Pakistan’s Dilemma – Declare Default OR Continue to be blackmailed.

  • Pakistan’s Dilemma – Declare Default OR Continue to be blackmailed.

    Pakistan cannot have its own independent policies, since it owes big to IMF, World Bank and Asia Bank. Those loaning agencies are controlled by countries, which use loans as means to control policies of Pakistan.

    Recent resolution by Parliament is an example. That is just a fig leaf to let government follow the dictates of foreign powers.

    One way out is to declare bankruptcy, stop corruption and tighten belts, especially upper middle class and rich people.

  • Sipahi thanks for starting a conversation that is related to Pakistan and not PTI bashing or falsely trying to feed to us how Nawaz is amir-ul-momineen.

    Sipahi there are way around bankruptcy, pay the damn loan, every cent of it with

    Money that was looted, and have a tax system that tax's everyone. Tax rich more.

    Then get rid of corruption in PIA, Narcotics, Steel Mill, NICL, Hajj, RPP, NHA, PSO, Railways......

    But all this cannot be done with people you have their hands in the cookie jar. Whether its this terd Zardari or this idiot of a donkey Nawaz or this Maulvi Fazool. They can't do it.

    If Imran Khan doesn't show his cards, his roadmap, his future strategies that he has been talking about for the past 5 years, i will start to doubt him as well, even though i am a big supporter of him.

  • PPP-Zardari terd league cannot do anything but taking advantage of the situation by looting as much as they can get there hands on.

    When they are recycling corrupt minister after corrupt minister in a ever expanding thief cabinet how can anyone thin Pakistan will turn around.

  • There are other solutions. Tax reforms are the way to go vast majority of people don't pay taxes. and the Ice Cream opposition hasn't done anything to stop the government from borrowing more money and mortgaging our future to world powers. they are too busy taking loans themselves and overspending on stuff like laptops.

  • Tax should be payed by every one, a small or big.

    Earning 200/day or 20 million / day.

    I remember one of my friend working in Russia, he told there is only two slot of taxation.

    If you earn money in less than 6 month and leave Russia you have to pay 30% tax and it is deducted in advance from salary. but if you earn more than 6 months then tax rate is 13%.

    if you are business man then 18% VAT(value added tax) on each purchase small or big.

    I think this is really workable formula and due to this Russia is rapidly growing in last 12 years. I remember that in 1994 Russia don't have the money to pay salaries and pension was totally stopped and abolished for all USSR regime employees.

  • Our arms and weapons are western made . Those will change into scrap within months if we can not get spares for them .

    You can see another Mush or Zia ,ready to move any time .

    More terrorism , more violence also possible .

  • @Insaftak

    Proper taxation might have been a way out four years ago, not it is too late. This government has borrowed so much that it is extremely difficult to get out of the "Jaws: of loan sharks.

    Even if IK has the best of intentions, without declaring bankruptcy, stopping corruption and tightening belts, especially upper middle class and rich people, it is not humanly possible to be in position to have independent policy.

  • @Anwer Kamal

    What we are protecting with weapons?

    Pakistan was created to protect Islamic values and muslim culture.

    We have lost our Islamic values and muslim culture. We are either followers of western culture or hindu culture.

  • @sipahi

    Bhai thanks for a purposeful thread. First of all i would like to give you figures from last budget that Total budget outlay for 2010-11 is Rs 3259 billion, and 685 billion budget deficit, which is 4 percent of GDP. What can we do now is:-

    (I) Come out of war on terror to save billions on army expenditure and revenue losses bcoz of side effects of this war.

    (II) Our current TAX-GDP ratio is about 10%, make it about 15-18%, its not hard as india's ratio is about 18%.

    (III) Fix the organisations like PIA, Steel mill, railway etc. as we are losing 235 billion bcoz of PIA, Steel Mill & PEPCO.

    (IV) Bring in simplicity in the ruling elite and eradicate the top level corruption(President/PM/CMs/Ministers/Bureaucrates/Judges/Generals).

