Why isn't the PML-N govt given credit for the stable inflation rate? Is deflation possible?

[Major]

I don't know much about politics, infact, i barely have any idea about it, but i do know is that economic and foreign policies play a big part for the political govts support.

Ever since PMLN's govt came into power, Pakistan's has faced disinflation. The rate of inflation has continuously decreased since 2013. Back in 2009, the country was near hyper inflation, but PMLN's govt has moved the rate of inflation near to stable inflation. Infact, Pakistan also experienced stable inflation a couple of months ago aswell.

Although i understand that while the inflation is still in the positive, the prices of products don't decrease(rate of inflation should be in negative), but the prices haven't also increased aswell.

Also, how much of a factor does the role of decreasing oil prices play here? What if the factor behind the decreasing rate of inflation is the oil prices. The cost of production decreasing, thus moving our country out of the cost push inflation due to the oil prices.

Also, seeing that our rate of inflation is at 5%, is it possible that we could see a negative rate of inflation in the near future? Could the general price level finally start decreasing?

But if the general price level decreases, will PMLN lose its support from the business community? Because stable inflation allows them to still charge high price, while deflation forces them to reduce prices. Thus, will PMLN allow deflation to take place?

 

[Slog]

Inflation was reduced in PPP tenure only

When PPP came into power inflation was hovering at 25% and within three years it was in the low teens.

You also have to realise that when PPP was in power the world had just seen the Great Recession and was at its worst economically since the 1920s and 30s. Oil was close to $120/barrel and GDP growth was in negative or just above zero in most of the world

PML-N has benefitted a lot from the overall good health of the global economy and extremely low oil prices.

 

[Slog]

Additionally general price level decreasing is next to impossible in a country like Pakistan

However the hope and dream would be for GDP growth to outstrip inflation rate

 

[Major]

Additionally general price level decreasing is next to impossible in a country like Pakistan

However the hope and dream would be for GDP growth to outstrip inflation rate

so to see an actual decrease in the price level, Pakistan would need to have further GDP growth? Meaning power shortages not causing a fall in the production and affecting GDP?

 

[Major]

Inflation was reduced in PPP tenure only

When PPP came into power inflation was hovering at 25% and within three years it was in the low teens.

You also have to realise that when PPP was in power the world had just seen the Great Recession and was at its worst economically since the 1920s and 30s. Oil was close to $120/barrel and GDP growth was in negative or just above zero in most of the world

PML-N has benefitted a lot from the overall good health of the global economy and extremely low oil prices.

but didn't PPP increased the salaries and all? WOuldn't that had an affect on the inflation rate? Plus, did PMLN have an hand in this as it was governing Punjab at that time.

so you are saying that todays low inflation rates are because of PPP's economic policies adopted?

So taking into account the inflation rate and ecenomic growth and development, who should be most like be voted in future?

 

[Slog]

so to see an actual decrease in the price level, Pakistan would need to have further GDP growth? Meaning power shortages not causing a fall in the production and affecting GDP?

There won't be an actual/nominal decrease in price level ever (it's just rare for 99% countries). Like you won't see a situation in a country like pakistan where the average basket of goods would decrease from let's say 1000Rs to 800Rs. (Individual things can get cheaper but you look at a basket of commonly used goods to get an idea of overall price level)

However what can happen is that the income levels can increase fuelled br growth in the economy ie. GDP growth. So from an economic point of view the real value of prices can decrease.

An example:

A earns $100,000 dollars a year
His income increases by 10% this year
The inflation rate is 5%.
So in real terms the prices have decreased for him next year as he can now afford more of the same items now.

For a country like Pakistan it is important that not that inflation is somewhat stabilized we achieved GDP growth rate upwards of 5 percent per annum atleast.

So yes you're right that we need to solve our energy problems so that the industries can produce to their optimum capacity in order to fuel GDP growth rate. But that's just one piece of the puzzle. We need good economic policies, setting up of new industries, foreign investment, security among others.

The energy problem is being tackled somewhat but a lot of it is through debt (CPEC is fuelled by a lot of debt rather than China putting in their own money as equity). However yes prospects do seem better under PML-N. In PPP tenure we had sky high inflation (which to be fair the Zardari government curbed somewhat). However the GDP was lagging at barely 2 percent growth which is frankly terrible. Last year it was 4.3 percent I think so it's been an improvement but still far from ideal rate. And as I mentioned it's not as much PML-NS great policies but rather the global economy and low oil prices.

 

[godzilla]

Inflation was reduced in PPP tenure only

When PPP came into power inflation was hovering at 25% and within three years it was in the low teens.

You also have to realise that when PPP was in power the world had just seen the Great Recession and was at its worst economically since the 1920s and 30s. Oil was close to $120/barrel and GDP growth was in negative or just above zero in most of the world

PML-N has benefitted a lot from the overall good health of the global economy and extremely low oil prices.

you have got to be kidding.

ppp took pakistan to the brink of being a failed state, with zardari often going mia particularly on foreign trips. corruption - which is the main reason given for stunted foreign investment in the country - has been near all time highs with both the ppp and pml (http://www.tradingeconomics.com/pakistan/corruption-rank).

whilst its true that zardari presided over the time line of the global recession, there was no economic policy - both ppp and pmln have been grossly naive in their economic policies - explained by the fact that foreign debt is sky rocketing throughout both the ppp and plm tenures:
http://www.tradingeconomics.com/pakistan/external-debt
in addition, he also presided over the energy collapse, so in theory, pakistan being a heavily energy importing and so energy dependent economy, he received a huge boost in terms of an energy price windfall. (http://www.macrotrends.net/1369/crude-oil-price-history-chart)

the pmln government this time round seems marginally more competent than the ppp - borrowing is still through the roof. inflation is low globally because of energy prices. and yet even with that input cost so low, exports are collapsing, debt rising, costs (and inflation) will start increasing as energy continues its recovery, and the recent move from $30 to $50 starts to filter into economic measures. they have been successful in terms of making the security situation better, and both governments benefitted from two things (a) massive repatriations of money from overseas pakistan as the aftermath of 9-11 and the recession and more stringent border controls, money laundering, stricter financial control etc have continued to take hold; and (b) the growth spurt in the middle east resulting in a surge of foreign pakistani labourers resulting in a boost to repatriations. once these two essentially one off events diminish, the true underlying organic strength of the pakistani economy will come to bear which will be a disaster of massive proportion.

theres only so much this can be masked with debt - greece is not a fantasy analogy.

