Lets see:
- Growth is up
- Forex is up
- Exports are up
- Imports are now
- Imports specifically oil is cheaper due to the exchange rate (short term as it may be)
Over all seems the economy is on track. Oh yes our “traditional allies” seem to trust us again.
Re: The economy
It is, no denying that.
But fundamental reforms are not taking place.
Re: The economy
It is, no denying that.
But fundamental reforms are not taking place.
Completely agree. We need massive economic restructuring in the private and public sectors. Though I am not sure about the selling of stake in public corporations.
Re: The economy
Lets see:
- Growth is up
- Forex is up
- Exports are up
- Imports are now
- Imports specifically oil is cheaper due to the exchange rate (short term as it may be)
Over all seems the economy is on track. Oh yes our "traditional allies" seem to trust us again.
Growth is not up. It has been extensively debunked in the press by various experts, who have used SBPs own numbers to calculate what the govt is showing as growth, when in fact it is not. Govt has forced SBP into using various monies as revenue, when they are not. Financial misreporting to say the least.
Forex is up because of dollar aid. And very soon this will dry up. Expats have already started to curtail their remittances. (down by 20% from the UAE in the last week).
Exports are up. But so are imports. Oil is cheaper (for the govt) but it doesnt make sense unless it translates into the same savings at the pump as well.
Inflation is still at its peak. Shelf prices do not reflect any of the decrease in dollar value. In general, our big business is controlled by a variety of mafia. Just 3 weeks ago, the govt graciously announced a 2 rs decrease in the price of petrol. In response, petrol pumps remained closed for a whole 2 days across various cities.
Without change in our corruption culture, there can be no realistic change. BTW, dollar has already started its reversal. Back above Rs. 100, after reports that a chunk of the supposed $1.5 billion is in the form of oil against deferred payments. A repeat of 1999, where after a few 'good' months, Pakistan was left on the verge of bankruptcy.
Re: The economy
^ Things still seem to be a bit better than what we suffered since post-Mush.
Re: The economy
Which experts? I only read the dawn due to its credibility. Could you provide some links?
Re: The economy
Living on illusion - Dr Ashfaque H Khan
Finally the work that was undertaken on an experimental basis has now been ‘owned’ by the government. Officially it has now been ‘declared’ that Pakistan’s real GDP has grown by 5.1 percent in the first quarter (July-September) of the current fiscal year. We should now ‘celebrate’ that the economy has suddenly ‘recovered’ from its prolonged slumber. It is now on a path of ‘strong recovery’.
The readers would recall that since the great revelation of ‘strong economic recovery’ through the quarterly estimate, I wrote three articles (Dec 10, 24 and Jan 3) questioning the authenticity of these otherwise great numbers. In my December 10, 2013 article, I had highlighted various distortions created by the Pakistan Bureau of Statistics (PBS) pertaining to data for national income accounts, inflation and unemployment.
Instead of addressing these issues by forming a high-level committee, the government dropped yet another bombshell by leaking quarterly estimates of GDP which suggested that it has grown by 5.1 percent in the first quarter (July-September) of the current fiscal year. No one knows how the PBS estimated these numbers. No competent authority (the National Accounts Committee) has approved these numbers. No technical committee was formed to vet these numbers.
The factual position is that the PBS had initiated the exercise of measuring quarterly data on an experimental basis. The idea was to estimate quarterly GDP for three/four quarters and then compare it with the annual number at the end of the fiscal year, to gain confidence on their measurement ability.
The PBS never intended to release the numbers since work was in progress on an experimental basis but somehow these numbers found their way to the media. Since the first quarter numbers appeared ‘impressive’, the political leadership just grabbed these numbers to show the success of their economic policies. When commentators like us questioned the authenticity of these numbers, the government adopted an ambivalence policy. The finance minister in the last Economic Advisory Council meeting categorically stated that “I don’t own this number but at the same time I don’t disown this number”. He finally shed his ambivalence policy and ‘owned’ these statistics through his recent article published in an English daily.
