Coalition Government's Solution To All Troubles - Borrow from SBP

Society Pakistan & World Affairs
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Who to blame now for inflation?

Record borrowing made in 100 days: Rs651bn acquired from SBP

By Shahid Iqbal

KARACHI, June 27: The present government in its first 100 days has borrowed much more than what the previous government borrowed from the State Bank in first eight months of the ongoing fiscal year completely ignoring the frequent warnings issued by the central bank which termed it as catalyst for inflation.

The SBP calculations showed that the total government borrowing from July 1, 2007 to June 14, 2008 was over Rs651 billion.

Surprisingly, since the formation of new cabinet on March 31, 2008 the government geared up its pace of borrowing sharply. It borrowed Rs355 billion during three and half months while the previous and interim governments collectively borrowed Rs296 billion till March 1, 2008.

The continued rising trend of borrowing reflected that the PPP-led government denying the impression that it would adopt different measures to meet the budgetary deficit.

The SBP had been issuing warnings that record government borrowings for budgetary support would further escalate inflation. The central bank held the government responsible for destroying all its effort to control the inflation.

The new government has already announced that it will reduce borrowing burden from the State Bank but it looks that its plan would be implemented from next fiscal 2008-09.

However, analysts said the rampant borrowing would seriously inflict the economy as its adverse impact would continue to hurt it even in next fiscal year if the government stops borrowing from the SBP.

The government has planned to launch securities papers to mobilise deposits from the public and reduce burden on the SBP.

The rate of return on National Savings Scheme has also been increased by two percentage points to muster maximum deposits from the public.

Analysts believe that despite these efforts the government would require more money to meet the ambitious spending plan.

“The slowdown in economic growth will not create much revenue for the government to meet its spending target and it will have to again rely on SBP borrowing,” said research head of a brokerage house.

A total budget outlay of Rs2,010 billion was announced for 2008-09 and revenue collection target was projected at Rs1,250 billion.

On the expenditure side, a record amount of Rs550 billion, 27 per cent of total expenditure, has been allocated for development expenditure.

“The revenue target is highly ambitious and unlikely to be achieved which means more borrowing to meet the expenditure,” said the analyst.

Moreover, in view of the prevalent oil prices, the government has allocated oil subsidy of Rs140bn as against Rs15bn last year.

The government has already set main inflation target at 12 per cent for the next fiscal year. The record borrowing from the State Bank pushed inflation to 11.5 per cent during the current fiscal year.

Dawn

Enjoy!

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Re: Coalition Government's Solution To All Troubles - Borrow from SBP

no comments from democracy lovers?

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Re: Coalition Government's Solution To All Troubles - Borrow from SBP

its not because of democracy but the in efficient lot who is running the show these days, they have gone back to their old ways. no wonder Pakistan rupee is 138 to 1 pound today.

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Re: Coalition Government's Solution To All Troubles - Borrow from SBP

They have to, to stay afloat, because of the unprecedented mismanagement of the economy by the last regime and shortcut Parachute Aziz, which was confirmed by both Musharraf and the top PML[Q lota] leadership.

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Agreed. But present government has to change that countinueously flawed economic policies of Mush/Aziz's government. Money comming for war against terror can stop any time. The arificial life support can be withdrawn any time. Unless present government do some hard homework, Pakistan economy can collapse the moment artificial life support is withdrawn by Uncle Sam. Then Mush/dictators lovers will ask for another military government. That is the sad story of Pakistan's life cycle.

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What has the current government done to fight inflation which they’ve been boasting about so much? All I’ve seen them do is fix their political status to make sure they stay in power, while the country has been almost forgotten. Pakistan seems to be the least of their worries.

How did these lot get in power? Was it not a result of democracy? The democracy threw out of office the previous lot which developed the country (and the economy) so much. Years and years of work gone down the drain in less than 3 months.

Musharraf said that the previous government may have caused the current situation - he did not confirm it. You run around on every thread with the same argument, yet you cannot elaborate on how the economy was mismanaged. As I expect, you will do the same thing here :lol:

What is the artificial life support of Pakistan? And please list the** flawed** economic policies set up by the last government. I hope you are not referring to the ones that were praised by international observers.

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Re: Coalition Government's Solution To All Troubles - Borrow from SBP

lkc, this unprecedented mess was present in the last 8-9 years, the people werent happy back then either, but a few select supporters of the previous regime took a while to realize this (more like 8-9 years), when Shortcut Aziz figures werent there to reassure them.

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Re: Coalition Government’s Solution To All Troubles - Borrow from SBP

KARACHI - Federal Information Minister Sherry Rehman Friday rejected the allegations levelled by the PML-Q leaders in white paper against the PPP-led coalition government, saying that the mess of PML-Q five-year government could not be removed in three months.
Addressing a press conference at a local hotel here, she said that today the government was facing economic problems due to the previous government wrong policies and the PPP government with better planning was trying to control the economics crisis inherited from the previous regime.
She said wheat flour scandals, stock exchange crisis, steel mill scandal and sugar crisis were inherited to the PPP government due to the flawed policies of the PML-Q government. She said the previous regime spent money on their minister’s luxuries and only made tall claims about the foreign investment, adding that when the PPP formed government, it inherited all the crises from the previous regime and the PPP led government was trying to resolve the crises by providing better facilities to the people.
“It was due to the PPP government’s proper actions that wheat flour is available in the market and the government has announced to open utility stores at UC levels to provide edible items to the people at cheap prices,” she said.
She said the previous government only printed currency and told people of the country that the government has enough capital, adding that the PPP government is always accountable to the masses and always rid the country out of the crises. She added that in coming months, a series of schemes would be announced in health, education and other sectors to provide better facilities to the masses. Sherry said that in 100 days, the PPP-led coalition government repealed all the draconian laws imposed by the previous rulers on the media.
She said the PPP government took solid steps to resolve the Balochistan issue amicably and released the political leaders and the Prime Minister announced to provide 10,000 jobs in Balochistan to the local people and end the deprivation among the people of that province. She said Industrial Relations Ordinance (IRO) 2002 was abolished by the PPP led government and it also enhanced the wages of the labourers. She presented figure about the people killed in the previous regime in terrorist activities and in 100 days government of the PPP.
Replying to query about Makhdooam Amin, she said he was PPP senior vice-president but not part of the Cabinet. She said the PPP was democratic party and it had a democratic culture in it and Mr Fahim had right to express his opinion.
Replying to query about PML-N Quaid Nawaz Sharif’s statement that PPP had not take his party into confidence on the military operation near Peshawar areas, she responded that coalition partners were agreed on three-point strategy and the PPP would not take any action in which coalition partners leave the government. She said the government would not allow any person to challenge its writ and kill innocent people and demolish girl’s schools. She said that on the request of the provincial government, paramilitary forces were helping provincial administration in maintaining peace in NWFP.
On the judges’ issue, she said the PPP had sent constitutional package to the coalition partners for seeking suggestions from them and after that, judges’ issue would be resolved. Replying to query about induction of more ministers in the federal cabinet, she said more ministers would be inducted in the federal cabinet after consultation with coalition partners.
Sherry Rehman rebuts PML-Q

http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/Politics/05-Jul-2008/Q-mess-cant-be-removed-in-3-months-Sherry

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Re: Coalition Government's Solution To All Troubles - Borrow from SBP

I'm a democracy lover, but we must accept that no system of government is perfect, so far. If government is going to be a popularity contest, politicians are going to see spending as the way to buy popularity. In a mature system, the taxpaying public votes out the craziest spenders.

Democracy has it's problems, for sure. But I can't think of any other way that is better.