 

[Slog]

but didn't PPP increased the salaries and all? WOuldn't that had an affect on the inflation rate? Plus, did PMLN have an hand in this as it was governing Punjab at that time.

so you are saying that todays low inflation rates are because of PPP's economic policies adopted?

So taking into account the inflation rate and ecenomic growth and development, who should be most like be voted in future?

PPP increased salaries somewhat but that doesn't help because it was artificially done rather than through any economic policies. It was printing a lot of money (I remember it was several hundred crores a day if I'm not wrong. Don't remember exact number but it was insane)

So when there is too much money in the economy but the production remains at similar level it leads to increases in prices (inflation) because market forces come into play. Let's imagine an economy where there is only one product with 10 units available in a month. And there is only $100 (through the month's salary)in the economy. Now let's say the government comes and increases the salary and does that through printing money and now everyone has $200. There's $200 chasing the same 10 units. So the people with the money will be willing to pay more to get those units and as most people have increased cash and ability to pay the prices of those goods will naturally increase. So salaries have gone up but the same 10 units are there so in effect no one is better off because due to inflation (the price increase of units of product) they can still only afford the same things and nothing new is available to them. So in REAL terms their spending power has not gone up.

 

[Slog]

you have got to be kidding.

ppp took pakistan to the brink of being a failed state, with zardari often going mia particularly on foreign trips. corruption - which is the main reason given for stunted foreign investment in the country - has been near all time highs with both the ppp and pml (http://www.tradingeconomics.com/pakistan/corruption-rank).

whilst its true that zardari presided over the time line of the global recession, there was no economic policy - both ppp and pmln have been grossly naive in their economic policies - explained by the fact that foreign debt is sky rocketing throughout both the ppp and plm tenures:
http://www.tradingeconomics.com/pakistan/external-debt
in addition, he also presided over the energy collapse, so in theory, pakistan being a heavily energy importing and so energy dependent economy, he received a huge boost in terms of an energy price windfall. (http://www.macrotrends.net/1369/crude-oil-price-history-chart)

the pmln government this time round seems marginally more competent than the ppp - borrowing is still through the roof. inflation is low globally because of energy prices. and yet even with that input cost so low, exports are collapsing, debt rising, costs (and inflation) will start increasing as energy continues its recovery, and the recent move from $30 to $50 starts to filter into economic measures. they have been successful in terms of making the security situation better, and both governments benefitted from two things (a) massive repatriations of money from overseas pakistan as the aftermath of 9-11 and the recession and more stringent border controls, money laundering, stricter financial control etc have continued to take hold; and (b) the growth spurt in the middle east resulting in a surge of foreign pakistani labourers resulting in a boost to repatriations. once these two essentially one off events diminish, the true underlying organic strength of the pakistani economy will come to bear which will be a disaster of massive proportion.

theres only so much this can be masked with debt - greece is not a fantasy analogy.

Where have I praised PPP. Read my whole post

Both governments have borrowed intensely which is never a good thing

But PML-N (there is corruption Ofcourse as it is a corrupt family run mafia) is using some of that debt to fund infrastructure projects

Also
Musharraf presided over there energy collapse

 

[Slog]

Where have I praised PPP. Read my whole post

Both governments have borrowed intensely which is never a good thing

But PML-N (there is corruption Ofcourse as it is a corrupt family run mafia) is using some of that debt to fund infrastructure projects

Also
Musharraf presided over there energy collapse

However as I mentioned that PPP had a lot of things going against them which were totally out of their control:

- global recession and the fall out
- sky high oil prices
- the terrible security situation which has improved a lot
- the shameless CJ who interfered in government matters everyday when he had no right to

So you have to take that into account

I don't see any reason to believe PML-N would have fared better If put up against this

 

[godzilla]

basically there is absolutely no doubt from the black and white statistics available to anyone who wants to look for them online that both governments have been speeding the country towards the edge of a cliff. its not a question of if, its a question of when at this point.

the only legitimate reason for taking on debt, is if its used to invest in the economy so that the economic returns then pay back that debt and create more to boost to sustain a growing population. thats not the case in pakistan. building pointless roads does not address the fact that exports are not only not growing, but are in freefall. there is no investment of any substance in education, which is the most fundamental building block of economic productivity, the issue of taxes is of course what it is, so theres no revenue generated to pay for eduction which would generate human capital to generate economic return to payback the mountain of debt. the alternative is becoming a slave state to other larger countries that hold the debt (cf greece) and/or becoming a failed state.

with each passing year of economic mismanagement, it will take that much longer for a recovery, whilst pakistans peers continue to fly farther and farther ahead.

i think its beyond any rational doubt that both these political leaderships have almost irreparably destroyed the future of the country.

 

[Slog]

Where have I praised PPP. Read my whole post

Both governments have borrowed intensely which is never a good thing

But PML-N (there is corruption Ofcourse as it is a corrupt family run mafia) is using some of that debt to fund infrastructure projects

Also
Musharraf presided over there energy collapse

basically there is absolutely no doubt from the black and white statistics available to anyone who wants to look for them online that both governments have been speeding the country towards the edge of a cliff. its not a question of if, its a question of when at this point.

the only legitimate reason for taking on debt, is if its used to invest in the economy so that the economic returns then pay back that debt and create more to boost to sustain a growing population. thats not the case in pakistan. building pointless roads does not address the fact that exports are not only not growing, but are in freefall. there is no investment of any substance in education, which is the most fundamental building block of economic productivity, the issue of taxes is of course what it is, so theres no revenue generated to pay for eduction which would generate human capital to generate economic return to payback the mountain of debt. the alternative is becoming a slave state to other larger countries that hold the debt (cf greece) and/or becoming a failed state.

with each passing year of economic mismanagement, it will take that much longer for a recovery, whilst pakistans peers continue to fly farther and farther ahead.

i think its beyond any rational doubt that both these political leaderships have almost irreparably destroyed the future of the country.

