Pakistan Economy: News & Discussion

[cyclops]

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[pankaj nema]

The FATF ‘grey list’ means more trouble for Pakistan than you think

Don’t be fooled by those who say it will not impact the economy in the short run

https://profit.pakistantoday.com.pk...ans-more-trouble-for-pakistan-than-you-think/

 

[Compersion]

Too bad Pakis did not ask India for help (FAFT and even loans) - they would have been surprised with what we would have said.

New beginnings is the principle ... in the current framework that is not possible. who knows tomorrow what shape and size our neighbors are.

 

[pankaj nema]

Too bad Pakis did not ask India for help (FAFT and even loans) - they would have been surprised with what we would have said.

New beginnings is the principle ... in the current framework that is not possible. who knows tomorrow what shape and size our neighbors are.

What exactly do you mean

Will India give AID to pakistan ; why should we do that

 

[Compersion]

What exactly do you mean

Will India give AID to pakistan ; why should we do that

India wont give the AID today. More chance of United Nations Peacekeeping forces to enter Pakistan (indirect India AID).

https://www.dawn.com/news/1019784

(It has nothing to do with India-Pakistan relations - but more to do with how India deals and does business).

https://www.dabur.com/in/en-us/about/contact-information/overseas-offices

The structure of our aid and help is known within the af-pak region well.

Not possible today - but to see them getting bad deals and silly arrangements is in a bit laughable and depressing and the way it is being done - since the land is at heart part of us. The pakis are not valuing themselves at all its a surrender and suicidal thought process. their glamour for middle east is deviating and giving them a massive brain drain. The pakis are in big trouble - and it is not at all because of India - they are in danger of breaking up - it is the new arrangement we need to be ready for and we have seen how aid and assistance by India works and on really favorable and contingent terms where it is more on long term progress not short term takeaways - either way india will have direct connection to central asia shortly - there is no doubt. perhaps (new shape of the) pakis area can discuss a soft landing and alliance with india post facto. We can offer many positive arrangements - its the land that is important. who knows tomorrow what shape and size our neighbors are (not only pakis). we have seen how assistance and support is a big facet to relations not only internally but externally.

 

[Why so serious?]

Pakistan loses 50pc market share in Kabul
Shahid IqbalUpdated March 04, 2018
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Trucks and other vehicles travel through the mountains near Torkham border. Pakistan’s market share in Afghanistan is being receded to India and China as its exports fell to $1.24bn in 2016-17 from $1.437bn 2015-16.

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.

India has been providing goods at subsidised rates to capture the market and are providing air tickets with a 75pc rebate, said Motiwala, adding that Afghans find it easy to travel to India with cheap tickets and free multiple visas without police checks.

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.

ARTICLE CONTINUES AFTER AD
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.

Pakistan was the biggest supplier of shalwar qameez suits to Kabul but that too has changed since both India and China are now supplying the readymade suits which are traditionally Pakistani products.

State Bank’s data showed that the imports from Afghanistan increased to $68m in FY17, compared to $40m in FY16.

 

[The Juggernaut]

Lahore HC says no to arresting Hafiz Saeed

Lahore, March 7
A Pakistani court today ordered the federal and the Punjab governments not to arrest or place under house arrest JuD chief Hafiz Saeed, the 2008 Mumbai terror attack mastermind, until further orders.

Good news. Isn't it? It will help in blacklisting during next FATF meeting.

 

[aliyah]

Lahore HC says no to arresting Hafiz Saeed



Good news. Isn't it? It will help in blacklisting during next FATF meeting.

its been allways good...... just how 4-5 months before FATF meet he is given bail.....how we published all over global media......we are allways been playing long n slow game......this start is so cold that even our ppl gets frustrated.

 

[The Juggernaut]

I have started countdown. out of 11 weeks to June 2 are done. Now 9 remaining.

 

[Butter Chicken]

Foreign exchange: SBP's reserves fall $112m, stand at $12.2b

KARACHI: Foreign exchange reserves held by the State Bank of Pakistan (SBP) continued to remain under pressure, decreasing 0.91% on a weekly basis, according to data released by the central bank on Thursday.

The fall marks the 12th successive week of decline, sparking concern over Pakistan’s ability to meet future payment obligations and manage a bulging current account deficit.

