Pakistan& #39;s Economic Crises 2018

Economic crises are not earthquakes which strike without warning; they are culmination of years of excesses & misguided macroeconomic policies

CAD reached $19.9bn in FY18 which was the highest ever in the country’s history in absolute terms
1/N
An increase in REER implies that exports become more expensive & imports become cheaper; therefore, an increase indicates a loss in trade competitiveness

REER value of 100 reflects fair valuation

REER had appreciated to 123.5 by April-17

Source: http://www.sbp.org.pk/departments/stats/Notice/Revision-Study(REER).pdf
3/N">https://www.sbp.org.pk/departmen...
Net International Reserve (NIR) is about the amount SBP has to finance CAD by its own – in short it depicts, how much import led growth a country can afford

NIR is the amount which gives a country leverage to run pro-growth policies where import increase can be absorbed
7/N
Primary balance is the total revenues minus non-interest exp

Primary deficit means that govt is borrowing monies to pay interest
payment on the debt stock, debt trap

FY12* include payment of debt consolidation 2% of GDP
FY13* include resolution of Circular Debt 1.4% of GDP
11/N
Total Debt & Liabilities (TDL) surged from 73% of GDP in FY13 to 86.3% of GDP in FY18

In absolute terms, it surged from Rs16,338bn in FY13 to Rs29,879bn in FY18 - up 83%

TDL includes Govt, Private sector, PSEs Debt & commodity operations etc

Source: http://www.sbp.org.pk/ecodata/Summary-Arch.xls
13/N">https://www.sbp.org.pk/ecodata/S...
Gross Public Debt increased from 63.8% of GDP in FY13 to 72.1% of GDP in FY18

In absolute terms, it increased from Rs14,292bn in FY13 to Rs24,953bn in FY18 - an increase of 75%

Source: http://www.sbp.org.pk/ecodata/Summary-Arch.xls
14/N">https://www.sbp.org.pk/ecodata/S...
Govt Domestic Debt increased from 42.5% of GDP in FY13 to 47.4% of GDP in FY18

In absolute terms, It increased from Rs9,520bn in FY13 to Rs16,416bn in FY18 - an increase of 72%

Source: http://www.sbp.org.pk/ecodata/Summary-Arch.xls
15/N">https://www.sbp.org.pk/ecodata/S...
Total External Debt & Liabilities increased from 27% of GDP in FY13 to 33.4% of GDP in FY18

In absolute terms, It increased from $60,899 million in FY13 to $95,237 million in FY18 - an increase of 56.4%

Source: http://www.sbp.org.pk/ecodata/pakdebt_Arch.xlsx
16/N">https://www.sbp.org.pk/ecodata/p...
Total Debt of the Govt increased from 60.1% of GDP in FY13 to 66.5% of GDP in FY18

In absolute terms, It increased from Rs13,457bn in FY13 to Rs23,024bn in FY18 - an increase of 71%

Source: http://www.sbp.org.pk/ecodata/Summary-Arch.xls
17/N">https://www.sbp.org.pk/ecodata/S...
Circular debt surged from Rs503bn at end may& #39;13 to Rs1,196bn in FY18 - an increase of 137.8%

It is the amount of cash shortfall within the CPPA which it cannot pay to power supply companies

Source:
http://www.senate.gov.pk/uploads/documents/1538128795_955.pdf
https://www.senate.gov.pk/uploads/d... href=" http://www.senate.gov.pk/uploads/documents/questions/1383717414_521.pdf
https://www.senate.gov.pk/uploads/d... href=" https://www.imf.org/~/media/Files/Publications/CR/2019/1PAKEA2019002.ashx
20/N">https://www.imf.org/~/media/F...
In Jun& #39;13, Accumulated losses of 10 discos were a mere Rs20bn, & the year previous govt left the toll surged to Rs296bn. The Accumulated losses of DISCOs in previous govt& #39;s last 4 years stood at Rs662bn. This is how circular debt builds

Source: https://www.brecorder.com/2019/05/06/494796/power-discos-the-bleeding-goes-on/
21/N">https://www.brecorder.com/2019/05/0...
Circular debt refers to cash flow shortfall incurred in power sector from non-payment of obligations by consumers, distribution companies, & govt