You are not answering the OPs questions

 

[godzilla]

Where have I praised PPP. Read my whole post

Both governments have borrowed intensely which is never a good thing

But PML-N (there is corruption Ofcourse as it is a corrupt family run mafia) is using some of that debt to fund infrastructure projects

Also
Musharraf presided over there energy collapse

my apologies if i misread - it seemed to me that you were passing on some of the credit where to my mind it wasnt due.

energy collapse was late 08, and according to the following, zardari came in in early 08, so musharraf was gone before the first energy collapse.

thats not that important though.

 

[Slog]

my apologies if i misread - it seemed to me that you were passing on some of the credit where to my mind it wasnt due.

energy collapse was late 08, and according to the following, zardari came in in early 08, so musharraf was gone before the first energy collapse.

thats not that important though.

That energy point is actually not true

Energy was a huge issue in Musharraf time. His government had next to no power projects installed despite rising demand

 

[godzilla]

You are not answering the OPs questions

i did - its energy.

just for some back of the envelope type numbers from the few moments of internet research:

pakistan crude oil net import needs - roughly 350,000 barrels per day. at about $50 a barrel at current prices, thats an outlay of between 650 and 700 bn rupees or about 6.5 bn usd. (https://www.eia.gov/beta/international/analysis.cfm?iso=PAK). reserves are declining, according to that report, i know for a fact (first hand) that historically they have had fourth rate companies come in to develop assets that have been invited because they have chosen to work with corrupt politicians.

to put a 6.5bn usd price tag in context, pakistan has 70bn of current usd debt. (http://www.tradingeconomics.com/pakistan/external-debt), has a current trade deficit of 2.2bn usd, and a budget deficit last year of about 14bn usd.

so energy has a massive impact on pakistan's economic measures, and these governments have failed criminally in addressing that. note that pakistan is estimated to have over a 100 trillion cubic feet of natural gas reserves in shale alone (thats a reasonably large amount, not incredibly large), but they have done virtually nothing to extract it.

 

[godzilla]

That energy point is actually not true

Energy was a huge issue in Musharraf time. His government had next to no power projects installed despite rising demand

are you talking about energy problems in the country or global energy price collapses? they are not the same thing necessarily. my post was about global prices and was factually absolutely correct. if you are talking about power projects - thats a secondary issue, you have to power powers stations, if you dont have oil and gas, how do you do that? theres only so much hydro that is available, and its a tiny proportion. far more important that building power stations you cant afford to run is securing energy assets, like two other very large energy poor (from the point of view of reserves) countries over the past decade have done - india and china. because they are both run in far more competent ways, their governments went out buying energy leases, production and companies globally over the past decade or so. china too has build strategic oil reserves to protect against energy price spikes. this is the kind of thing a well run government does.

 

[Slog]

i did - its energy.

just for some back of the envelope type numbers from the few moments of internet research:

pakistan crude oil net import needs - roughly 350,000 barrels per day. at about $50 a barrel at current prices, thats an outlay of between 650 and 700 bn rupees or about 6.5 bn usd. (https://www.eia.gov/beta/international/analysis.cfm?iso=PAK). reserves are declining, according to that report, i know for a fact (first hand) that historically they have had fourth rate companies come in to develop assets that have been invited because they have chosen to work with corrupt politicians.

to put a 6.5bn usd price tag in context, pakistan has 70bn of current usd debt. (http://www.tradingeconomics.com/pakistan/external-debt), has a current trade deficit of 2.2bn usd, and a budget deficit last year of about 14bn usd.

so energy has a massive impact on pakistan's economic measures, and these governments have failed criminally in addressing that. note that pakistan is estimated to have over a 100 trillion cubic feet of natural gas reserves in shale alone (thats a reasonably large amount, not incredibly large), but they have done virtually nothing to extract it.

Yea but this energy problem was there during Musharraf last few years as well

Just compare the energy shortfall in his period. Ofcourse PPP didn't remotely take any significant measures to solve it

 

[anakin]

I don't know much about politics, infact, i barely have any idea about it, but i do know is that economic and foreign policies play a big part for the political govts support.

Ever since PMLN's govt came into power, Pakistan's has faced disinflation. The rate of inflation has continuously decreased since 2013. Back in 2009, the country was near hyper inflation, but PMLN's govt has moved the rate of inflation near to stable inflation. Infact, Pakistan also experienced stable inflation a couple of months ago aswell.

Although i understand that while the inflation is still in the positive, the prices of products don't decrease(rate of inflation should be in negative), but the prices haven't also increased aswell.

Also, how much of a factor does the role of decreasing oil prices play here? What if the factor behind the decreasing rate of inflation is the oil prices. The cost of production decreasing, thus moving our country out of the cost push inflation due to the oil prices.

Also, seeing that our rate of inflation is at 5%, is it possible that we could see a negative rate of inflation in the near future? Could the general price level finally start decreasing?

But if the general price level decreases, will PMLN lose its support from the business community? Because stable inflation allows them to still charge high price, while deflation forces them to reduce prices. Thus, will PMLN allow deflation to take place?

I believe your understanding of inflation and economic development is on the wrong lines.

Inflation is not an evil thing as it is made out to be. on the other Deflation is certainly a gloom time for the countries economy. Deflation will lead to recession and loss of jobs and widespread discontent. While the costs have gone down, so has the purchasing power of the public. Which in Pakistan's case depends heavily on the remittances from the Gulf countries.

A government cannot simply force declare an inflation value for the economy! They can only exercise a very limited control on it.

