The path out of Pakistan's economic crisis
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- Опубліковано 25 чер 2024
- In this episode, we continue our focus on Pakistan’s economic crisis and discuss the way out of it with Dr. Ahmed Pirzada. Dr. Ahmed Pirzada is an Assistant Professor at the University of Bristol, UK. He is also a Fellow of the Higher Education Academy, UK, and the Chair of the independent Economic Advisory Group (EAG), Pakistan.
He specialises in macroeconomics with a focus in monetary policy, and the conversation dives a bit deeper into what he sees as the main drivers of the crisis, the way out of it, and why debt restructuring may be a decent option.
You should read the EAG’s latest press release on this at this link: eag.org.pk/eag-advises-debt-r...
Chapters:
0:00 Introduction
1:20 What caused this crisis?
19:37 What decisions exacerbated the crisis recently?
28:30 Distorted exchange rate
35:21 Debt restructuring need
45:30 Painful adjustments in the economy
51:11 Reading recommendations
Reading Recommendations:
- This time is different by Carmen Reinhart and Kenneth Rogoff
- Quantum Enigma by Bruce Rosenblum and Fred Kuttner
- The history of western philosophy by Bertrand Russell
Nothing complex or rocket science...
Pakistan's obsession with Kashmir has brought it to bankcruptcy.
Pakistan always took India as an enemy and an immenent threat to its very existence, despite the reality being all 4 wars were started by Pakistan.
Because of this thought Pakistan maintains a very big army.
This army takes away a major chunk of its GDP
By trying to stay and maintain its competativeness vis-a-vis India Pakistan purchases more arms compared to its earning.
Funding terrorists is another big reason for this chaos.
Dual citizenship is also a main reason as most affluent swindle money and move outside.
But still Pakistani's dont want to discuss the core issue.
Just look at the topic being discussed in this very video.
Discuss and accept reality.
If they accept the core issues that you mentioned, they would then loose the VERY REASON for their existence.
Truth & Reality is a poison for them.
Pakistan has bought roughly 20 billion dollars of foreign weapons while being on the IMF program. Also it is very clear that this is a real estate driven consumption growth which the participants mention only in passing. Any corrective measures will cause a recession in the real estate sector which will cause a lot of pain. I guess generals and politicians holding real estate assets are against such a correction which seems to be core cause of the problem.
Pakistan survived so far on foreign aid and loans. So future is very clear.
we need to make sure PAK collapse and close our borders permanently
Its called KARMA.These Muslims stole our Hindu land ,destroyed it and killed Hindus.Now God is punishing them
But this cannot continue forever
No country can progress economically on foreign remittances by overseas citizens.
These remittances are like extra change in Country's kitty.
Those who send money back home send less money if Forex rates increase. The person in the country receives same amount in local currency.
@@R.kandaswamy very true
I learn a great deal of economics in a present context of our neibhourinh countries, Pakistan in perticular. I congratulate you for running a channel that serves its audience in multiple ways. Thanks a ton ..!
Informative video.
One thing I don't see is that Pakistani economists don't talk about the role of uncontrolled population growth on pulling the Pakistani economy down.
If one looks at the Total Fertility Rate (TFR) of a Pakistani woman, it is 3.3, which is much higher than the 2.1 needed to stabilize the population. Bangladesh, despite being an Islamic country, has brought down the TFR to less than 2. India also has reduced TFR to around 2.1.
The rate at which Pakistan's population is growing, it's per capita GDP will trail that of India and Bangladesh.
Purely from economic perspective; this growing population is also a sort of country's strength & attraction.
@@atahanafi6627
For that the population should be skilled also there should be particicpation of women too in economic development which is still not acceptable in pakistani society
unless the population is equipped with relevant skill nd each nd every adult populatin take part in economic development population growth is a burden for every country
WEEP
W- Water
E- Education
E- Economy
P- Population
@@rakeshkrishnan1099 45% of children do not go to school.
Probably one of the most informative and non biased reporter. Excellent podcast. A must for all Pak. stakeholders
So many brilliant Pakistani economists around the globe- when the Pakistani rulers and the army, listens to them and act of their guidance, their nation will prosper.
Beg Borrow or Steal is the way to go.
First two acts are being carried out presently. Will the 3rd kick in?
U r bringing different perspectives which are very good. Keeping in view our past monitory policy steps; it has not always been in line with the international market trends prevailing in those respective times. A lot of time our sbp has reduced interest rates when this was not the stance of other central banks of large established economies. Do u think that currently we need to push business & growth and for that our sbp should or may reduce interest rates regardless of the international trends.
Has CHINA sent investment as FDI into SBP or just invoiced the material/contracts /machinery as Investments and added to Pakistan’s Debt? Have funds ever touched Pakistan’s central bank ?
