Pakistan Economy : Updates and Discussions
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Alarm bells ring on fiscal deficit as govt borrowing from SBP shows massive spike
ISLAMABAD: The Monetary and Fiscal Policies Coordination Board on Thursday expressed serious concern over the growing budget deficit and inflation, increasing government borrowing from the State Bank of Pakistan (SBP) and sluggish revenue performance.
The board was also worried over the poor show by manufacturing sector and called for earliest possible course correction and advised the government to immediately finalise its medium-term strategy paper for macroeconomic stabilisation.
Finance Minister Asad Umar presided over the meeting and assured the board of government’s commitment to improving the fundamentals of economy and achieving sustainable and balanced economic growth.
“Fiscal consolidation remained a challenge during the first quarter of the current fiscal year as fiscal deficit increased to 1.4 per cent, from 1.2pc in comparable period last year,” Secretary Finance Arif Ahmed Khan was quoted in an official statement. The FBR’s revenue rose by 6.4pc and “if gains traction, it may bridge up the fiscal deficit going forward.”
The Ministry of Finance reported last week that defence and current expenditure surged significantly while development spending dropped drastically in the first quarter of the current year as consolidated fiscal deficit widened to 1.4pc of the gross domestic product (GDP).
It said the total defence spending in first three months (July-September) rose to 0.6pc of GDP, compared to 0.5pc in same period last year. In absolute terms, the defence expenditure increased by 21pc to Rs219.4bn.
The current expenditure also grew by 19pc to Rs1.48 trillion in the first quarter versus Rs1.24 tr of corresponding period last year. As percentage of GDP, current expenditure was up 3.9pc this year, from 3.5pc of last year. Public Sector Development Programme (PSDP), on the other hand, plunged 35.5pc to Rs106.6bn in 1QFY19 as against Rs165bn in comparable period last year. In other words, PSDP spending was down to 0.3pc of GDP, from 0.5pc of last year.
The saving grace came from four provinces who together offered a rare cash surplus of a record Rs246bn.
The board is required to set the direction of government with a mix of public and private sector advice. Led by the finance minister, the board is represented at the highest level by ministries of finance, commerce and planning, SBP and two independent private sector economists.
SBP governor discussed monetary aggregates along with views on the economy. Broad money (M2) witnessed a rise of Rs35bn from July to Nov 16 as compared to a decrease of Rs67bn in same period last year, which was entirely contributed by net domestic assets of the banking system as net foreign Assets continued to contract.
Despite rising interest rate overall private sector credit remained higher than last year. The government borrowed Rs2.859tr from SBP, versus Rs195m in same period last year. On the other hand, it retired Rs2.619tr to scheduled banks as against a borrowing of 201.5m. As a result, net government borrowing from the banking system reached Rs186.5bn, to Rs383.5bn over the previous year.
The private sector credit surged to Rs304bn during the period, as compared to Rs69bn last year with expansion seen largely in working capital and fixed investments.
Khan told the meeting that external balance had improved in the first four months of this fiscal year, as current account contracted by 4.6pc due to significant increase in workers’ remittances, containment in imports and increase in export growth. He said the headline inflation was increasing on the back of non-food inflation above 8pc, whereas food inflation was rising moderately by 2.7pc on account of smooth supply of commodities in the market and better price monitoring system.
He also updated the board about the economic reforms approved by the Economic Advisory Council. The meeting further discussed export credit facility offered by Saudi Arabia, envisaging the purchase of crude oil and or other petroleum product(s) of up to $3.24bn per annum on a 12-month deferred payment basis, a statement said.
Published in Dawn, November 30th, 2018
Alarm bells ring on fiscal deficit as govt borrowing from SBP shows massive spike - Newspaper - DAWN.COM
ISLAMABAD: The Monetary and Fiscal Policies Coordination Board on Thursday expressed serious concern over the growing budget deficit and inflation, increasing government borrowing from the State Bank of Pakistan (SBP) and sluggish revenue performance.
The board was also worried over the poor show by manufacturing sector and called for earliest possible course correction and advised the government to immediately finalise its medium-term strategy paper for macroeconomic stabilisation.