 

[Bewal Express]

basically there is absolutely no doubt from the black and white statistics available to anyone who wants to look for them online that both governments have been speeding the country towards the edge of a cliff. its not a question of if, its a question of when at this point.

the only legitimate reason for taking on debt, is if its used to invest in the economy so that the economic returns then pay back that debt and create more to boost to sustain a growing population. thats not the case in pakistan. building pointless roads does not address the fact that exports are not only not growing, but are in freefall. there is no investment of any substance in education, which is the most fundamental building block of economic productivity, the issue of taxes is of course what it is, so theres no revenue generated to pay for eduction which would generate human capital to generate economic return to payback the mountain of debt. the alternative is becoming a slave state to other larger countries that hold the debt (cf greece) and/or becoming a failed state.

with each passing year of economic mismanagement, it will take that much longer for a recovery, whilst pakistans peers continue to fly farther and farther ahead.

i think its beyond any rational doubt that both these political leaderships have almost irreparably destroyed the future of the country.

Argued this point on many occasions on this forum. The debt will be a noose around the neck of the poor( the ones who don't have daddy paying for flats abroad) for generations to come. With population predicted to double again in the next 60 years we are in for interesting times.

 

[Yossarian]

Generally a very good post overall - except for the following passing remark

... building pointless roads ....

A half-decent transport infrastructure, especially roads, is the single most important aspect of any successful economy.
Decent roads and a widespread road insfrastructure:
* Facilitates the movement of people and goods.
* Facilitates trade
* Opens up isolated villages and communities to the rest of the country.
* Increases the prospect of developing and locating production facilities, from sugar mills to oil refineries, closer to the supply sources. This also increases local employment prospects whilst also boosting the local economies.
* Reduces wear and tear on cars, buses, trucks and every other form of road transportation.
* Reducea accidents, and the resulting injuries and deaths.
*
The list is endless.....

 

[Major]

[MENTION=138463]Slog[/MENTION]

so i have few question

So does a country never experience the phenomena where deflation comes, and now a 1.5 pepsi bottle which is for 85 rupees, falls down to 50 rupees?

As for the debt, isn't that a characteristic of a developing country? and will stay that way until it employs certain policies.

I understand that deflation has its negatives aswell, with job losses and cost cutting and all, but does the phenomena of price cutting by large margins ever take place?


Also, if IMF takes over the economy, does that benefit us or destroy us more?

 

[Bewal Express]

Generally a very good post overall - except for the following passing remarkA half-decent transport infrastructure, especially roads, is the single most important aspect of any successful economy.
Decent roads and a widespread road insfrastructure:
* Facilitates the movement of people and goods.
* Facilitates trade
* Opens up isolated villages and communities to the rest of the country.
* Increases the prospect of developing and locating production facilities, from sugar mills to oil refineries, closer to the supply sources. This also increases local employment prospects whilst also boosting the local economies.
* Reduces wear and tear on cars, buses, trucks and every other form of road transportation.
* Reducea accidents, and the resulting injuries and deaths.
*
The list is endless.....

You are right about roads buy ultimate success or failure of the economy will be the development of its people. Can you name any successful economies with uneducated people?

 

[Slog]

[MENTION=138463]Slog[/MENTION]

so i have few question

So does a country never experience the phenomena where deflation comes, and now a 1.5 pepsi bottle which is for 85 rupees, falls down to 50 rupees?

Countries do (I think Japan had it for a while) but it usually is not a good sign because it means that economic activity in the country is stagnating. Actually a little bit of inflation (2% or so) is a good thing and a sign of a growing economy because it means that there is growth in production and there is demand for the new products.

Deflation usually occurs in or post an economic recession when economic output slows and customers do not want to buy. There is usually a spiral effect because people know that the prices of assets are declining so they prefer to hold onto their liquid money rather than spending it knowing that the prices of assets they own are reducing and what they buy now will have lower value in the future due to deflation.

Only time deflation can be considered somewhat good is in prices of oil/energy and maybe food staples but even then its better for it to be stable.

There are reduction in prices of imported goods if the local currency appreciates as well

But as I said the best indicator is there to be a nominal 2-3% inflation, with 6-7% economic growth in a developing economy.

As for the debt, isn't that a characteristic of a developing country? and will stay that way until it employs certain policies.

Debt isnt a bad thing and in fact most developed countries are highly leveraged

The problem with developing countries usually is that we end up taking too much debt and do not spend it properly on projects which give us economic returns.

But debt isnt Pakistan's biggest problem in all honesty eventhough the way we are loading up debt is beyond reckless and even now we are in a spiral where we end up taking more debt every year to pay off interest costs on previously drawn debt.

I understand that deflation has its negatives aswell, with job losses and cost cutting and all, but does the phenomena of price cutting by large margins ever take place?

Unlikely. Unless its imported goods.

Also, if IMF takes over the economy, does that benefit us or destroy us more?

Thats a long long debate.

Many academics feel that they impose stringent conditions and make governments follow policies which hurt the average person in the country due to budget cuts, removal of subsidies etc etc. The reason is that IMF wants to impose conditions which make the country have the best chance of being in a position to repay the loan and fulfil the financing costs. And if need be, come to IMF again.

However I think despite sometimes draconian measures, IMF can be good for some third world countries which are riddled with corruption and ineptness. For countries like Pakistan, the IMF danda sometimes keeps the federal government in check and holds it to some accountability.

But the end aim of IMF is to show some numerical improvement and ensure it gets its loan back at the IRR it set to achieve. It certainly isnt a charity organizations and mainly exists to make money.

 

[Slog]

Generally a very good post overall - except for the following passing remarkA half-decent transport infrastructure, especially roads, is the single most important aspect of any successful economy.
Decent roads and a widespread road insfrastructure:
* Facilitates the movement of people and goods.
* Facilitates trade
* Opens up isolated villages and communities to the rest of the country.
* Increases the prospect of developing and locating production facilities, from sugar mills to oil refineries, closer to the supply sources. This also increases local employment prospects whilst also boosting the local economies.
* Reduces wear and tear on cars, buses, trucks and every other form of road transportation.
* Reducea accidents, and the resulting injuries and deaths.
*
The list is endless.....

