One idea for every Pakistani
What if we ban all imports except in one scenario. That the international seller accepts Pak Rs instead of dollars. Or the firm is compensated with property complexes built for foreigners like JLT Marina Ranches Emirates Hills etc in Dubai. But only for foreign investors and sellers. Allow bars massage parlors and literally an EU US similar environment in those gated communities
The first idea ie forcing sellers to accept Pak Rs which is still an instrument of economic value valid in Pakistan as a tool. The more people accept it the more Pak Rs will gain the status of global currencies
I am sure atleast 30 to 40 percent of global suppliers will sit on the negotiating table with us and make it happen!
Please propagate this if you think it’s of value. CrystalHeart Kazmi blahblah.info
Dr Khan, Dean NUST & Member Economic Advisory Committee of PTI Gov hints at following IMF blindly is akin to suicide for Pakistan, are you reading & listening to the writing on the wall?
“The IMF programme is not in the interest of Pakistan and its going to be very painful for the economy,” said Dr Ashfaq Hassan Khan, member of the Economic Advisory Council, which is headed by Prime Minister Imran Khan.
Dr Khan, the principal and dean of the School of Social Sciences and Humanities at National University of Science and Technology, is the only member in the council who opposes the so-called IMF financial package. “The IMF programme will choke Pakistan’s economy and restrict its GDP growth to 2 per cent to 2.5 per cent. It will increase unemployment, devalue the rupee and accelerate inflation,” Dr Khan told Khaleej Times.
Analysts said the recent devaluation has added around Rs667 billion to Pakistan’s external debt, and forex reserves also dwindled accordingly. During the week ending May 10, the SBP’s reserves decreased by $138 million to $8.84 billion due to external debt servicing and other official payments. Total foreign exchange reserves, which also includes $7.04 billion held by commercial banks, dropped to $15.89 billion on May 10.
Famous Pakistani and world reputable economist Atif Mian explain why Pakistani economy is in mess: These points are eye openers for those who despite not able to run a “Paan shop “, but become an expert on economy.
1/ On Pakistan’s Independence Day 2018 , why is the country still far from economic independence? (e.g. seeking its largest bail out ever this year):
I’ll focus on last 5 years as an example … it will get a bit technical but i’ll try to be clear.
2/ Economic growth is almost entirely a function of domestic productivity growth. What matters is investment in building your institutions and people.
Instead pak govts have increasingly looked outside in what i’d call an attempt at “import-led” growth … it doesn’t work.
3/ The idea is to borrow from outside, and task another country with building your infrastructure or institutions, and hope some magic others .
The latest example starts in 2013, when PML-N comes to power and decides to outsource growth to China. I’d explain why it doesn’t work.
4/ Gov funds large infrastructure projects through China’s Belt and Road Initiative (CPEC in pakistan), external debt rises from 62 to 90 billion $. The borrowing raises domestic demand “artificially”, making Pakistan more expensive and less competitive globally.
5/ This is a variant of the famous “dutch disease” and Pak suffered an extreme version of it. Poof?
Real effective exchange rate (pak prices relative to trading partners) increased by 20+ % and total exports DID NOT INCREASE over past 5 years.
6/ To make matters worse, Pakistan’s “in-law” finance minister strips away independence of the central bank and sets the terrible policy of keeping the exchange rate appreciated. Now Pakistan has the dutch disease, on steroids.
7/ Meanwhile there is a blanket ban on any objective assessment of CPEC. Ask a question, and you’d be accused of conspiring against national interest.
Media feeds the frenzy that its a “game changer” & a big bubble develops in the port city (currently largely sand) of Gawadar.
8/ Real estate bubbles further artificially raise domestic demand, & given the senseless exchange rate policy, it makes the dutch disease sclerotic
Notice we haven’t even gotten into whether the $$ borrowing is “sustainable”, the damage is being done before any repayment is due.
9/ So lets talk about debt sustainability now.
The first thing to remember is, you are borrowing in dollars, while most revenue from the projects are in rupees (think domestic transportation use and local energy consumption)
This is a big problem for two reasons.
10/ First, the whole enterprise is exposed to exchange rate (ER) risk. A future depreciation of the currency, which is almost certain to happen given the inane ER policy, will jeopardize profitability.
12/ Another big ? on sustainability is that the borrowing and spending deals are highly opaque. No one really knows what’s going on.
For example, what is the cost of capital in CPEC? A loan contract may report a “concessional” rate of 2%. But is it really 2%? Consider this …
13/ There is no open bidding and Chinese companies decide everything. They charge 100$ for equipment, but put in place lower quality equipment worth only $80.
Guess what, the “true” cost of capital just went up to (2+20)/80=27.5%!