The State Bank of Pakistan willingly or unwillingly ‘accepted’ this number when it stated that the economy had grown by 5.1 percent in the first quarter of the current fiscal year. Going by the trend, I am positive that the PBS will manufacture a growth of over five percent for 2013-14. Great news, isn’t it?
The PBS has also released numbers pertaining to large-scale manufacturing for the first half of the fiscal year which registered an impressive growth of 13.2 percent in December 2013 and 6.8 percent during the first half of the fiscal year. Some of the numbers released by the PBS are simply unbelievable. For example, the production of diesel was up by 94 percent, sugar production registered a growth of 78 percent, deep freezer and air conditioner grew by 115 percent and 116 percent respectively, and billets/ingots was up by 27 percent. There are many other idiosyncratic growth numbers pertaining to large-scale manufacturing reported by the PBS.
Can anyone believe that sugar production was up by 78 percent? That would mean that the country has now been flooded with sugar. Few items (sugar, diesel, deep freezer, air conditioners, billets etc) with their fictitious growth and with their relative weights in large-scale manufacturing appear to have contributed over five percentage point growth in large-scale manufacturing. Adjusting for this fictitious growth, the large-scale manufacturing appears to have grown by 2.8 percent in the first half of the current fiscal year.
The story is not yet over. The Ministry of Finance has released the budgetary numbers for the first half (July-December) of the current fiscal year on its website. While going through these budgetary numbers, I found some strange developments. Budget deficit is reported to be 2.1 percent of GDP as compared with 2.6 percent in the comparable period of last year.
How did we achieve such a low fiscal deficit number? First, the government had paid Rs342 billion to the IPPs to clear the Rs480 billion circular debt in June 2013. This number appeared as an expenditure item in the 2012-13 budget. On July 22, 2013, the government paid the remaining amount of Rs138 billion to the IPPs. Did this Rs138 billion appear on the expenditure side in 2013-14? I could not find such a large amount on the expenditure side. Can the government explain this please?
Second, I found it very amusing to see that the Universal Services Fund of the Pakistan Telecom Authority, amounting Rs68 billion, was treated as non-tax revenue. How can years of accumulated amount, meant for the infrastructure development of cellular companies, be brought under federal consolidated fund and treated as non-tax revenue?
Third, what was surprising to me was to see foreign grants amounting Rs31 billion treated as non-tax revenue. Perhaps never in the history of this country have we treated foreign grants as non-tax revenues. Grants have always been treated as a separate item and the IMF has always used budget deficit excluding grants as a real deficit of the country.
Fourth, yet another strange development could be observed on the non-tax revenue side. As against Rs4.6 billion under mark-up payment to the government by the rotten PSEs in the first half of the last year, I was surprised to see that this number jumped to Rs58 billion in the first half of the current fiscal year against the full year target of Rs24 billion. What happened to these rotten PSEs all of a sudden? Which PSEs have become financially so strong that they could pay their mark-up to the extent of Rs58 billion?
Fifth, the SBP’s profit is one of the largest sources of non-tax revenue. Its profit is targeted to be Rs200 billion for the year 2013-14. Why did the SBP provide Rs145 billion or 72.5 percent of its targeted profit in just six months of the fiscal year? Did we force the SBP to provide such a large amount to the government to build non-tax revenue and accordingly show lower budget deficit?
Sixth, the federal Public Sector Development Program (PSDP) is targeted at Rs540 billion for the year 2013-14. Against this target, the government has spent only Rs119 billion – only 22 percent of the total federal development budget in six months. The government intends to achieve budget deficit target by cutting development spending drastically. This is a bad fiscal policy.
Seventh, gas development surcharge (GDS) is a part of non-tax revenue as well. The government has targeted to collect Rs35.3 billion from the GDS for the year 2013-14. As against this target, the government has collected Rs29 billion in the first half as against Rs7.6 billion in the corresponding period of last year – an increase of 282 percent. Where has this number come from?
The above listed questions require the government’s clarification. Otherwise, the federal government fiscal deficit is understated to the extent of 1.5 percent of GDP and has stood at 4.2 percent of GDP in the first half of the fiscal year.