The issue is what roads are being built.

Unfortunately most roads built by Sharif brothers are white elephants without much utility and economic gain.

Sure if its was on a trade route or connecting important economic zones then there would have been utility. But a fancy motorway connecting Islamabad to Lahore or Lahore to Raiwind will only be used by a select few.

 

[Major]

Countries do (I think Japan had it for a while) but it usually is not a good sign because it means that economic activity in the country is stagnating. Actually a little bit of inflation (2% or so) is a good thing and a sign of a growing economy because it means that there is growth in production and there is demand for the new products.

Deflation usually occurs in or post an economic recession when economic output slows and customers do not want to buy. There is usually a spiral effect because people know that the prices of assets are declining so they prefer to hold onto their liquid money rather than spending it knowing that the prices of assets they own are reducing and what they buy now will have lower value in the future due to deflation.

Only time deflation can be considered somewhat good is in prices of oil/energy and maybe food staples but even then its better for it to be stable.

There are reduction in prices of imported goods if the local currency appreciates as well

But as I said the best indicator is there to be a nominal 2-3% inflation, with 6-7% economic growth in a developing economy.


Debt isnt a bad thing and in fact most developed countries are highly leveraged

The problem with developing countries usually is that we end up taking too much debt and do not spend it properly on projects which give us economic returns.

But debt isnt Pakistan's biggest problem in all honesty eventhough the way we are loading up debt is beyond reckless and even now we are in a spiral where we end up taking more debt every year to pay off interest costs on previously drawn debt.




Unlikely. Unless its imported goods.



Thats a long long debate.

Many academics feel that they impose stringent conditions and make governments follow policies which hurt the average person in the country due to budget cuts, removal of subsidies etc etc. The reason is that IMF wants to impose conditions which make the country have the best chance of being in a position to repay the loan and fulfil the financing costs. And if need be, come to IMF again.

However I think despite sometimes draconian measures, IMF can be good for some third world countries which are riddled with corruption and ineptness. For countries like Pakistan, the IMF danda sometimes keeps the federal government in check and holds it to some accountability.

But the end aim of IMF is to show some numerical improvement and ensure it gets its loan back at the IRR it set to achieve. It certainly isnt a charity organizations and mainly exists to make money.

Some people often blame a part of the ZImbabwe economic crises on the IMF plan they had set for them.


Also, so apprently, reduction of prices and all are more linked with the business environment and very little to the economic theory? THe only economic theory that could come into place here is Trade agreements, multinationals and importing?

 

[Slog]

Some people often blame a part of the ZImbabwe economic crises on the IMF plan they had set for them.


Also, so apprently, reduction of prices and all are more linked with the business environment and very little to the economic theory? THe only economic theory that could come into place here is Trade agreements, multinationals and importing?

Not really.

One of the text book economic theories to tackle inflation is to increase the interest rate so that people save money rather than spend it. And as a result reduced demand would slow down price increase.

This is what happened. In 2008-09 Pakistan had 20+% inflation rate so the State Bank increased the policy rate to over 14% at the time. So slowly inflation was brought under control but as everyone (industries, individuals) was saving rather than spending we didn't see much economic growth.

And now that the inflation is brought down to a sustainable level gradually the interest rate has been brought down. Just last week SBP cut the policy rate further and now its 5.75% i think.

So technically economic theory worked here

 

[Yossarian]

You are right about roads buy ultimate success or failure of the economy will be the development of its people. Can you name any successful economies with uneducated people?

Can you name any successful economies without a transport infrastructure? As for your education comment, schools aren't just for the populations of large urban conurbations. Remote communities and villages too need schools, which need teachers, which in turn needs successful local economies and transport links in order to generate the taxation to pay for the teachers and build the schools.

Apart from the benefits already listed, the building of roads and bridges also creates large scale employment by kick starting many other industries, and their support services, that are required to provide the machinery and raw materials for such large projects. Put simply, a decent transport infrastructure is the life-blood of economies, it's the veins and arteries that keep the blood flowing to the rest of the body and stop the body from dying.

 

[godzilla]

http://labs.tribune.com.pk/game-of-numbers-2/

thats an excellent article today about this issue, and how much of the fanfare around this government's economic successes is smoke and mirrors, and that there are serverely worrying underlying trends. thats why the debt number is so important - that doesn't get revised down like teh FBR or GDP numbers do. some quotes:

"Revenues recorded are always less than stated in the law (budget) but what’s worse is that some of the decrease happens because the finance minister and the Economic Coordination Committee (ECC) of the Cabinet hand out tax exemptions as protests and lobbying influence gather pace."

"Unaware of its importance, parliamentarians happily agree to a summary debate on the budget of about two weeks. In this short duration, no aspect of the budget is seriously discussed, let alone those supplementary grants that are announced."

"The worst element of the taxation part of the budget is that the annual collection target is set on flowery assumptions. The FBR does not bother to ask its field formations to conduct a survey to figure out whether businesses are doing well in their jurisdictions. Due to this faulty exercise, authorities end up levying new taxes to meet targets besides blocking taxpayers’ refunds.

The last three budgets from June 2013 to June 2015 are classic examples of a robotic budget-making exercise. The finance ministry and the FBR have failed to meet their targets in any of the years.

In the last three years, the FBR has imposed Rs940 billion in additional taxes. The impact of nominal GDP growth on the measures taken in the past is in addition to Rs940 billion. However, the actual tax collection grew far less than this figure, exposing the hollowness of the procedure.

There have been no major developments in the past three exercises. The finance minister will, each year, deliver hours-long speech highlighting the government’s ‘achievements’ and making tall claims about the upcoming year. No one bothers to track the progress of these claims, which cannot be independently verified either."