This guest is Rocket scientist. Selling old wine in new bottle 😂
Great work uzair Bhai
Well done but please make some videos of issues of dollar shortage and how long it will last make small and quantity wise videos
With due respect to both of you, how long a country can survive on loans, borrowings and donations?
With the increasing interest rates & depreciating PKR; the return on equity is gradually in reducing for any kind of investment.
Guests webcam audio is far better than professional host audio
The "truth". No BS.
jis ghar (house) or desh (country) ka kharch (spend) is significantly higher than it’s amdun (income) over a prolonged period, it has to fall ..
I didn't realize the level of security state Pakistan is until recently. Even after inflation in Pakistan, it didn't seem the prices(of commodities) are that bad for me. It's about the same cost here but people earn more here. The incomes are higher here.
Fascinating discussion .But isnt their an argument that reduing barrriers might de-industrialize at this point when electricity is so expensive and pakistani players wont be able to compete. Wouldnt it make more sense to open up when local infrastructure is more built up with CPEC and energy is cheaper?
If you open the market, people will import, dollar price will rise, making domestic production attractive and cheaper.
Both of you have good points.
Watching, Listening to the Pakistani UA-cam channels, one gets the feeling that living in Pakistan is like living in a Hell Hole. Living in America is not perfect.
Pakistan should adopt permanent bankruptcy system. Pakistan believes in Bankruptcy is Beautiful. Happy to be bankrupt. First file free moral bankruptcy then filing financial bankruptcy is no shame, no problem.
Pakistan has nothing to offer, in a world where globalization is coming to an end.
The status-quo will remain. The owners of the country will never relinquish the power.
It’s a country both morally and financially bankrupt. Makes me sad, I left in 88. Never went back.
Pakistan has no alternative to put Kashmir issue at the back burner for at least 15years Reduce cost on army drastically. Same will also reduce India's defence budget. Good for common people & spend money on development. Control hawks in Pakistan & maintain peace with India. With India's help only, Pakistan, s economy will stabilize. Let common sense come to politicians
Sorry to break your bubble. Issues here are more complex than that. The core issue is elites creating protected economy. The army and all are just extension of same problem. Kashmir now is only a 0.1% of big issue.
Dont waste time on things u dont want to understand.
India defence budget is not Pakistan centric but China centric. Kashmir is not the only issue between India and Pakistan, but also the terrorism and crores of Pakistani staying in India + Bangaldesh. Pakistani army indulging in businesses that is the main issue, not the defence budget.
Bhaag bhadddve
And then become equipped to fight jihad against Kafirs?
Incompetency and nepotism has delivered this to us in end .
Thank you, very informative. I have just subscribed.
Please also ask all your guest you interview, how normal Pakistanis like me can secure their savings from this inflation, without harming the country. I would rather not convert my saving to forex, or spend buying plots. Looking forward.
They are not personal finance experts. The best solution is to invest globally in stocks or have global assets. Read philosophy of John bogle. He suggested only to invest amount in your country in proportion to how big economy is in proportional to world economy. This is not very helpful for pak economy though.
Plot prices are going down and investors are loosing money even in investing in property. Also the depreciating pkr is continously eroding their investments
@@nacpatil Not sure about the others, but I had been reading, and hearing Ammar give personal finance advice through 2013~2016, pretty good advices, then he fell off the radar. That's why I asked the question.
@@atahanafi6627 So there is no way to keep the personal interest alligned with the country right now.
Maybe if people like you enter the parliament, it may lead to change! You guys need a people political movement without a traditional space. Time has come to disrupt power at all levels, local, regional and national.
Dont u think that one of the root cause for all these ecconomic mess is privitization adventure done by bhutto.
Secondly , we must also analyze that how india and argentina came out of there ecconomic crises especially india's 1992 use case must be closely studied for lessons learned.
Like the Nehruvian era, Bhutto's privatization was a bad economic decision. Unlike other countries, India was never part of any IMF program, it mortgaged gold to get loans from the IMF and then slowly and slowly started privatization and liberalization. It took India almost 30 years to sell Air India. In the subcontinent, reforms are hard to bring about. The Sikh farmers set up a protest in Delhi for almost a year, demanding free electricity, free water, the right to burn paddy grass, and a higher price for grains. The one-child policy, better education spending, and rapid industrialization allowed China to achieve this. Additionally, India has trade relationships with all of its neighbors, including Pakistan, only recently tariffs were imposed on imports from Pakistan and MFN status revoked (because Pakistan failed to reciprocate for more than 25 years). In addition, India is a far more liberal democracy than Pakistan, with clear industrial policies and an independent but inefficient court system that attracted foreign direct investment. India ran a successful campaign against Pakistan after the Kargil war, appealing to FDI to invest in India instead of Pakistan. It is mostly anti-China sentiments that are driving Indian FDI from 2022 onwards. Another issue with Pakistan is that army also run businesses, which also need to be privatised to attract FDI.
