Chairman Centre of Advisory Services for Islamic Banking and Finance (CAIF), Former Head of FSCD SBP, Former Head of Research Arif Habib Investments and Member IFSB Task Force for development of Islamic
Money Market, Former Member of Access to Justice Fund Supreme Court of Pakistan
In a series of events and after arrival of Federal Budget the common man has gone more confused about Nayya Pakistan.
Both sides of the government ruling and in opposition are not interested with public issues. Ruling party is totally focusing on labeling each member of opposition corrupt and putting them in jail. In this way they are sure, they can continue their rule. On the other side opposition is not interested to dislodge the government and consider NAB actions as a gift to run their campaign on the basis of victimization and to wait for a proper time to come up with their attacks. Some analysts argue that opposition has no potential for that but they should understand that ongoing mistakes of PTI would automatically provide golden opportunity to opposition to come with a decisive attack.
On economic front now it is final that we have to go under treatment of IMF making first of all our PKR to go down and then to move forward. Fitch has rated Pakistan with B negative on June 15 2019 despite a staff-level agreement between Islamabad and the International Monetary Fund (IMF) as it sees significant risks to implementation of the $6-billion loan program. The development has come as the IMF Executive Board has decided to take up Pakistan’s request for the $6-billion loan program on July 3 for decision.
Fitch Ratings forecast that it would be challenging for the Federal Board of Revenue (FBR) to meet its Rs5.55-trillion tax collection target and there was a likelihood that the government would have to cut its expenditure in the next fiscal year to meet the 0.6% primary deficit target.
It said the fiscal deficit would remain high at 7.1% of gross domestic product (GDP) by the end of next fiscal year. Fitch forecast reserves would begin rising during FY20 on the back of improved access to external financing. Liquid foreign exchange reserves were still low, at $7.8 billion, sufficient for only 1.7 months of import coverage, as of June 3. This is despite the fact that the country received $7.2 billion from Saudi Arabia, the United Arab Emirates and China since last November.
It also projected 3.5% economic growth for the next fiscal year, which was higher than the finance ministry’s own estimate of 2.4% growth in fiscal year 2019-20. It added that inflation was set to remain high at 9% on the back of past rupee depreciation and tax and energy tariff increases, which was lower than the finance ministry’s estimate of 13%.
Now coming to government borrowing side the most sensitive area at the moment the federal government of Pakistan has added Rs3.9tn ($25.92bn) to the public debt in just 10 months of the current fiscal year. The central government’s total debt surged to Rs28tn with net addition of Rs3.9tn from July through April of the current fiscal year as per SBP. The central government’s debt increased at an alarming pace of 16% in first 10 months of this fiscal year as per SBP.The increase in public debt was nearly half of the debt that the PPP government added in five years. During the PPP’s 2008-13 tenure, the public debt surged from Rs6tn to Rs14tn. In the next five years of PML-N government, it hit the Rs24.2tn mark with an addition of Rs10tn.
The prime minister has now decided to form a commission to investigate the Rs18tn addition to the public debt. But Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh did not attend the meeting at the PM Office since he was the finance minister from 2010 to 2013 during the PPP tenure.
Steep currency devaluation also contributed to the Rs3.9tn addition to the central government’s debt. Next year, the federal government will spend nearly 68% of the total budget on debt servicing and defense of the country.
An increase in interest rate by the State Bank of Pakistan (SBP) has also added at least Rs500bn to the cost of debt servicing. The central bank raised the key interest rate by another 1.5% to 12.25% last month despite a decline in core inflation.
The external debt of the central government increased 22.5% to Rs9.55tn in first 10 months of the current fiscal year.
There was a net increase of Rs1.8tn in the external debt, largely due to currency depreciation. In June 2018, the value of a dollar was equal to Rs121.54, which reached Rs141.32 by the end of April 2019, according to the central bank. Now PKR has crossed Rs 157 per dollar with further increase in external debt.
The Rs9.55tn external debt does not include loans of $5.2bn obtained from Saudi Arabia and the United Arab Emirates. These loans are the responsibility of the central bank.
The share of short-term public debt increased to 58% or Rs10.73tn by the end of April.