Differential margin is created by disparity between prescribed gas prices by OGRA & notified consumer tariff(includes subsidies)
22/N
Public Debt that has to be re-fixed in one year increased from 47.8% in Jun& #39;17 to 55.5% in Jun& #39;18

Source:
http://www.finance.gov.pk/dpco/RiskReportOnDebtManagement_End_June_2018.pdf
26/N">https://www.finance.gov.pk/dpco/Risk...
The external debt that requires to be readjusted in one year to new interest rates increased from 22.2% in Jun& #39;13 to 32.2% in Jun& #39;18

Source:
http://www.finance.gov.pk/dpco/RiskReportOnDebtManagement_End_June_2018.pdf
27/N">https://www.finance.gov.pk/dpco/Risk...
Average time to re-fixing is a measure of weighted average time until all principal payments in the debt portfolio become subject to a new interest rate

Average time to Re-Fixing of Public Debt fell from 4.2 yrs in Jun& #39;13 to 3.2 yrs in Jun18

Source:
http://www.finance.gov.pk/dpco/RiskReportOnDebtManagement_End_June_2018.pdf
29/N">https://www.finance.gov.pk/dpco/Risk...
External Debt Average time to Re-Fixing fell from 9.2 years in Jun& #39;13 to 6.6 years in Jun& #39;18

Source:
http://www.finance.gov.pk/dpco/RiskReportOnDebtManagement_End_June_2018.pdf
30/N">https://www.finance.gov.pk/dpco/Risk...
Public Debt Maturing in one year (% of total) surged from 36.2% in Jun& #39;15 to 48.9% in Jun& #39;18

Source:
http://www.finance.gov.pk/dpco/RiskReportOnDebtManagement_End_June_2018.pdf
31/N">https://www.finance.gov.pk/dpco/Risk...
External Debt Maturing in one year (% of total) surged from 8.9% in Jun& #39;13 to 12.4% in Jun& #39;18

Source:
http://www.finance.gov.pk/dpco/RiskReportOnDebtManagement_End_June_2018.pdf
32/N">https://www.finance.gov.pk/dpco/Risk...
Domestic Debt Maturing in one year (% of total) surged from 47.3% in Jun& #39;15 to 66.3% in Jun& #39;18

Source:
http://www.finance.gov.pk/dpco/RiskReportOnDebtManagement_End_June_2018.pdf
33/N">https://www.finance.gov.pk/dpco/Risk...
Public Debt Average time to maturity fell from 4.5 years to 3.6 years

Source:
http://www.finance.gov.pk/dpco/RiskReportOnDebtManagement_End_June_2018.pdf
34/N">https://www.finance.gov.pk/dpco/Risk...
The average time-to-maturity of external debt decreased from 10.1 years in FY13 to 7.6 years in FY18

Source:
http://www.finance.gov.pk/dpco/RiskReportOnDebtManagement_End_June_2018.pdf
35/N">https://www.finance.gov.pk/dpco/Risk...
Contingent liabilities (CLs) are off-budget activities that appear on govt balance sheet only
when event actually happens

It relates to govt guarantees on behalf of PSEs

CLs surged from Rs625.9bn in Jun& #39;13 to Rs1236.2 in Jun& #39;18 - up 97.5%

Source:
http://www.finance.gov.pk/dpco/RiskReportOnDebtManagement_End_June_2018.pdf
36/N">https://www.finance.gov.pk/dpco/Risk...
Total Govt debt (% of Revenue) increased from 402.1% in FY14 to 440.4% in FY18

Source:
http://www.finance.gov.pk/publications/DPS_2019_2020.pdf
38/N">https://www.finance.gov.pk/publicati...
Foreign Exchange Reserves (% of External Debt Liabilities) decreased from 18.1% in FY13 to 17.2% in FY18

Source:
http://www.finance.gov.pk/publications/DPS_2019_2020.pdf
41/N">https://www.finance.gov.pk/publicati...
Total Debt & Liabilities (excluding private sector external debt) as % of GDP increased from 70.9% in FY13 to 82.1% in FY18

In absolute terms, it increased from Rs15,873bn in FY13 to Rs28,253 in FY18 - an increase of 78%

Source:
http://www.finance.gov.pk/publications/DPS_2018_19.pdf
42/N">https://www.finance.gov.pk/publicati...
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