Finance Minister Asad Umar presided over the meeting and assured the board of government’s commitment to improving the fundamentals of economy and achieving sustainable and balanced economic growth.
“Fiscal consolidation remained a challenge during the first quarter of the current fiscal year as fiscal deficit increased to 1.4 per cent, from 1.2pc in comparable period last year,” Secretary Finance Arif Ahmed Khan was quoted in an official statement. The FBR’s revenue rose by 6.4pc and “if gains traction, it may bridge up the fiscal deficit going forward.”
The Ministry of Finance reported last week that defence and current expenditure surged significantly while development spending dropped drastically in the first quarter of the current year as consolidated fiscal deficit widened to 1.4pc of the gross domestic product (GDP).
It said the total defence spending in first three months (July-September) rose to 0.6pc of GDP, compared to 0.5pc in same period last year. In absolute terms, the defence expenditure increased by 21pc to Rs219.4bn.
The current expenditure also grew by 19pc to Rs1.48 trillion in the first quarter versus Rs1.24 tr of corresponding period last year. As percentage of GDP, current expenditure was up 3.9pc this year, from 3.5pc of last year. Public Sector Development Programme (PSDP), on the other hand, plunged 35.5pc to Rs106.6bn in 1QFY19 as against Rs165bn in comparable period last year. In other words, PSDP spending was down to 0.3pc of GDP, from 0.5pc of last year.
The saving grace came from four provinces who together offered a rare cash surplus of a record Rs246bn.
The board is required to set the direction of government with a mix of public and private sector advice. Led by the finance minister, the board is represented at the highest level by ministries of finance, commerce and planning, SBP and two independent private sector economists.
SBP governor discussed monetary aggregates along with views on the economy. Broad money (M2) witnessed a rise of Rs35bn from July to Nov 16 as compared to a decrease of Rs67bn in same period last year, which was entirely contributed by net domestic assets of the banking system as net foreign Assets continued to contract.
Despite rising interest rate overall private sector credit remained higher than last year. The government borrowed Rs2.859tr from SBP, versus Rs195m in same period last year. On the other hand, it retired Rs2.619tr to scheduled banks as against a borrowing of 201.5m. As a result, net government borrowing from the banking system reached Rs186.5bn, to Rs383.5bn over the previous year.
The private sector credit surged to Rs304bn during the period, as compared to Rs69bn last year with expansion seen largely in working capital and fixed investments.
Khan told the meeting that external balance had improved in the first four months of this fiscal year, as current account contracted by 4.6pc due to significant increase in workers’ remittances, containment in imports and increase in export growth. He said the headline inflation was increasing on the back of non-food inflation above 8pc, whereas food inflation was rising moderately by 2.7pc on account of smooth supply of commodities in the market and better price monitoring system.
He also updated the board about the economic reforms approved by the Economic Advisory Council. The meeting further discussed export credit facility offered by Saudi Arabia, envisaging the purchase of crude oil and or other petroleum product(s) of up to $3.24bn per annum on a 12-month deferred payment basis, a statement said.
Published in Dawn, November 30th, 2018
Alarm bells ring on fiscal deficit as govt borrowing from SBP shows massive spike - Newspaper - DAWN.COM
Here is some more good news for everybody
https://tribune.com.pk/story/1856330/2-troubles-ahead-balance-payments-crisis-appears-far/
Its better than what they would put for Pakistan Taliban Khan (who isnt invited to anything important in first place).....maybe Achmed the dead terrorist picture? SAILENCE!!! I...KILL YOU!
Well ... nobody did so... But they did Apu for ModiIts better than what they would put for Pakistan Taliban Khan (who isnt invited to anything important in first place).....maybe Achmed the dead terrorist picture? SAILENCE!!! I...KILL YOU!
Atleast he didn't went there with a begging bowl like your Desi Murgi-Andewala PM. He went there to attend G20 summit of top 20 industrialized and rich nation. You people are not even invited for any important world sumitts except maybe for world terrorist sumitts in maybe ISIS land and soon Pakistan too will become one when your economy tanks completely. Below are links just go through list of apologies issued by Argentina. And that TV channel is junk channel run by junkies who make fun of their president too.