 

[Suryavanshi]

Foreign exchange: SBP's reserves fall $112m, stand at $12.2b

KARACHI: Foreign exchange reserves held by the State Bank of Pakistan (SBP) continued to remain under pressure, decreasing 0.91% on a weekly basis, according to data released by the central bank on Thursday.

The fall marks the 12th successive week of decline, sparking concern over Pakistan’s ability to meet future payment obligations and manage a bulging current account deficit.

What happens when reserve become 0

 

[IndiaRising]

What happens when reserve become 0

they become rahul gandhi

 

[SanjeevM]

The skirmishes at LOC if continue for another couple of years, Pakistan will bleed economically. If the cost of bullets and shells are expensive for us, they are equally expensive for Pakistan as well. Because we are economically well placed, we can afford the cost of ammunition. However Pakistan that cannot pay for its imports, will start feeling the pinch of high ammunition bill in next few months. Once they get into cost cutting in defence, that will be the time for SF to do regular cross border raids.

 

[Butter Chicken]

What happens when reserve become 0

They will have no money to import anything,and will be forced to take loan on harsh terms from IMF,World Bank etc

 

[Butter Chicken]

Whole Pakistan is being sold off-Pak Media

 

[nongaddarliberal]

Stocks fall on IMF’s bleak review of Pakistan’s economy

Listen

Stocks closed 0.6 percent down on Wednesday, slipping for the second consecutive session as International Monetary Fund (IMF) in its monitoring report expressed concerns over the country’s macroeconomic imbalance and political uncertainty, dealers said.

An analyst at Arif Habib Limited said KSE-100 took negative turn, caused by selling pressure in blue chips.

“Part of IMF’s concluding remarks, relating to macroeconomic imbalance and ballooning current account deficit, were taken negative by the investors causing selling pressure,” the analyst added.

The IMF noted that continued erosion of macroeconomic resilience could put growth outlook at risk.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index shed 0.60 percent or 263.92 points to close at 43,441.18 points. KSE-30 shares index shed 0.69 percent or 150.82 points to close at 21,845.33 points. As many as 365 scrips were active of which 103 advanced, 240 declined and 22 remained unchanged.

The ready market volumes stood at 142.428 million shares as compared with the turnover of 177.59 million shares a day earlier.

Analyst Ahsan Mehanti at Arif Habib Corp said stocks closed lower in line with global equities selloff and IMF’s concerns over ongoing political uncertainty.

“Autos and banking scrips outperformed on reports of rising banking spreads and reports of surging auto sales. However, foreign outflows and uncertainty in global equities played a catalytic role in the bearish close at the PSX,” he added.

Dealers said comparatively low volumes were seen traded in cement Sector. DG Khan Cement down 0.9 percent, Fauji Cement down 3.25 percent, and Maple Leaf Cement down 4.14 percent showed low volumes and selling, despite increased cement price in north zone. Lucky Cement, down 1.5 percent saw accumulation at the end of the session, when market started losing points at pace.

Late session buying was witnessed in some index names including United Bank, up 0.9 percent, Dawood Hercules, up 1.1 percent, Hub Power, up 0.3 percent and Nishat Mills, up 0.6 percent.

Going forward, analysts see news flow on economic and politics front to guide the market.

Companies with the highest gains included Rafhan Maize, up Rs379.95 to close at Rs7,978.95/share, and Unilever Foods, up Rs200 to close at Rs9,500/share.

Companies reflecting most losses include Pakistan Tobacco, down Rs405 to close at Rs1,995.1/share, and Sanofi Aventis, down Rs77.75 to end at Rs1,477.25/share.

Highest volumes were witnessed in Matco Foods with a turnover of 12.79 million shares. The scrip gained Rs1.38 to close at Rs31.60/share.

Pakistan International Airlines was second with a turnover of 9.47 million shares. It gained 24 paisas to close at Rs5.56/share.

Unity Foods was third with a turnover of 6.29 million shares. It shed Rs1.01 to close at Rs26.57/share.

 

[nongaddarliberal]

IMF expresses concern at Pakistan weakening economy
By PTI | Mar 8, 2018, 04.52PM

The IMF also noted gross international reserves further declining in a context of limited exchange rate flexibility.
ISLAMABAD: The IMF has expressed concern over Pakistan s weakening macroeconomic situation, including widening external and fiscal imbalances, reduction in foreign exchange reserves and emerging risks to economic and financial outlook, a media report said today.