"In 2014, the total numbers of income tax filers was 1.199 million, which in 2015 slipped to just 980,155. As many as 219,840 slipped from the FBR net in just one year, suggesting that the policy of broadening the tax base by increasing the cost of non-compliance has backfired.

The PML-N government had come into power on the promise of reducing the standard General Sales Tax (GST) rate, which at that time was 16%. However, immediately after assuming office, the government announced to increase the rate to 17%, suggesting it could not come up with any out-of-the-box solution."

the pmln like the pp before it, has been an unmitigated disaster. but unfortunately, since these things are beyond the scope of the layman: ego, jingoism and paid support will obfuscate the ground reality that a swelling morass of poison in seeming out of the ground. it will be exactly like greece, when all the the rich and corrupt will have fled with all the spoils, corporations would have run off with the larger share due to corrupt political dealings, and the average layperson will be left to carry the immense burden of a sovereign bankruptcy.

 

[Bewal Express]

By the time the poor educated Nooras and their educated co-conspirators realise that the elite in the form of Sharifs and Bhutto Zardari is worse than all our foreign enemies could manage, it will be too late.

 

[Syed1]

By the time the poor educated Nooras and their educated co-conspirators realise that the elite in the form of Sharifs and Bhutto Zardari is worse than all our foreign enemies could manage, it will be too late.

Dost, do not get your hopes up to high. The second generations from both families are lining up to take their God given right of ruling Pakistan. If I were a long term stalwart of PML-N/PPP I'd be very annoyed that my 20-30 years of service is useless and this "kal ka bacha" is the head of the party just because of his/her last name.


In Pakistan we do not have democracy, instead we have elected dictatorship.

 

[the Great Khan]

i can predict another massive desire to run off to the IMF with a begging bowl to to stave off a bankruptcy. Then the kicker with appear! give up your very expensive nuclear program and we will give you loans to avoid starvation and sovereign default.

When Modi lifts the tri colour over lahore fort as part of some lease agreement to make money then and only then will the nation wake up. But by then it will be too late!!

 

[Bewal Express]

Dost, do not get your hopes up to high. The second generations from both families are lining up to take their God given right of ruling Pakistan. If I were a long term stalwart of PML-N/PPP I'd be very annoyed that my 20-30 years of service is useless and this "kal ka bacha" is the head of the party just because of his/her last name.


In Pakistan we do not have democracy, instead we have elected dictatorship.

You are right but the same people that vote these crooked family businesses because they built a road with borrowed money are the same idiots who moan about corruption.

 

[street cricketer]

i can predict another massive desire to run off to the IMF with a begging bowl to to stave off a bankruptcy. Then the kicker with appear! give up your very expensive nuclear program and we will give you loans to avoid starvation and sovereign default.

When Modi lifts the tri colour over lahore fort as part of some lease agreement to make money then and only then will the nation wake up. But by then it will be too late!!

What do you mean by "another"?
What happened during the first time?

When a country isn't able to repay its loans, doesn't the IMF cut off the lending?

 

[the Great Khan]

What do you mean by "another"?
What happened during the first time?

When a country isn't able to repay its loans, doesn't the IMF cut off the lending?

during the worldwide credit crunch we got asif ali zardari and within a few months of coming to power the countries reserves fell to dangerous levels. As a result a country that upto that point had managed to pay back IMF loans and was growing at almost 7% a year was sent back twenty years and forced to ask the IMF for a bailout package.

we will be in the same position again soon at this rate..

 

[The Last Of The Stars]

To hell with inflation or deflation, provide basic necessities to each and every Pakistani first then we should give them any credit.

 

[Asim2Good]

what about loans taken by PML-N during last couple of years
how much those loans helped in bringing down inflation ?

 

[JaDed]

Dost, do not get your hopes up to high. The second generations from both families are lining up to take their God given right of ruling Pakistan. If I were a long term stalwart of PML-N/PPP I'd be very annoyed that my 20-30 years of service is useless and this "kal ka bacha" is the head of the party just because of his/her last name.


In Pakistan we do not have democracy, instead we have elected dictatorship.

Elected Monarchy ,it happens across SC and not only in Politics but Bollywood,Businesses as well.

 

[Hamza_]

Our economy is in shackles. Barely anyone emphasizes over it whilist all the credit is given to social issues like education, health, religion.etc

 

[Bewal Express]

Exposed
Blatant lies about the growth rate as predicted by me a few weeks back.

 

[shah_1]

The issue is what roads are being built.

Unfortunately most roads built by Sharif brothers are white elephants without much utility and economic gain.

Sure if its was on a trade route or connecting important economic zones then there would have been utility. But a fancy motorway connecting Islamabad to Lahore or Lahore to Raiwind will only be used by a select few.

The motorways are built on BOT basis.

Karachi-Lahore Motorway that is under construction is useless? It takes around 4.5- 5 hours to Manshera from Islamabad and after Hazara motorway is completed, the journey time will cut down to 2 hours.

Building motorway is the best thing N league has done.

 

[Analyst]

I don't know much about politics, infact, i barely have any idea about it, but i do know is that economic and foreign policies play a big part for the political govts support.

Ever since PMLN's govt came into power, Pakistan's has faced disinflation. The rate of inflation has continuously decreased since 2013. Back in 2009, the country was near hyper inflation, but PMLN's govt has moved the rate of inflation near to stable inflation. Infact, Pakistan also experienced stable inflation a couple of months ago aswell.

Although i understand that while the inflation is still in the positive, the prices of products don't decrease(rate of inflation should be in negative), but the prices haven't also increased aswell.

Also, how much of a factor does the role of decreasing oil prices play here? What if the factor behind the decreasing rate of inflation is the oil prices. The cost of production decreasing, thus moving our country out of the cost push inflation due to the oil prices.

Also, seeing that our rate of inflation is at 5%, is it possible that we could see a negative rate of inflation in the near future? Could the general price level finally start decreasing?