Argentinians apologise to India, praise PM Modi after one of their channels uses Apu from the Simpsons to describe his G-20 Summit arrival - Republic World
Why Bill Gates thinks raising chickens is a great idea
Why This Billionaire Thinks Chicken Farming is a Great Idea
If Bill Gates lost $76 billion, which would make him close to penniless, what would he do?
Raise chickens, that’s what.
In a new blog post, the Microsoft co-founder and philanthropist writes that raising chickens is probably the easiest and cheapest way to make money as well as to assure a food supply if you are poor and have access to land.
Clearly, he’s done the research. First, chickens are relatively cheap to maintain. Some breeds can live off what they eat off the ground, he explains, although augmenting that is probably a good idea. As for shelter, hens need just a rudimentary structure to protect their nests and eggs.
Farmers who start with five hens and borrow a neighbor’s rooster to fertilize them can end up with 40 chicks within approximately three months, or a quarter of the year. In West Africa, those chicks can sell for $5 each. Thus, farmers could earn as much as $200 per quarter, or $1,000 per year, in income. That’s not much, but it’s a step up from the extreme poverty line of $700 a year, Gates wrote.
Additionally, eggs are also a protein-rich food source.
Finally, because chickens tend to stick close to home, a parent caring for his or her children at home can also tend the flock.
Gates also offered a way to help. If you read the blog post, watch the video, and answer a question, Gates will donate—on your behalf—a flock of chickens to a poor family. The poultry logistics will be handled by Heifer International, a non-profit group dedicated to providing livestock and training to impoverished people around the world.
This post comes a day after Melinda Gates wrote her own ode to chickens. The couple co-chair the Bill & Melinda Gates Foundation, which spends billions each year combating disease, hunger, and poverty.
Why This Billionaire Thinks Chicken Farming is a Great Idea
If Bill Gates lost $76 billion, which would make him close to penniless, what would he do?
Raise chickens, that’s what.
In a new blog post, the Microsoft co-founder and philanthropist writes that raising chickens is probably the easiest and cheapest way to make money as well as to assure a food supply if you are poor and have access to land.
Clearly, he’s done the research. First, chickens are relatively cheap to maintain. Some breeds can live off what they eat off the ground, he explains, although augmenting that is probably a good idea. As for shelter, hens need just a rudimentary structure to protect their nests and eggs.
Farmers who start with five hens and borrow a neighbor’s rooster to fertilize them can end up with 40 chicks within approximately three months, or a quarter of the year. In West Africa, those chicks can sell for $5 each. Thus, farmers could earn as much as $200 per quarter, or $1,000 per year, in income. That’s not much, but it’s a step up from the extreme poverty line of $700 a year, Gates wrote.
Additionally, eggs are also a protein-rich food source.
Finally, because chickens tend to stick close to home, a parent caring for his or her children at home can also tend the flock.
Gates also offered a way to help. If you read the blog post, watch the video, and answer a question, Gates will donate—on your behalf—a flock of chickens to a poor family. The poultry logistics will be handled by Heifer International, a non-profit group dedicated to providing livestock and training to impoverished people around the world.
This post comes a day after Melinda Gates wrote her own ode to chickens. The couple co-chair the Bill & Melinda Gates Foundation, which spends billions each year combating disease, hunger, and poverty.
GENERAL NEWS
Pakistan’s trade with South Asia can rise by eight-fold
December 5, 2018
ISLAMABAD: Regional trade can create many more jobs and make the country prosperous if trade barriers with South Asia are removed, says a new World Bank report.
Pakistan’s trade with South Asia accounts for only 8 percent of its global trade, despite the region being the world’s fastest growing. However, intraregional trade in South Asia is among the lowest at about 5 percent of total trade, compared with 50 percent in East Asia and the Pacific.
The recently-launched Glass Half Full: The Promise of Regional Trade in South Asia report documents what needs to be done to realize the full trading potential in South Asia.
It was launched at the 11th South Asia Economic Summit, hosted by the Sustainable Development Policy Institute in Islamabad.
It identifies four critical barriers to regional trade: tariffs and Para tariffs, real and perceived no tariff barriers, connectivity costs, and a broader trust deficit.
“Pakistan is sitting on huge trade potential that remains largely untapped,” said Illango Patchamuthu, World Bank Country Director for Pakistan.
“A favorable trading regime that reduces the high costs and removes barriers could boost investment opportunities that is critically required for accelerating growth in the country.
” The report argues that the costs of trade are much higher within South Asia compared to other regions.
The average tariff in South Asia is more than double the world average. South Asian countries have greater trade barriers for imports from within the region than from the rest of the world.
These countries impose high Para tariffs, which are extra fees or taxes on top of tariffs.
More than one-third of the intraregional trade falls under sensitive lists, which are goods that are not offered concessional tariffs under the South Asian Free Trade Area (SAFTA).
In Pakistan, nearly 20 percent of its imports from, and 39 percent of its exports to, South Asia fall under sensitive lists.
“Pakistan’s frequent use of tariffs to curb imports or protect local firms increase the prices of hundreds of consumer goods, such as eggs, paper and bicycles.
They also raise the cost of production for firms, making it difficult for them to integrate in regional and global value chains,” said Caroline Freund, Director, Macroeconomics, Trade and Investment, World Bank.
South Asian countries are yet to reap the benefits of shared land borders, the report adds.
While Pakistan and India collectively represent 88 percent of South Asia’s Gross Domestic Product, trade between the two countries is only valued at a little over $2 billion. This could be as high as $37 billion. “For example, it is cheaper for Pakistan to trade with Brazil than with India.
Reducing policy barriers, such as eliminating the restrictions on trade at the Wagah-Attari border, or aiming for seamless, electronic data interchange at border crossings, will be major steps towards reducing the very high costs of trade between Pakistan and India,” said Sanjay Kathuria, World Bank Lead Economist and lead author of the report.
The report recommends ending sensitive lists and para tariffs to enable real progress on SAFTA and calls for a multi-pronged effort to address non-tariff barriers, focusing on information flows, procedures, and infrastructure.
Policy makers may draw lessons from the India-Sri Lanka air services liberalization experience, the report suggests, where liberalization was gradual and incremental, but policy persistence paid off.
Connectivity is a key enabler for robust regional cooperation in South Asia.
Pakistan’s trade with South Asia can rise by eight-fold | Business Recorder
Pakistan’s trade with South Asia can rise by eight-fold
December 5, 2018
Pakistan’s trade with South Asia accounts for only 8 percent of its global trade, despite the region being the world’s fastest growing. However, intraregional trade in South Asia is among the lowest at about 5 percent of total trade, compared with 50 percent in East Asia and the Pacific.
The recently-launched Glass Half Full: The Promise of Regional Trade in South Asia report documents what needs to be done to realize the full trading potential in South Asia.
It was launched at the 11th South Asia Economic Summit, hosted by the Sustainable Development Policy Institute in Islamabad.
It identifies four critical barriers to regional trade: tariffs and Para tariffs, real and perceived no tariff barriers, connectivity costs, and a broader trust deficit.
“Pakistan is sitting on huge trade potential that remains largely untapped,” said Illango Patchamuthu, World Bank Country Director for Pakistan.
“A favorable trading regime that reduces the high costs and removes barriers could boost investment opportunities that is critically required for accelerating growth in the country.
” The report argues that the costs of trade are much higher within South Asia compared to other regions.
The average tariff in South Asia is more than double the world average. South Asian countries have greater trade barriers for imports from within the region than from the rest of the world.
These countries impose high Para tariffs, which are extra fees or taxes on top of tariffs.
More than one-third of the intraregional trade falls under sensitive lists, which are goods that are not offered concessional tariffs under the South Asian Free Trade Area (SAFTA).
In Pakistan, nearly 20 percent of its imports from, and 39 percent of its exports to, South Asia fall under sensitive lists.
“Pakistan’s frequent use of tariffs to curb imports or protect local firms increase the prices of hundreds of consumer goods, such as eggs, paper and bicycles.
They also raise the cost of production for firms, making it difficult for them to integrate in regional and global value chains,” said Caroline Freund, Director, Macroeconomics, Trade and Investment, World Bank.
South Asian countries are yet to reap the benefits of shared land borders, the report adds.