Learning from Kafirs is haraam! Their books and Universities must be burned down. Remember Nalanda.
I don't see people talking about the fact that the country has a low savings to GDP ratio hence in absence of FDI it needs to rely on debt to grow since there is a persistent GDP.
If I understand correctly, Pak8stan's savings to GDP ratio is 5% while that of India is 27%. Pakistan has 0.25 million retail accounts in Pakistsn, India has 100 million. This impacts how much money can be raised through IPO. Policies to encourage savings are missing in Pakistan. The government dissavings in Pakistan just add to the problem. Pakistan has never been attacked by India and it has a nuclear bomb. Why then does it spend 33% of its tax revenue on defense and that is not even counting the defense pensions.
The point that you mentioned about high protection to Pak industries is very valid because 50% of tax is collected through customs duty. In India this is 5%. How in the world will Pakistan be competitive in exports when there is such a huge protection available domesticslly? India too used to get 80% of its taxes indirectly (a regressive way to get taxes) pre-1991. Custom duties were slashed. Was there no resistsnce? Of course there was. Google Bombay club. But PM Narsimha Rao did not care about popularity and pushed macro-economic reforms through. He was not re-elected. Same was true about Vajpayee in 2004. Mankohan Singh did not push through any reforms and simply distributed the surpluses created betwee. 1991-2004 and so was re-elected. PM Modi was an exception. Despite continuing macroeconomic reforms he was re-elected. Why? He dramatically improved last mile delivery of service and improved quality of life of hundreds of millions of people. But certainly the elite unfairly targets him just as they had targeted Vajpayee when he was alive and Narsimha Rao when he was alive because the elite capture is being dismantled consistently over the last 30 years (barring the 2004-14 period).
Accurate except for the connection your arguments seem to be makin between macro-economic reforms and not getting elected.
How is saving any useful if its mostly invested in real estate? The problem here is more rooted into the selective protectionism.
@ Gauravi Pal, Mostly agree with one caveat, MMS is just an implementer of his masters voice. Narasimha Rao was his master in 90s and the Gandhi family was his master from 2004 to 14 via an extra constitutional non democratic "advisory" board. In fact whenever the Gandhi's have ruled they have destroyed the economy.
Things got a bit too technical at some points for a layman like me
Pay attention to few things:
1) economy is extractive means its mostly based on extracting natural resources and very basic raw material business.
2) elites have created a protective environment killing competition in business environment. This results in benefitting their businesses at the cost of countries business environment and development.
3) Borrowing mostly helped elites to protect their interests. They have no interest in changing it. When country borrows it protects elite interests and cuts funding for everything else.
4) my point: what you hear on TV/news is mostly about stopping you to know or think about above.
All wise talk. Missing fundamentals. Root cause is oversized Army. Distance second is JAMINDARI and landless peasants. Stop smoking GAZVA E HIND pipe dream.
Watch the video carefully. These are real experts not jingoist like you. If that's not interesting then go to Jaipur dialogues.
@@nacpatil real experts?. Yeah right.
@@7xr1e20ln8 yes one of the guy is indeed Pakistan expert in DC. He in indeed good at understanding Pakistan. Irrespective of credentials what they are telling is truth for todays time.
PKMKB happening literally! 😁😁
Finally a good comment🤣🤣🤣🤣🤣🤣
Why Dr. Sahab is looking downward? Just A feedback - It would be nice if Guest look at the camera while talking. While watching the video it looks awkward (as a viewer) that guest looking somewhere else. Btw great session 👍
He is looking at uzair
Rishwat economy shamful
Boss wajahat aur apka sar ragrein gay tu chingari nikalti hai?
😂
It’s relentlessly stupid that India and Pakistan thanks to the enemy status don’t trade electricity. Imagine if Pakistan was able to just have access to India’s grid they could have easily bypassed the transmission breakages using leveraging the infrastructure across the border. Something like that also adds to “strategic depth” which Pak military seems to love.
So how would the west beneficial? West loves to make Ind vs Pak
Toh teri pichwade me kis baat ki khujli ho rahi hai be..tera ba@p pakistan me rehta h kua be 😡
Are you sure? Why do you want to enable pakustan. They will again harm us. This is time to leave them alone and go through the pains and if they want resort course correction
Will there be payment for electricity supplied? Or on credit that will be rolled over when the time comes to repay.
Kiya complicated word use karrahai ho be simple for watchers buddy
Itna to mabhi Janta ho