In June last year, the short-term domestic debt stood at 54.1% or Rs8.9tn. The short-term debt grew Rs1.84tn or 20.8% in 10 months. The federal government’s total domestic debt increased to Rs18.52tn, an addition of Rs2.1tn or 13% in 10 months of the current fiscal year. The MTBs issued to borrow from the central bank rose to Rs7tn, a net addition of Rs3.4tn or 95.4% from July through April. However, the trend is going to shift from next fiscal year after the International Monetary Fund has imposed a restriction on borrowing from the central bank but practically this would not work.
The long-term debt, which was earlier shrinking, also went up 3.6% to Rs7.8tn. The debt obtained through prize bonds increased 12% to Rs952bn.
This is how after 73 years of birth as a Pakistani we are still moving with no direction and immense economic risks. This is what Socrates said 2500 years back that don’t try to find your destination like asking some blind man to find black cat in total darkness. But we are consistent in doing this.
Today the victims of this style are the 95% population of this country with no bread, no treatment, no education, no security of life and threats from different agencies.
On one side the institutions are standing. On the other hand theocrats or Moulvis are standing with their fatwa’s and terrorists and finally politicians are standing with their corruption and vague policies.
This has created a country with immense corruption and confused policies with no direction. Everybody is involved in this with words on their lips that God may forgive them for this. This is how we all pray. Centuries ago someone had said “God! Make me honest and pious but not today”. This is how we have built our society with the same “dua” on daily basis.
Everyone in Pakistan just blame US, India, Europe and Israel for their miseries. But whether we have thought that why they are dominating us. With their technology and research they are far ahead of us.
People sitting at the helm of affairs in Pakistan have no vision. While settling programs for future of working class they start like this.
The population of this country is 200 million, 60 million are retired. That leaves 140 million to do the work. There are 85 million in school. Which leaves 55 million to do the work? Of this there are 35 million employed by the federal government, leaving 15 million to do the work. 2.8 million are in the armed forces preoccupied with law and order situation. Which leaves 12.2 million to do the work? 10.8 million People work for state and city Governments. That leaves 1.4 million to do the work. At any given time there are 188,000 people in hospitals, leaving 1,212,000 to do the work. Now, there are 1,211,998 people in prisons. That leaves just two people to do the work.This is how our government designs its policies to resolve the matter of unemployment.
But we should not forget that in fact Man who fishes in other man’s well often catches crabs. Men who run in front of car get tired. Men who run behind car get exhausted. Man with one chopstick goes hungry. Man who drives like Hell, bound to get there. Men who live in glass house should change clothes in basement. Crowded elevators smell different to midget. This is how our governments have lived since inception of this country.
Most of the time our leaders have proved to be a taxi driver. In this regard a taxi passenger tapped the driver on the shoulder to ask him a question. The driver screamed, lost control of the car, nearly hit a bus, went up on the footpath, and stopped centimeters from a shop window. For a second everything went quiet in the cab, then the driver said, “Look mate, don’t ever do that again. You scared the daylights out of me!” The passenger apologized and said, “I didn’t realize that a little tap would scare you so much.” The driver replied, “Sorry, it’s not really your fault. Today is my first day as a cab driver – I’ve been driving a funeral van and running a hospital for the last 10 years.”
In valuing time we act like an Employee whose Manager asked him: “This is the third time you’ve been late for work this week. Do you know what that means? “Employee replied: “That it’s only Wednesday and still three days are there.”
This is how our mental status is. During a visit to the mental asylum, a visitor asked the Director what the criterion was which defined whether or not a patient should be institutionalized. “Well,” said the Director, “we fill up a bathtub, then we offer a teaspoon, a teacup and a bucket to the patient and ask him or her to empty the bathtub.” “Oh, I understand,” said the visitor. “A normal person would use the bucket because it’s bigger than the spoon or the teacup. “No.” said the Director, “A normal person would pull the plug to on the lights. Than he asked the visitor do you want a room with or without a view?”
Imran Khan always come up with dashing ideas like for energy problem he once asked that all men and women of Pakistan fond of increasing population should stop and focus on creating electricity now.
In another occasion when someone saw a mosquito with Dengi coming to him to suck his blood he cried that go away, if you are so fond of sucking human blood than become Finance Minister of Pakistan.
While addressing a class of students he once asked that how we can create an Islamic Republic of Pakistan and if someone gave the rights answer than he would get 25 marks. Ten minutes passed and no reply came. At this Imran said fine you all have passed and have got 25 marks.
In a speech to his party members he said “Try to work with full efforts otherwise you can lose your wives and then media can throw salt on your bleeding wounds”
Enjoy it. This is Nayya Pakistan.