We should not be ignorant and should know the truth.

[Aalsi]

@Sa1eem

Oh yea, I forgot. Goons of Thug Nawaz and Liars like Ishaque Dar and Ahsan Iqbal of Punjab Municipal Party (Notorious) always think of having free lunch. They got used to living on charities coming from Taxes paid by others. These people do not understand that there is no free lunch in international financial market and those amongst them who do understand are blatant liars and they always lie blatantly to keep people ignorant of truth. Fact of world financial market is that if one borrows (even if that one is a country) than one has to pay what they borrowed with interest.

Anyhow, goons of Thug Nawaz many times talk in media about rescheduling of debt to fool ignorant Pakistanis and unfortunately many innocent Pakistanis get fooled by lies these crooks especially those who believe on free lunch and do not know what rescheduling means. So, here is what rescheduling of debt means.

First type of rescheduling (one that Pakistan adopted) is to extend the period of debt repayment but keep the interest payment going plus keep paying reduced portion of debt Capital every year. Result is that interest is paid as usual but borrowed Capital is paid over longer period. In this type of rescheduling, debts that are rescheduled do not increases rather debt gets reduced slowly and takes longer time to get amortized. This is what happened when Pakistan rescheduled the debt. [Well, debt would still increase if new borrowing is done … as whenever rescheduling happened in past, crooks like Nawaz and BeNazir did, started borrowing in big way again].

Second type of rescheduling is to just pay interest and take holiday on paying borrowed Capital. Hence, actual borrowed Capital stays same and does not reduce. This holiday period from repaying actual Capital is always short and gives relief to borrowers who are on verge of Bankruptcy. Once holiday period is over or borrower comes out of bad financial situation, borrower starts paying Capital along with interest again. Borrower benefits in immediate payment but loses over long run as normally in such situation, lenders also increase the interest rate of existing debt. This type of rescheduling is similar to first type with little difference (because of likely increase in interest rate, first type is better).

Third type of rescheduling happens when debts repayment as well as interest on that debt gets differed until situation of borrower changes. In this type of rescheduling no debt or interest is paid for a period. Anyhow, interest rate gets negotiated again and normally interest rate gets increased. All occurred interest gets added to existing debt every year with new interest getting worked out every year on new value of debt. In this type of rescheduling, though borrower gets immense immediate relief but debt starts getting increased very fast as interest keeps increasing the debt. Pakistan rescheduling was not like this type of rescheduling as if that would have been the case then Pakistan debt would have increased in big way. For instance, $38 billion debts of 1999 would have become over $80 billion today without any extra borrowing.

So there is no free lunch in international financing. One can see that interest plus borrowed Capital is always paid by borrowers, and if borrowers do not then interest starts increasing the debt. Pakistan debt did not increase because Pakistan kept paying the interest. Actually Pakistan kept paying interest and reduced borrowed capital too. So, what I wrote that Pakistan has paid at least $30 billion dollars as interest on pre-1999 debt taken by past crooks is 100 percent true. Most likely Pakistan has paid more interest but not less.

Sa1eem bhai. Very informative indeed. :k: