Pakistan Economy: News & Discussion

assassin162

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It's the Economy, stupid.

What we need to make Pakistan's asymmetric warfare irrelevant, Kashmir a foregone conclusion and Terroristan's very existence a question is the same. Economy. Economy. Economy.

Forget everything and just focus on rapid sustainable growth. The global economy is in trouble but I strongly hope India can touch double digit growth. It'll be the ultimate game changer and will bring us to another level.

Pakistan 2021 GDP in pkr was around 6 Trillion. In USD, it was around $346 Billion. Now, assuming a low growth due to floods & due to currency devaluation, Pakistan's GDP in 2022 would only be around $280 Billion.

That's right, $280 Billion from $350 Billion!

Pakistan's economy for the foreseeable future, at least for the next 5 years is going to be in a limbo. It'd have to work hard just to get back to $350 Billion.

Now, if India grows at 7% every year—and I certainly hope we do more than that, then yearly addition to India's GDP would be:

2023$245 Billion
2024$262 Billion
2025$280 Billion
2026$300 Billion
2027$320 Billion

See what's happening? India's GDP addition would itself be equal to Pakistan's entire GDP!

And if we sustain the high growth rate, by 2030, Pakistan would have to be at around $400 Billion to equal our net growth.

Why is this important? The differential b/w India-Pakistan would widen greatly.

YearIndiaPakistanDifferential
20121.832248.16X
20142.042448.36X
20192.833208.84X
20213.173469.16X
20223.4628012.35X
20275360 (Best case)13.88X
20275300 (Normal growth)16.66X
20275250 (Post Bankruptcy)20X

India is expected to change base year after 2024 General Elections. It'll bump our GDP figures.

I think we'll reach an inflection point when we hit the difference of double per capita, 20X GDP.

Pakistanis can hate Indians who are within Reach. Just 50% higher GDP per capita than them. But when the difference widens to 2X, 3X, 5X, the hate vanishes and only yearning and inferiority will remain.

In 2021, the differential between China & Pakistan is 50X! When India reaches 25X, Pakistanis will have a rude awakening.

We're at an inflection point in history and geopolitics! This decade will change the world forever! May we do our personal best for ourselves and for our country! Jai Hind!
Thanks first for all for this detailed take on Indian and Paki economy, I fully agree with your views alongwith so many others on this forum.

Also, we have to continue and double down on the policy of encouraging chaos in Pakistan and limiting their growth somehow in the short term. In long term as the differential between India and Pak further grows, so does India's capacity, he have to do with Pakistan what US does say with Venezuela in particular and south America in general. Have to keep them from growing for the next hundred years. Not letting Pakistan develop will be our biggest win not against Pakistan only but against China and America as well.
 

Jimih

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It's the Economy, stupid.

What we need to make Pakistan's asymmetric warfare irrelevant, Kashmir a foregone conclusion and Terroristan's very existence a question is the same. Economy. Economy. Economy.

Forget everything and just focus on rapid sustainable growth. The global economy is in trouble but I strongly hope India can touch double digit growth. It'll be the ultimate game changer and will bring us to another level.

Pakistan 2021 GDP in pkr was around 6 Trillion. In USD, it was around $346 Billion. Now, assuming a low growth due to floods & due to currency devaluation, Pakistan's GDP in 2022 would only be around $280 Billion.

That's right, $280 Billion from $350 Billion!

Pakistan's economy for the foreseeable future, at least for the next 5 years is going to be in a limbo. It'd have to work hard just to get back to $350 Billion.

Now, if India grows at 7% every year—and I certainly hope we do more than that, then yearly addition to India's GDP would be:

2023$245 Billion
2024$262 Billion
2025$280 Billion
2026$300 Billion
2027$320 Billion

See what's happening? India's GDP addition would itself be equal to Pakistan's entire GDP!

And if we sustain the high growth rate, by 2030, Pakistan would have to be at around $400 Billion to equal our net growth.

Why is this important? The differential b/w India-Pakistan would widen greatly.

YearIndiaPakistanDifferential
20121.832248.16X
20142.042448.36X
20192.833208.84X
20213.173469.16X
20223.4628012.35X
20275360 (Best case)13.88X
20275300 (Normal growth)16.66X
20275250 (Post Bankruptcy)20X

India is expected to change base year after 2024 General Elections. It'll bump our GDP figures.

I think we'll reach an inflection point when we hit the difference of double per capita, 20X GDP.

Pakistanis can hate Indians who are within Reach. Just 50% higher GDP per capita than them. But when the difference widens to 2X, 3X, 5X, the hate vanishes and only yearning and inferiority will remain.

In 2021, the differential between China & Pakistan is 50X! When India reaches 25X, Pakistanis will have a rude awakening.

We're at an inflection point in history and geopolitics! This decade will change the world forever! May we do our personal best for ourselves and for our country! Jai Hind!
Very good analysis.
 

