budgetary estimates of $1.2 billion. The World Bank has already disbursed $289 million in the July-January period but withheld $500 million policy loan.

Lending from China could increase to roughly $1.9 billion, which will partially compensate for the shortage, said the sources.

The Islamic Development Bank has already extended $995 million and its disbursements would remain below the target due to expiry of the crude oil financing agreement, said the sources.