The author is principal and dean at NUST School of Social Sciences & Humanities, Islamabad.
Email: [email protected]
Re: The economy
Growth is not up. It has been extensively debunked in the press by various experts, who have used SBPs own numbers to calculate what the govt is showing as growth, when in fact it is not. Govt has forced SBP into using various monies as revenue, when they are not. Financial misreporting to say the least.
Forex is up because of dollar aid. And very soon this will dry up. Expats have already started to curtail their remittances. (down by 20% from the UAE in the last week). Exports are up. But so are imports. Oil is cheaper (for the govt) but it doesnt make sense unless it translates into the same savings at the pump as well.
Inflation is still at its peak. Shelf prices do not reflect any of the decrease in dollar value. In general, our big business is controlled by a variety of mafia. Just 3 weeks ago, the govt graciously announced a 2 rs decrease in the price of petrol. In response, petrol pumps remained closed for a whole 2 days across various cities. Without change in our corruption culture, there can be no realistic change. BTW, dollar has already started its reversal. Back above Rs. 100, after reports that a chunk of the supposed $1.5 billion is in the form of oil against deferred payments. A repeat of 1999, where after a few 'good' months, Pakistan was left on the verge of bankruptcy.
i don't know where you are living, but i can guess under somewhere.
ask someone from textile city how much orders are coming in and how many new units are being set-up or the booming small business construction activity or how many cars/bikes are being sold.
another barometer for the recovery is future orders for cement, steel & import orders for foodstuff.
why not bother to ask someone who works in multinationals about the growth in the last nine months?
hate NS & Dar but its been great here. you can back to hyper sleep now.
Re: The economy
i don't know where you are living, but i can guess under somewhere.
ask someone from textile city how much orders are coming in and how many new units are being set-up or the booming small business construction activity or how many cars/bikes are being sold.
another barometer for the recovery is future orders for cement, steel & import orders for foodstuff.
why not bother to ask someone who works in multinationals about the growth in the last nine months?
hate NS & Dar but its been great here. you can back to hyper sleep now.
So that is why inflation has dropped down to less than 5%. Thank you for your brilliant input. Seems like everything is 'booming' in your world.
Govt has taken on close to $20 billion in debt liabilities in the past 9 months. If business sectors are up, a major reason for that is tax loopholes and money whitening schemes gifted to the business community. Just look at the stock market. Its gone bonkers.
Ishaq Dar has historically been a market manipulator. Steps like these do not end well for the country, even though they put cute figures on the screen and make people like you happy, even though they bring zero relief for the masses at large.
Re: The economy
In order to provide relief to the masses, they need to fiercely focus on creating jobs on levels. Besides stating the obvious, the Honourable Minister of Finance and Economic Affairs need to present structural planning to indicate recovery and growth. Let's have a serious economic debate in the country for a change.
Re: The economy
Pakistan Inflation Rate | Actual Value | Historical Data | Forecast
Inflation has dropped in the past 2 or 3 months. Not 5 percent. But 7.9 is not bad compared to 10 plus earlier.
Re: The economy
So that is why inflation has dropped down to less than 5%. Thank you for your brilliant input. Seems like everything is 'booming' in your world.
Govt has taken on close to $20 billion in debt liabilities in the past 9 months. If business sectors are up, a major reason for that is tax loopholes and money whitening schemes gifted to the business community. Just look at the stock market. Its gone bonkers. Ishaq Dar has historically been a market manipulator. Steps like these do not end well for the country, even though they put cute figures on the screen and make people like you happy, even though they bring zero relief for the masses at large.
So you support stuff like Benazir Income Support Fund?
Re: The economy
Completely agree. We need massive economic restructuring in the private and public sectors. Though I am not sure about the selling of stake in public corporations.
They need to be sold, but with transparency. Because lets admit it, our 'sarkaari mulaazim' species is not able to function properly.
Biggest crap that N-League does is that they never target the big fish to bring them into the tax net. Never.
Re: The economy
So you support stuff like Benazir Income Support Fund?
