Country twice as indebted as in June 2008

yazdi · October 31, 2012, 10:24am

Re: Country twice as indebted as in June 2008

These countries have sound economies, and mostly stellar credit ratings. They have the ability to pay off their debts. Pakistan on the other hand holds a junk status. Pakistan’s debts are paid off by taking more debts. Our so called GDP figures include money that comes in the form of aid and loans as well. Currency devaluation may have contributed to the bloating of the debt figure, but the article also says that domestic borrowing has gone up by 137%.
Pak govt survives with handouts from the US, and US engineered loans from IMF and world bank. At the ground level, Pak economy survives thanks to overseas Pakistanis and their hawalas, which run their families. Local Pakistani businesses pay meaningless taxes, and that is how they survive.
The fact that this government has put Pakistan in the fiscal gutter is no secret. Greece suffered from a similar problem, with a huge and overspending government, corrupt politicians, and look where they stand. Their pants are down, and they acknowledge it. PPP government thinks that they can solve problems merely by pretending they dont exist.

I think it is totally unfair analysis..

If our government has much lesser public debt ratio ti GDP and is collecting much lesser taxes in percentage to GDP (less than 10%).. what does it mean..???

Our government is managing with much lesser resources compared to other economies. Means our government spending as a percentage of GDP is much lesser compared to other economies. One of the largest expense for our government is the interest payment because we have double digit base rate on rupee.. I can assure you that if US government has to pay double digit interest rates on their huge debt.. there will be no money available with the US government to pay even the salaries of government employees..

As far as our financial sector being bankrupt and has no ability to repay.. is a very big blatant lie…

Our financial sector is not only strong.. it’s robust..

Our financial sector continues to lend the government compared to some developed economies where the government has to continuously pump in money to keep the financial sector afloat.. Our financial sector has resource placement which is largely secured compared to western economies where the finances are stuck up in housing, consumer and totally unproductive sectors which do not have capacity to repay.. Our people are poor but they live within their means and do not have life styles on borrowed money thanks to artificially low interest rates managed by FED…

Our macro indicators are strong.. we are not Greece.. although we have a management problem in the country specially in the energy sector..

I don’t think economics is your subject and your post shows very limited understanding of the issues.. so please don’t make these sweeping statements..

Pakistan has a strong economy with great potential for future. I have no doubt in my mind that investments, businesses in Pakistan will do much better than US, Germany, Japan etc in next 25 years.. Pakistan, India, Bangladesh, and China is the focus region for growth for next decades.. It’s just that we have to sort out our management issues a little more than the other regional economy.

Last but not least.. these expatriate Pakistanis did not come from Mars. A vast % of the remittences come to Pakistan from middle eastern countries from poor labour class. Most of the educated class who emigrate to US and Europe use our educational resources to become doctors and engineers.. but never bother to contribute to our economy. Most of them just criticize Pakistan as a filthy place unlike Indian expatriates who never talk bad about India..

Indian expatriates are the biggest FDI contributors in India.. Pakistan’s FDI does not show any significant contribution from expatriate Pakistan.. we just have remittences coming from poor labour class..