FalconSlayers

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Pakistan’s debt skyrockets to Rs62.5tr
Debt mismanagement, rupee devaluation, high interest rates push debt to record high


ISLAMABAD:
Statistics released by the central bank, on Wednesday, show that Pakistan’s total debt and liabilities peaked, by an unsustainable 24%, to Rs62.5 trillion at the end of September 2022 – pushing the country into unchartered territory.


According to the State Bank of Pakistan (SBP), the total liabilities of the country, mainly government debt, surged by Rs12 trillion, or 23.7%, compared to a year ago.

The figures reported in the central bank’s latest debt bulletin suggest that no political party, neither the Pakistan Tehreek-e-Insaaf (PTI) nor the Pakistan Muslim League-N (PML-N), have a solution out of our growing debt problems. With the mounting number of loans, coupled with a lack of resources to repay, the country’s destiny has been placed in the hands of international financial institutions and the global powers.

Now, however, the realisation that Pakistan cannot seem to survive without continued financial support is becoming more apparent to the world powers, creating problems in the political and security spheres.

The central bank did not give the percentage of Pakistan’s total debt and liabilities in terms of size of the economy. The increase in public debt alone, a direct responsibility of the government, was Rs9.7 trillion in the past year. Gross public debt was recorded at Rs51.1 trillion by the end of September 2022, according to the SBP.

None of the three mainstream political parties have managed to bring any meaningful reforms to stop debt accumulation. Instead, in its 43-month rule, the PTI added the largest amount of debt to country ever.

While blaming his predecessors for throwing the country under a pile of debt, former prime minister Imran Khan had promised to curtail debt on priority. When he left office in April 2022, however, his government had mounted Rs19.5 trillion to the federal government’s total debt stock.

During his visits to China, Saudi Arabia and the United Arab Emirates, Pakistan’s Finance Minister Ishaq Dar pleaded for additional loans so as to meet this year’s gross financing requirements. The government is also in dialogue with foreign commercial banks, the World Bank and the International Monetary Fund (IMF) to secure loans.

There was a clear mismatch between the increase in public debt and the budget deficit, showing the adverse impact of the currency devaluation on the external debt stock.

In terms of US dollars, Pakistan’s total external debt and liabilities remained almost unchanged at $127 billion in the past one year due to the soaring ties between Pakistan, the international financial institutions (IFI) and Washington. However, in terms of the rupee, there was a massive surge in external debt due to the currency’s devaluation.

Pakistan’s total external debt jumped to Rs26.5 trillion as of September-end – an addition of Rs6.8 trillion or 35% compared to last year. Excluding the IMF loans, the federal government’s external debt increased to Rs18 trillion within one year. There was a net increase of Rs1.3 trillion in external debt, largely caused by the depreciation of the rupee and the country’s efforts to build foreign currency reserves via borrowing.

Pakistan’s debt from the IMF increased by 44% within one year to Rs1.7 trillion by the end of September, stated the SBP. This is despite the fact that the IMF has disbursed about $2 billion less than its scheduled releases during this period.

The federal government’s total domestic debt increased to Rs31.4 trillion, an addition of Rs5 trillion, or 19%, in one year.

The lower-than-targeted tax collection, steep currency devaluation, high interest rates, rising expenditures along with losses incurred by state-owned companies and debt mismanagement were the main reasons for the surge in public debt.

The average exchange rate on the last day of September 2022 was Rs228 to a dollar due to a depreciation of 57.4% in just one year, according to the central bank. This had a huge impact on the government’s external debt.

The direct consequence of the mounting pile of debt is a huge increase in the cost of debt servicing. In just one quarter of the current fiscal year, debt servicing stood at Rs1 trillion. The government’s revised estimates show that the cost of debt servicing may cross Rs4.7 trillion – about Rs750 billion more than the budgeted figure.

Published in The Express Tribune, November 17th, 2022.
 

Indx TechStyle

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Quoted Dawn
Failure of governance

Miftah Ismail Published November 19, 2022

The writer is a former finance minister.