No way. But I also dont support providing loopholes to the rich and famous in order to fatten their wallets, and instead increasing taxes on middle and lower middle classes.
Companies can, and should be given tax breaks, but in return, something tangible should be expected of them....eg, in return for tax breaks, a company should be made to hire additional staff....not simply put the money in their accounts.
Re: The economy
.....eg, in return for tax breaks, a company should be made to hire additional staff........
You cannot force companies to do such stuff, unless the company is government owned and you'd want to do some bharti on political grounds.
What can and should be done is to ensure fair competition in the market which would eventually take care of the problems you mention.
Re: The economy
You cannot force companies to do such stuff, unless the company is government owned and you'd want to do some bharti on political grounds.
What can and should be done is to ensure fair competition in the market which would eventually take care of the problems you mention.
Its not about forcing. Its about give and take. If you want tax breaks, increase your workforce by 10%. If you dont, you dont get a tax break.
Point is, a tax break is not meant to fatten a company's wallet. It is meant to create opportunities for a broader spectrum of the public.
Re: The economy
Its not about forcing. Its about give and take. If you want tax breaks, increase your workforce by 10%. If you dont, you dont get a tax break. Point is, a tax break is not meant to fatten a company's wallet. It is meant to create opportunities for a broader spectrum of the public.
Still, you cannot ask them to increase workforce by 10%.
The idea is that if that 'extra cash' is not reinvested in the business, expanding it, other companies should take that market share with their 'extra cash'. Expanding businesses would automatically increase workforce. Government's job is just to ensure they do not form cartels.
Unfortunately, we have focussed on non-productive sectors for the last 2 decades. Telecom and Banking sectors making tons of money, leaving productive sectors in a lurch and us importing everything.
Re: The economy
**
Pakistan to Auction Next-Generation Cellphone Licenses **
Government Hoping to Raise $1.6 Billion
By SYED SHOAIB HASAN
March 14, 2014 2:21 p.m. ET
KARACHI, Pakistan—Pakistan said it would auction next-generation cellphone licenses on April 23, in a move that the government hopes will raise at least $1.6 billion and create new jobs.
Pakistan is the only major country in the region that still doesn’t offer 3G services, surpassed even by war-torn Afghanistan. It will sell both the 3G and the more advanced 4G LTE spectrum, government officials said.
The auction is part of a series of measures that the government of Prime Minister Nawaz Sharif is adopting to spur the country’s stagnant economy and attract investment.
“We expect to receive bids for up to five licenses for 3G and 4G LTE bandwidths. Gauging from the interest so far we hope that the revenues will be more than estimated,” said Syed Ismail Shah, chairman of the Pakistan Telecommunication Authority.
The country’s Finance Minister Ishaq Dar approved the auction at a meeting in Islamabad on Thursday.
A government-commissioned study by Plum Consulting forecast that the 3G spectrum auction could raise Pakistan’s gross domestic product by $8 billion and indirectly create up to 900,000 new jobs.
The government said that bids for 3G license will start at $295 million, and for 4G LTE licenses at $210 million. Mr. Dar said in a recent Wall Street Journal interview he is hoping the process would rake in as much as $2 billion.
Currently, Pakistan has five telecom operators. At least four of them are expected to participate in the bidding process.
“The entire process was carried out in a very clear, transparent and professional way and we are satisfied with it,” said Omar Manzoor, spokesman for Mobilink, Pakistan’s largest cellular operator.
In addition to existing operators, a Turkish and a Middle Eastern operator expressed interest, Mr. Shah said.
Officials and telecom operators said that 3G services could come online within a few weeks of the auction.
“There is a consensus now among all the stakeholders that the auction should proceed quickly,” said Mohammad Tahir Saeed, an analyst at Topline Securities, a Pakistani brokerage firm. “Apart from the telecom industry, it is the services sector that stands to benefit the most once the 3G network starts operating.”
Pakistan has about 132 million cellphone users, but only 15 million of them use the slow mobile Internet currently available in the country.
Write to Syed Shoaib Hasan at
[EMAIL=“[email protected]”][email protected]