    (V) Bring in the money saved in step IV and also the money involved in other political stunts like BISP, laptops etc to clear the circular debt and provide energy to the industry, to reduce unemployment and generate more revenue.

    BUT, you need a sincere leader for that, and i don't see if there is any of our tested leader can do it for us. As, you might be aware that our PM/President houses expenditure for a single day is about 2.6 million, and PM has spent about 70 million out of his discretionary funds on average every day for last four years. Its same in provinces, some are only enjoying the chief minister-ship and some are working hard without any vision and trying to promote their party and family through public money(16.1 million on a single ceremony in punjab university).

  • Abdul Hameed,

    Excellent post.

    What happens to the money from Overseas Pakistani's?

    Point I - Agree with the idea, but the Army has to realize that things have to change otherwise there budget will be squeezed either way. Corrupt generals should be made example off.

    Points II - Tax to GDP ratio can be increased pretty easily, when these billionaires are asked to pay tax also. Have a tax system that tax's the rich and dedicate big portion of that money for development projects like Schools.

    Points III - PIA, PSO and PSM are draining the money but remember these are also the organizations that are used for one purpose only. To house friends of corrupt ministers. Kill corruption and these things will automatically start to turn around. Bring people on merit and you got an organization with very little competition from inside Pakistan.

    Points IV - Instead of BISP, laptops and schemes that are political in nature. Start some schemes that benefits the common man as a whole. For example instead of BISP make some technical schools that give free technical education. A countries asset is the manpower it has and how efficiently it can complete a task.

    Points III -

  • @abdulhameed

    First of all you have neglected to include both external and internal debt and large %age of GDP that is eaten up by debt servicing.

    Total Domestic and External Debt exceeds 140 Billion US Dollars, that is more than 12.5 Trillion Rupees

    Domestic Debt and Liabilities -- Billion Rs. 7,215 (29-Feb-12)

    External Debt and Liabilities Million US$ 61,134 (30-Dec-11)

    The external debt (IMF, World Bank, Asia Bank, etc.) has been given to Pakistan to have a stronghold on policies of Pakistan.

    The measures you have mentioned won't be easy with the current parliamentary set-up, irrespective of who will be PM.

  • @sipahi

    I guess this 12.5 Trillion Rupees figure is the total loan, and we are paying it back in instalments which were included in the budget. "The expenditure on General Public Service (inclusive of debt servicing transfer payments and superannuation allowance) was estimated at Rs 1,388 billion which was 69.5% of the current expenditure."

    I agree with you that these measures are not easy, but these all are doable. BTW what do u think would be the most difficult task?

  • One correction.

    Corporations declare bankruptcy. States declare default.

    I totally agree that declaration of default, in particular refusal to pay off foreign debt is the only long term solution for economic turnaround. This method is nothing strange or uncommon and has been used by many countries.

    In most cases, a sovereign default is nothing like borrowing money when needed and then refusing to pay back, something that many lay persons believe it to be. In international sovereign lending, loans are accompanied by severely crippling usurious terms and conditions. For example, it is quite common for a poor country to borrow $ 5 billion (from IMF, World Bank, USA, UK etc), pay back & 12 billion in 20 years and still have $ 14 billion outstanding from the original loan of $ 5 billion. I know this math is difficult to understand. But this happens as a result of terms and conditions associated with the loan.

    For example, the $ 5 billion loan is not given in one go but in tranches. Disbursement at each tranche is related to some performance benchmark to be assured by the borrowing country, non adherence to which adds penalties to the loan. Then certain percentage of the total loan is never given but held back in the guise of service/facilitation fee. Furthermore, hefty penalties are imposed on small technicalities and these are added up to the original loan and then repeated compounding increases the original loan manifold. Because of this, a borrowing country ends up paying back the original loan many times over and still owes 3 or 4 times the original loan taken.

    Many countries of the world including Russia, Turkey, Mexico, Argentina, Brazil and several African countries have declared default several times. We have not done so only because our economic managers have always been those who are here on sort of deputation from world bank/ IMF as is our current Finance Minister.

  • @Adonis

    Thanks for correction.