The writer is a former finance minister.
INDIA, a large, imperfect democracy with its many ethnolinguistic and religious groups, separatist forces, occupied territories, etc, is certainly not easier to govern than Pakistan. Up until the 1980s, Pakistan was ahead of India in most economic indicators. Then, in the early 1990s, India dismantled its licence raj and shot past Pakistan.
Today, its annual foreign direct investment is 40 times more than that of Pakistan. Its central bank reserves are over $580 billion; ours are $8bn. It is now well ahead of Pakistan in most human development indicators.
Bangladesh, with a land mass the size of Sindh, half of which is underwater, is a resource-poor nation under a corrupt, authoritarian government. At the time of its separation, East Pakistan’s income per head was half that of West Pakistan. Today, it is ahead of Pakistan in income, exports, education, population control, life expectancy — in fact in almost all economic and social indicators.
Pakistan’s per capita income is below every country in South Asia except Nepal, and below even the average of the countries in sub-Saharan Africa. In human development indicators such as education, infant mortality, etc, we do even worse.
We often have a debate in Pakistan about whether we should have presidential or parliamentary democracy, or even a military dictatorship. Other countries have progressed under all three. We have done badly under all. The problem isn’t the type of government we have.
The problem is that governance in Pakistan is just ineffective: in 75 years, our governments haven’t been able to deliver economic growth, security of life or property, education or health, or even clean drinking water. The hard truth is that our governments haven’t been able to solve any major problems facing Pakistan.
All countries have problems but successful nations resolve them.
All countries have problems but successful nations resolve them. Our governments only put off resolving problems and, in the process, exacerbate them. From population planning to illiteracy to extremism to budget and trade deficits to local autonomy to privatisation to growth to income disparity — our governments have been unable to fix any issue. We can’t even resolve the simple issue of moonsighting!
Take, for instance, the circular debt. This arose during Gen Musharraf’s regime and was around Rs25bn. It grew to Rs500bn under PPP, Rs1,100bn under the PMLN and Rs2,500bn under the PTI. No government has been able to fix the issue, as none has had the time, will or competence required to resolve it. As a result, the issue has become more intractable over time.
However, as most people working in the power sector know, there cannot be any resolution of the circular debt or a reduction in power theft and distribution losses until we have intelligent privatisation. Yet no government has had the courage to move towards that. None.
Whether this ineffectiveness of our governments is the result of political witch-hunts, including in the name of accountability; an outdated system of governance; the occupation of political space by ‘non-political’ actors; judicial interference or political and bureaucratic incompetence can and should be debated. My concern here is more prosaic.
Every country, including desperately poor nations, has moneyed elites, and they aren’t interested in economic growth. Their preoccupation is with keeping a large share of the economic pie for themselves. It is the poor and the middle classes that benefit from growth.
When a country rapidly increases its income, it is the vast majority of the people who benefit. When Japan, Korea and China quadrupled their incomes in a couple of decades, it was the poor who transitioned to the middle class. Of course, the rich got richer, but it is the vast working class that got the most benefits. But no country can grow without effective governance and savvy economic policy, and in this we have always failed.
Take education. Our various governments spend over Rs2,000bn on education annually. But half of all school-age children aren’t even in school, and of those who matriculate from government schools, most can’t solve a simple sum involving percentages, or write a decent paragraph. The issue here is not lack of resources but of will. Without this resolve, the money we are spending on education is being wasted.
Pakistan has one of the fastest population growth rates globally and we add about 5.5 million people every year; more than the population of Rawalpindi and Faisalabad combined. Yet no government, federal or provincial, has been able or willing to do anything about it. Population control doesn’t require a lot of money. It only requires resolve and competence. But this has been lacking.
At the time of separation, East Pakistan’s population was 17 per cent more than West Pakistan’s. Today, Bangladesh’s population is 22pc less than Pakistan’s. It is Bangladesh’s population control that drives the difference between the two countries’ economic performance. Moreover, an average Bangladeshi has three more years of schooling than her Pakistani counterpart, leading to Bangladesh having a higher participation of women in the labour force and its textile exports growing on the shoulders of women workers.
Consider security in Pakistan. Ours is a crime-ridden society where no one, especially women, feels safe. Foreign airlines avoid coming to Pakistan because they don’t want their crews staying here overnight, particularly in Karachi. Foreign buyers don’t like visiting Pakistan, and foreign firms neither invest here in factories nor open buying houses.
This obviously hurts our exports. We get no tourists coming here either. How can a country prosper where no foreigner feels safe? We have experienced extremism, terrorism and crime since the 1990s, and are ‘used to’ living with danger and an ineffective police and security apparatus.
Since Pakistan loses thousands of billions due to lack of security, the resolution should have been of utmost importance. But it requires competence and single-minded determination, and these have been lacking in our governments.
What do Pakistanis think of our governments? In a PIDE survey, 40pc Pakistanis want to leave Pakistan. Look at how Pakistan is faring on various human development indices, and you cannot but conclude that Pakistan is one of the worst-governed countries in the world. It’s time we wake up to this reality.
The writer is a former finance minister.
Published in Dawn, November 19th, 2022
 

RoaringTigerHiddenDragon

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After a long time, a genuinely good News For Pakis.
View attachment 185695
1. massive circular debt.
2. Extracting coal is not cheap. And Chinese have resource control.
3. Massive power theft
4. 10% Zardari, Bhutto, Altaf Husain.
5. Transmission infra is abysmal
6. Power is mainly for Punjab. Sindhis especially those in thar will continue to live like donkeys.
7. SRA adopting BLA tactics to drive out poonjabis for their resource crimes.

But if they are really developing, we must hack their power grid or do other things to stall development. A developing Pakshitstan is a clear security threat for us.
 

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