While Pakistan and India collectively represent 88 percent of South Asia’s Gross Domestic Product, trade between the two countries is only valued at a little over $2 billion. This could be as high as $37 billion. “For example, it is cheaper for Pakistan to trade with Brazil than with India.
Reducing policy barriers, such as eliminating the restrictions on trade at the Wagah-Attari border, or aiming for seamless, electronic data interchange at border crossings, will be major steps towards reducing the very high costs of trade between Pakistan and India,” said Sanjay Kathuria, World Bank Lead Economist and lead author of the report.
The report recommends ending sensitive lists and para tariffs to enable real progress on SAFTA and calls for a multi-pronged effort to address non-tariff barriers, focusing on information flows, procedures, and infrastructure.
Policy makers may draw lessons from the India-Sri Lanka air services liberalization experience, the report suggests, where liberalization was gradual and incremental, but policy persistence paid off.
Connectivity is a key enabler for robust regional cooperation in South Asia.
Pakistan’s trade with South Asia can rise by eight-fold | Business Recorder
Sometimes I wonder why these politicians become more concerned about the country's main affairs as soon as they get into the opposition.
If her concerns are sincere and genuine, let her ask Zardari to return the $15-20 billion dollars he stole from Pakistan.
If her concerns are sincere and genuine, let her ask Zardari to return the $15-20 billion dollars he stole from Pakistan.
Pakistan leverages CPEC to launch 2 auxiliary corridors: SPEC & RPEC
January 11, 2019
Jan Achakzai |
Pakistan has successfully launched two auxiliary corridors to CPEC by engaging Saudi Arabia and Russia to leverage its geostrategic location ultimately opening Moscow’s access to the Indian Ocean and Riyadh’s reach to Euro-Asian markets potentially circumventing long route of Suez Canal for Gulf Cooperation Council (GCC) giant.
As Saudi Arabia has embarked on an ambitious economic plan to reduce its dependence on oil exports, offset the potential loss of the US and EU markets to Shell, it is looking to expand its investment in other sectors and regions to enhance trade volume and meet the demand of oil-hungry economies of Asia in coming decades.
The formal announcement is likely to be made in coming weeks following the high profile visit of Saudi Crown Prince Mohammad Bin Salman to Pakistan. Almost 12 Memorandums of Understanding (MoUs) are ready to be inked: Oil, sports, agriculture, media among other areas will be earmarked for investment. Saudi Ambassador to Pakistan Nawaf bin Said Al-Malki has been instrumental behind these initiatives shuttling between Islamabad, Riyadh, and Gawadar leading various delegations from KSA.
Read more: Economic crisis hurting CPEC?
There is already a proposal by KSA to link Gawadar with Oman via a seabed railway tunnel or bridge potentially connecting the proposed Israeli Railway Corridor with GCC Countries: Tel Aviv via Jordon and Saudi Arabia encompassing Oman. Since Iran has bad relations with GCC countries and Israel, it will be Saudi Pakistan Economic Corridor (SPEC) which will greatly benefit from any Mediterranean/Gulf Railway links and enhanced trade preceding new geopolitical realignments.
Thus the SPEC will be complementing the CPEC and the Mediterranean Corridor. Coupled with the SPEC, the second auxiliary corridor Pakistan has succeeded to launch is the new Russia Pakistan Economic Corridor (RPEC). Russia’s access to the Indian Ocean/Arabian Sea through the ports of Gwadar or Karachi and further to the Strait of Hormuz makes the shortest route.
Pakistan leverages CPEC to launch 2 auxiliary corridors: SPEC & RPEC - Global Village Space
January 11, 2019
Jan Achakzai |
Pakistan has successfully launched two auxiliary corridors to CPEC by engaging Saudi Arabia and Russia to leverage its geostrategic location ultimately opening Moscow’s access to the Indian Ocean and Riyadh’s reach to Euro-Asian markets potentially circumventing long route of Suez Canal for Gulf Cooperation Council (GCC) giant.
As Saudi Arabia has embarked on an ambitious economic plan to reduce its dependence on oil exports, offset the potential loss of the US and EU markets to Shell, it is looking to expand its investment in other sectors and regions to enhance trade volume and meet the demand of oil-hungry economies of Asia in coming decades.