But if the general price level decreases, will PMLN lose its support from the business community? Because stable inflation allows them to still charge high price, while deflation forces them to reduce prices. Thus, will PMLN allow deflation to take place?

Petrol/CNG/Diesel have around 7% weight in CPI!! and it also have an indirect impact on food inflation as transport cost goes down!! So its true that oil prices have played their part. Also, aggregate demand has remained muted due to internal and external factors

 

[godzilla]

its starting....

http://tribune.com.pk/story/1278792/govt-may-increase-oil-prices-rs6-93-per-litre/

"govt-may-increase-oil-prices-rs6-93-per-litre"

just for some context, not that anyone expects a return to the oil price highs, but just to see how much more risk there is to increased costs for the general pubic by increasing fuel costs ( a tax on the poor so to speak), i attach a chart of oil prices over the past decade from: http://www.nasdaq.com/markets/crude-oil.aspx?timeframe=10y

what this means is a cost increase to the consumer for everything from heating, cooling, food, transport, everything. consequently it will cause an economic headwind which together with tax cuts for the rich, and industry like real estate, will mean lower tax revenue, increased trade balance deficit, increased debt, and so on.

the journey to becoming greece is taking the very predictable path that many of us have predicted.

 

[Mamoon]

I hope those who are calling motorways useless will not be using them for their convenience and lead by example.

 

[Syed1]

I hope those who are calling motorways useless will not be using them for their convenience and lead by example.

First bring the motorway to Karachi then we will use it. Right now it concentrated only in and around beloved Punjab.

 

[Mamoon]

I won't

Also really poor logic.

Good on you, but the motorway has made commuting between Lahore, Islamabad/Rawalpindi and Peshawar (including outskirts) very convenient, so it's not something that should be criticized. Other problems will always be there, and there will always be more important priorities, but you have to cater to these needs/wants as well.

When the London Underground was built in 1863, the economy of Great Britain was not really prospering either, it was in the middle of the cotton famine. I'm sure there would have been more important priorities at that time.

 

[Mamoon]

First bring the motorway to Karachi then we will use it. Right now it concentrated only in and around beloved Punjab.

Only a matter of few years.

 

[HussainRx8]

But if the general price level decreases, will PMLN lose its support from the business community? Because stable inflation allows them to still charge high price, while deflation forces them to reduce prices. Thus, will PMLN allow deflation to take place?

Why would you want deflation? Deflation is considered more pernicious than moderate inflation in monetary economics. It's like asking for cancer (if I may borrow a medical analogy).

Inflation doesn't mean they're charging a higher price for a higher profit margin. It means the costs of their inputs have gone up. More specifically, the marginal cost of production.

 

[Haroon786]

Is the motorway in question, linked to AJK ?

 

[HussainRx8]

Why would you want deflation? Deflation is considered more pernicious than moderate inflation in monetary economics. It's like asking for cancer (if I may borrow a medical analogy).

Inflation doesn't mean they're charging a higher price for a higher profit margin. It means the costs of their inputs have gone up. More specifically, the marginal cost of production.

Let me also add that some inflation in Pakistan is associated with high levels of cartelization in primary goods. They have too much market power. Competition Commission of Pakistan (CCP) has completely failed at antitrust enforcement.

 

[godzilla]

the inevitable is continuing to unfold.

http://tribune.com.pk/story/1289332/plunging-exports-cause-trade-deficit-widen-14-5b/

if you've got assets in pakistan and can take them out, start arranging for getting them out!

http://tribune.com.pk/story/1289332/plunging-exports-cause-trade-deficit-widen-14-5b/

"The gap between exports and imports during July-December period of fiscal year 2016-17 stood at $14.5 billion, reported the Pakistan Bureau of Statistics (PBS) on Monday. The trade deficit was alarmingly 71% of the annual projections of $20.5 billion, suggesting that the government will face serious problems in meeting its external account targets."

id love to hear from some of the pmln supporters how they can justify supporting a government so inept it is literally driving the country off a cliff at an accelerating rate.

"For fiscal year 2016-17, the government has projected exports would grow to $24.75 billion and imports bill may remain at $45.2 billion by end of this fiscal year. It had projected $20.5 billion trade deficit for the whole fiscal year. However, the six-month result showed that the deficit may touch $24 billion by end of the fiscal year, as the trade deficit in July-December period was 70.7% of the annual target.

The government closed the last fiscal year 2015-16 at an eight-year low level of exports, which dropped to $20.8 billion despite preferential access to European markets. The exports have been declining since the current government took over, falling from $24.5 billion in 2012-13."

 

[TalentSpotterPk]

I don't know much about politics, infact, i barely have any idea about it, but i do know is that economic and foreign policies play a big part for the political govts support.

Ever since PMLN's govt came into power, Pakistan's has faced disinflation. The rate of inflation has continuously decreased since 2013. Back in 2009, the country was near hyper inflation, but PMLN's govt has moved the rate of inflation near to stable inflation. Infact, Pakistan also experienced stable inflation a couple of months ago aswell.

Although i understand that while the inflation is still in the positive, the prices of products don't decrease(rate of inflation should be in negative), but the prices haven't also increased aswell.

Also, how much of a factor does the role of decreasing oil prices play here? What if the factor behind the decreasing rate of inflation is the oil prices. The cost of production decreasing, thus moving our country out of the cost push inflation due to the oil prices.

Also, seeing that our rate of inflation is at 5%, is it possible that we could see a negative rate of inflation in the near future? Could the general price level finally start decreasing?

But if the general price level decreases, will PMLN lose its support from the business community? Because stable inflation allows them to still charge high price, while deflation forces them to reduce prices. Thus, will PMLN allow deflation to take place?

Because Ary, Samaa & Bol Tv had 90 % of ISI Political wing trained servants like Amir Liaqat, Hamza Ali Abbass, Arif Hameed Bhatti, Sabir Shakir, Sami Ibrahim etc etc who were ordered never to appreciate PML N because of its leaders struggle for civilian supremacy in Pakistan and

Social media was in the hands of paid employees of Jahangir Khan Tareen who sold lies to this Nation.