The IMF executive board asked the government to immediately refocus on near-term policies to preserve macroeconomic stability and get back to fiscal discipline shown under the three-year USD 6.64 billion multi-tranche Extended Fund Facility (EFF) to minimise risks and economic distortions.

In its first post-programme monitoring (PPM) after the completion of fund programme in September last year, the IMF board also raised questions over the medium-term debt sustainability and called for additional revenue measures and containing expenditures, the Dawn newspaper reported.

The board expressed its anxiety over the deteriorating assessment that the country s fiscal deficit was set to hit 5.5 per cent of GDP almost Rs 505 billion higher than 4.1 per cent budgeted by the government and current account deficit to touch 4.8 per cent of GDP with the economic growth rate staying conservative at 5.6 per cent instead of budgeted 6 per cent.

The IMF said the near-term economic growth outlook was broadly favourable but "continued erosion of macroeconomic resilience could put this outlook at risk".

"Directors also emphasised the need for prudent debt management and caution in phasing in new external liabilities, and the urgency of tackling rising fiscal risks stemming from continued losses in public sector enterprises," the IMF said in a statement, issued two days after the executive board meeting that took place on March 5 in Washington.

The IMF said that real GDP was estimated to grow by 5.6 per cent during the fiscal year in 2017-18 due to improved power supply, investment related to the China-Pakistan Economic Corridor (CPEC), strong consumption growth and ongoing recovery in agriculture.

Inflation has remained contained and is estimated at 5.4 per cent.

Following significant fiscal slippages last year and current year deficit estimated at 5.5 per cent of GDP, with risks towards a higher deficit ahead of the upcoming general elections, surging imports have led to a widening current account deficit and a significant decline in international reserves despite higher external financing.

The IMF noted gross international reserves further declining in a context of limited exchange rate flexibility.

Against the backdrop of rising external and fiscal financing needs and declining reserves "risks to Pakistan s medium-term capacity to repay the Fund have increased since completion of the EFF arrangement in September 2016 .

The board directors welcomed move to allow some exchange rate adjustment last December, but stressed the importance of greater exchange rate flexibility on a more permanent basis to preserve external buffers and improve competitiveness, the report said.

They also encouraged the authorities to phase out administrative measures aimed at supporting the balance of payments as soon as conditions allow them to minimise potential economic distortions, it said.

The executive board noted that the external sector pressures were in part linked to the fiscal deterioration during the last fiscal year and an accommodative monetary policy stance, as well as high imports related to the CPEC projects.

 

[Butter Chicken]

Pakistan rejects IMF report on it's economy

ISLAMABAD - Pakistan’s de-facto finance minister refuted an International Monetary Fund assessment that the country’s economy was deteriorating and said plans to issue dollar bonds or Chinese-currency bonds haven’t been firmed up.

The IMF in a statement this week said the South Asian nation’s economy faces continual “erosion” and its widening external and fiscal imbalances mean that “risks to Pakistan’s medium-term capacity to repay the fund have increased” since completion of a three-year $6.6 billion bailout program that ended in Sept. 2016. Pakistan’s current-account deficit could reach 4.8 percent of gross domestic product in the year ending June, the IMF said.

“Given the growth of our economy, this growth will solve lot of problems,” Miftah Ismail, an adviser to Prime Minister Shahid Khaqan Abbasi, said in an interview in the capital Islamabad late on Wednesday. The fiscal deficit went up “last year we had lot of political upheaval — but we will bring down to less than 5 percent. We’ll make sure, our current account deficit is under control, not more than 3 percent next year.”

“I don’t see us going back to the IMF — we are considering issuing a Panda bond which is sold in China,” said Ismail, who took over the ministry portfolio in December after Finance Minister Ishaq Dar, who faces arrest in Pakistan on graft charges, sought medical treatment in London. “If the market is favorable only then I’ll go to the market. If not, I’m not in desperate need for money.”

 

[F-14B]

“I don’t see us going back to the IMF — we are considering issuing a Panda bond which is sold in China,”

Which is a glorfied way of saying we will now will only be fucked by china

 

[HariPrasad-1]

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.

They shall sell balochistan to china against CPEC debt.