Russia wants to export gas by laying this offshore pipeline through Gwadar Port to Pakistan and India.
Therefore, Riyadh has indicated to invest a massive $15 billion in renewable energy in Pakistan and putting an oil refinery in Gawadar. It is also looking to launch 3 airlines, and utilize the CPEC and BRI infrastructure for further access into China and Central Asia, respectively, for future trade and energy suppliesThe formal announcement is likely to be made in coming weeks following the high profile visit of Saudi Crown Prince Mohammad Bin Salman to Pakistan. Almost 12 Memorandums of Understanding (MoUs) are ready to be inked: Oil, sports, agriculture, media among other areas will be earmarked for investment. Saudi Ambassador to Pakistan Nawaf bin Said Al-Malki has been instrumental behind these initiatives shuttling between Islamabad, Riyadh, and Gawadar leading various delegations from KSA.
Read more: Economic crisis hurting CPEC?
There is already a proposal by KSA to link Gawadar with Oman via a seabed railway tunnel or bridge potentially connecting the proposed Israeli Railway Corridor with GCC Countries: Tel Aviv via Jordon and Saudi Arabia encompassing Oman. Since Iran has bad relations with GCC countries and Israel, it will be Saudi Pakistan Economic Corridor (SPEC) which will greatly benefit from any Mediterranean/Gulf Railway links and enhanced trade preceding new geopolitical realignments.
Thus the SPEC will be complementing the CPEC and the Mediterranean Corridor. Coupled with the SPEC, the second auxiliary corridor Pakistan has succeeded to launch is the new Russia Pakistan Economic Corridor (RPEC). Russia’s access to the Indian Ocean/Arabian Sea through the ports of Gwadar or Karachi and further to the Strait of Hormuz makes the shortest route.
Riyadh has indicated to invest a massive $15 billion in renewable energy in Pakistan and putting an oil refinery in Gawadar.
Pakistan is located at the crossroads of the East-West and North-South trade corridors, including the new Silk Road project in South Asia, or China’s BRI; as such it ’s would-be-expanded railroad will be crossing the Trans-Siberian Railway, Turksib (Turkestan-Siberia Railway), the Trans-Asian Railway from China to Europe and hence securing the Eurasian Union. The RPEC with Russia’s engagement exploiting Islamabad’s geostrategic location complementing the CPEC, have already got underway.Pakistan leverages CPEC to launch 2 auxiliary corridors: SPEC & RPEC - Global Village Space
CPEC, RPEC, SPEC, APEC, TPEC, DPEC., no matter what EC , Pakistanis have an unique ability to mess up anything. Give it 10 years all the ECs will be in various states of disintegration and pakistan will have moved on to the next “money making” plan.
May not be. Although their track record so far has been indicative of the outcome as suggested by you, understand that their policy is driven by Pakistan Army and not a bunch of politicians in this particular regard.
It is the insistence of PA to stick to the provisions of CPEC which saw Imran Khan undertake a massive u-turn from his position on the need to re-negotiate terms and conditions of the same. A policy continuum if a necessity to ensure sustained economic development within a nation. PA understands the gap being generated with India on the base of economy; they also understand that India can afford to massively upgrade their armed forces in a short span if a push comes to a shove, but their economic condition is such that they can ill afford the same - hence the push for "peace" - only difference is that GoI is no more as gullible as history has shown it to be.
That's what you think. Ahinsa is to our dhoti class what mother's milk is to a newborn. Just wait for the results of the 2019 elections.
Escuse me, but the main interest of the Pakistani army for CPEC was to line their pockets. Hence the secrecy. It was only recently that even some idea of the terms of the Chinese loans were made kind of public. The terms were not favorable to Pakistan...no surprise there.... The Army forced khan to u turn because again they (the army)stands to make money.
The Pakistani army is a self serving protection racket and Pakistanis in general are among the most incompetent people anywhere. They can mess up even things that are really hard to mess up. There maybe a few countries in sub Saharan Africa that are even more incompetent than Pakistan ..like Congo...maybe .....but really our neighbors are hard to beat in that particular category....