Media and Social media brainwashed average Pakistani with lies and allegations while courts with PCO infected judges bowed in front of General headquarters Rawalpindi Pakistan.



From Dawn Leaks to Iqama Panama drama to Model town and London Plan everything is getting exposed. Conspiracies are getting exposed with every day.



Now people are quickly realising the delivery of PML N government.



1. Electricity rate increased.

2. Gas rate increased

3.CNG rate increased

4. Petrol, Diesel rate increased.


Hence eatables prices have increased aswell and stable inflation is gone down the drain.

 

[TalentSpotterPk]

<blockquote class="twitter-tweet"><p lang="en" dir="ltr"><a href="https://twitter.com/hashtag/MehangaiKaBojh?src=hash&ref_src=twsrc%5Etfw">#MehangaiKaBojh</a><br>Is it only me or has anyone else also noticed the sharp increase in electricity bills? &#55357;&#56900;</p>— Sa`ad Mohamed &#55356;&#56821;&#55356;&#56816; سعد محمد بن ظفر (@DesiMountaineer) <a href="https://twitter.com/DesiMountaineer/status/1046324131816493056?ref_src=twsrc%5Etfw">September 30, 2018</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
Day to Day Life in NayaPakistan under Establishment’s subservient stooge [MENTION=140234]DRsohail[/MENTION]

 

[TalentSpotterPk]

Life in fake Medina ki Riasatt with lies and fake promises of Trump.2


<blockquote class="twitter-tweet"><p lang="en" dir="ltr">Grocery ke le jao tu almost sab chezen pehle se mehengi horahy ha. consumer rights ka na companies ku pata ha na awam ko. Hope New Gov takes notice and give some relief and control on prices <a href="https://twitter.com/hashtag/MehangaiKaBojh?src=hash&ref_src=twsrc%5Etfw">#MehangaiKaBojh</a></p>— Abdul Ghaffar (@GhaffarDawnNews) <a href="https://twitter.com/GhaffarDawnNews/status/1046331984866414592?ref_src=twsrc%5Etfw">September 30, 2018</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

 

[TalentSpotterPk]

IK gov has proposed 40 # increase in CNG prices


<blockquote class="twitter-tweet"><p lang="en" dir="ltr">CNG is produced in Pakistan yet it is quite expensive. And now the 40% increase will make it unaffordable for a common man.<a href="https://twitter.com/hashtag/MehangaiKaBojh?src=hash&ref_src=twsrc%5Etfw">#MehangaiKaBojh</a></p>— Aphrodite ☭ (@TheGrumpyDoctor) <a href="https://twitter.com/TheGrumpyDoctor/status/1046328692555862016?ref_src=twsrc%5Etfw">September 30, 2018</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

 

[Bewal Express]

<blockquote class="twitter-tweet"><p lang="en" dir="ltr"><a href="https://twitter.com/hashtag/MehangaiKaBojh?src=hash&ref_src=twsrc%5Etfw">#MehangaiKaBojh</a><br>Is it only me or has anyone else also noticed the sharp increase in electricity bills? ��</p>— Sa`ad Mohamed ���� سعد محمد بن ظفر (@DesiMountaineer) <a href="https://twitter.com/DesiMountaineer/status/1046324131816493056?ref_src=twsrc%5Etfw">September 30, 2018</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
Day to Day Life in NayaPakistan under Establishment’s subservient stooge [MENTION=140234]DRsohail[/MENTION]

It shows you economic iliiteracy that you blame IK for the increase in utility prices. The country is bankrupt and who bankrupted it? Yes it was your Nooras? Who ran up the 8% budget deficit and then lied about it? Why did Ishaq Dar the Finance Minister go on the run?

 

[Bewal Express]

Because Ary, Samaa & Bol Tv had 90 % of ISI Political wing trained servants like Amir Liaqat, Hamza Ali Abbass, Arif Hameed Bhatti, Sabir Shakir, Sami Ibrahim etc etc who were ordered never to appreciate PML N because of its leaders struggle for civilian supremacy in Pakistan and

Social media was in the hands of paid employees of Jahangir Khan Tareen who sold lies to this Nation.


Media and Social media brainwashed average Pakistani with lies and allegations while courts with PCO infected judges bowed in front of General headquarters Rawalpindi Pakistan.



From Dawn Leaks to Iqama Panama drama to Model town and London Plan everything is getting exposed. Conspiracies are getting exposed with every day.



Now people are quickly realising the delivery of PML N government.



1. Electricity rate increased.

2. Gas rate increased

3.CNG rate increased

4. Petrol, Diesel rate increased.


Hence eatables prices have increased aswell and stable inflation is gone down the drain.

And ran up the 8% budget deficit, yes it was the Nooras, who cooked the books, yes it was the Nooras. IK is a leader and has taken the tough decisions, whilst your crooks ran from the decisions their incompetence should have brought.

 

[Maverick84]

Lol idiots dints realize whatever steps Imran Khan is taking right now is due to the mess left by NS government. Prices are increased to cover the losses left by PMLN government

 

[TalentSpotterPk]

Inflation rose to 8.2 % in February 2019.

In January it was 7.2 %.



The average inflation in year 2018 was 3.92pc while in 2017 it was 4.16.


While the average inflation from August to February is 6.46pc.



4 year's record broken.

 

[Hamza_]

While unemployment is increasing as well.

This is alarming.
[MENTION=138980]TalentSpotterPk[/MENTION]

 

[TalentSpotterPk]

While unemployment is increasing as well.

This is alarming.

[MENTION=138980]TalentSpotterPk[/MENTION]

Bhai don't worry at all.



Keep reminding yourself that 5 million new homes & 1 Crore new jobs will solve everything.



Be Positive

 

[Hamza_]

[MENTION=138980]TalentSpotterPk[/MENTION]

This is like using Panadol for Pnemunia.