14/ There is a lot China and Pakistan can gain from each other. But deals have to be structured properly, with proper macro-prudential framework. Unfortunately, none of that was done.
The govt wanted a shiny new road real bad before the next election, which they lost anyways.
15/ Let’s hope for better economic sense this time.
Isn’t Atif Mian hated in Pakistan only because of his religious beliefs ie Ahmedi. For they are not even ALLOWED to call themselves thanks to drunkard Bhuttos 73 constitution made with the Mullahs? While Jinnah was secular to the core his vision was raped in the name of Islam by his own people
So why are you educating people with the comments of a Kafir? Brother they don’t care. Give them opinions of Maulana Diesel on economy or similar and they will respect you at least they are certified Muslims with the seal of approval of 73 constitution
What a joke of a nation
I copy below response to a Mem Saheb from UK. Makes perfect sense as a response to many Pakistanis doubts on using retired armed forces for law & order and low taxes to stimulate economy
I’ve spent a lot of time in the company of army men, at a personal and professional level and at ALL levels, lowest to highest, serving and retired, in one sentence you have summed an average Pakistan’s lack of understanding of the dynamics of this area
1 An Officer is generally of good health even in old age and I know many who nearing 80 are driving RVs in Virginia (Majors from Pak Army and their Col / Gen friends) – they haven’t contributed enough as they served in a peace keeping army and their need is now more than ever as the men serving cannot be spared for the tasks they can easily manage
2 Unemployed for Police!!! 🙂 my dearest, we are not talking about a laborer’s job here, we are talking about law and order, and it is a sensitive topic, army officers are trained in MP, MI and ISI and discipline and rules (ask them about MPML and ARR/I) they being clean are our BEST BET for a clean environment which is a PRE REQUISITE for economic growth
3 Look at it this way, you apparently live somewhere in England, what IF British Police and Judges were as horrible, bikao, intimidating and corrupt as Pakistani? Do the math…
You speak of “progressive” taxation, my idea is the opposite, with a SUPER LOW tax base you need to EXPAND it by INCENTIVIZING people to PAY TAXES I’d even offer them LUCKY DRAWS if they pay up, again it appears you have no clue of the mess BOTH our law and order and taxation systems are in, I don’t blame you, I learnt it the hard way, just passing on my experience to you in goodwill and good faith
You are 100% RIGHT on building capacity, my suggestion will help do that precisely by enabling production and growth
You speak of EXPORT promotion, I think we need to focus on REPLACING IMPORTS with indigenous alternates as a FIRST step to reduce trade deficit and parity
Skills audit, we’ll get there as we cross the bridges
Sent to the lady self explanatory. Kindly read carefully and ponder a while this isn’t knee jerk stuff it’s observation and experience of 2 decades. Absorb it like a slow drip. Let it sink in. And when it does your entire paradigm to change in Pakistan will change. See my sites and blogs in more detail then here
Then shoot your ideas for the economy! Mines simple go to IMF ask for interest exemption for two years. Next give police and judiciary to retired army officers ask for no mercy and Swift fair conciliation based justice except criminal where ask for exemplary. Next put up 10 percent flat sales tax on all products zero income or wealth tax. Give sales tax exemption to investors to 5% only no income tax who put in 10 million dollars or above or employ 100 people or more. Both cases the economy will REBOOT
Dear IBA Finance and Banking Group Members
As I understand it anybody with a green passport is deeply concerned that we are going down hill at the speed of light as an economy
Can we use this amazing forum via the admin and moderators to have a moderated, professionally done discussion here and perhaps on a LinkedIn group specifically on jump starting the economy? I’ve also created a separate group as described in the end but it will be better if you all shared this with each other right here!
This is important for reasons you know too well
Whatever the output can be virtually signed by all and submitted to the Government. We’re not eyeing top positions in GOP only that we retain a semblance of hope and respect as Pakistanis. No more no less
If you agree with my humble suggestion I want you to answer this question with a simple yes and no and if any qualifying remarks you believe will add further clarity and hope
Someone said a long time ago. If it is to be it is up to me. Bear that in mind. For the team is here is the combined me of all of us
It will be nice if any of you IT savvy create the linkedin group and share here
God bless you all
Please share with anyone who joins this group
This group exists solely to discuss solutions to Pakistan problems, specially economy which is suffering decades of incompetence and corruption. No forwards are allowed except super relevant! Mutual respect and cordial behaviour is key to our success
IMF loan to Pakistan is 6 billion US Dollars.
Uber stock exchange listing in the USA was of 8 billion US Dollars.
Uber bought Careem for 3.1 billion US Dollars.
So if government becomes encouraging towards technology and startups, who knows that a single mobile app can pay off pakistan’s debt.