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Archive for category BILAWAL ZARDARI BAMBINO KINGS OF CORRUPTION

Dr Ashfaque, Dr Pasha, Dr Salman write open letter to IMF “Wrong sides of the Picture”

Dr. Ashfaque H. Khan, Dr. Hafiz A. Pasha and Dr. Salman Shah, who have served on key posts in Finance Ministry and Planning Division have written an open letter to the IMF, exposing wrong picture presented by the Dar-led economic team about Pakistan’s economy. Dr Khan send this article to the Editor of Corporate Ambassador, Javed Mahmood today.

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The three year program under the IMF’s Extended Fund Facility (EFF), has now come to an end. Pakistan has received $6.1 billion loan from the IMF under this program. During the tenure of the program, Pakistan was required to undertake wide – ranging structural reforms and implement the type of macroeconomic policy that would restore macroeconomic stability, gradually promote economic growth and build foreign exchange reserves to bolster external buffers.

After the completion of the twelfth and the final Review, the IMF Staff Mission Report has declared ‘victory’ and stated that “the Fund Supported Program has helped the country restore macroeconomic stability, reduce vulnerabilities and make progress in tackling key structural challenges. Economic growth has gradually increased and inflation has declined. External buffers have been bolstered, financial sector resilience has been reinforced, and the fiscal deficit has been reduced while social safety nets have been strengthened”.

On the reform side, the Report stated that “tax policy and administration reforms allowed for further revenue mobilization.Steps have been taken to strengthen the State Bank of Pakistan’s autonomy. Energy sector reform allowed a reduction of power outages, energy subsidies, and accumulation of power sector arrears. A country – wide strategy to improve the business climate was adopted”.

The Staff Report contains the views of the IMF on the “success” of the program. We, the three independent economists, through this open letter would like to present the other side of the picture. In particular, we identify the extent of the success, how these “successes” have been achieved and express our disappointment with the failure to implement reforms that are critical for achieving higher economic growth. Needless to mention, the three authors of this open letter have all dealt in the past with the IMF in senior management capacity at the ministry of finance, either as Federal Ministers or Advisor.

Firstly, building foreign exchange reserves to bolster the external buffer was the main pillar of the hurriedly put together IMF Program. The idea was to build reserves and repay the then IMF loan on time. That is why many independent economists including the ones who remained associated with the IMF for a long time termed the program as ‘Self-Serving Program’.

Such an objective of the program forced the government to borrow extensively to build foreign exchange reserves and in the process accumulate net external debt of over $12 billion during the program period. Incidentally, Pakistan added exactly the same amount to its foreign exchange reserves, that is, from $6 billion in end-June 2013 to $18.0 billion in end-June 2016. The above facts clearly suggest that we improved the external buffer entirely through adding external debt. Isn’t it simply postponing the current problem of insolvency to a future date?

Secondly, in a three year program, the IMF has extended sixteen waivers. Perhaps never in the history of the IMF did Pakistan receive such a large number of waivers. This diluted the purpose of the program and also reflected on the lack of emphasis towards implementing and achieving the stated goals of the program.

Sadly, the IMF Staff Mission has selectively highlighted the improvement in some economic indicators from 2012-13 to 2015-16. This includes rising economic growth, falling rate of inflation, rising tax-to-GDP ratio,  higher spending under BISP and private sector credit and falling subsidies as percentage of GDP.

The rate of economic growth achieved in the last three years remains contentious. The Pakistan Bureau of Statistics (PBS) has estimated the GDP growth rate as 4 percent or above each year, reaching 4.7 percent in 2015-16. The authors have presented contrary evidence that the growth rate has been exaggerated each year, and it has ranged between 3.1 to 3.7 percent during the program periods. The Data Quality Assessment Framework (DQAF) of the IMF should have been used to check the reliability of the national income estimates.

We would like to quote the recent statement of the Managing Director of the IMF as posted on September 1, 2016 by iMF direct. In her words “The longer demand weakness lasts, the more it threatens to harm long-term growth as firms reduce production capacity and unemployed workers are leaving the labor force and critical skills are eroding. Weak demand also depresses trade, which adds to disappointing productivity growth”.

This statement clearly depicts the current state of economic growth and unemployment in Pakistan in terms of the social costs of the excessive focus on stabilization policy. The persistence of lower economic growth has failed to create enough jobs. People in general and youth in particular, are finding difficulties to get jobs. People remaining unemployed for a longer duration are becoming unemployable, with all its social and economic consequences. Not only that the unemployment rate has surged to a 13 years high at over 8.0 percent (including the ‘discouraged worker’ effect), youth unemployment rate has also increased to over 11 percent in 2014-15. Furthermore, between 2012-13 and 2014-15, the annual number of entrants into the labour force has been approximately 650,000 as against 1.3 million during 2008-13.

A particularly worrying feature of the current employment situation is the extremely high unemployment rate of 20 percent of workers with either graduate or post graduate degrees. There are 2.4 million educated workers with bad employment prospects. This is the unfortunate outcomeof the IMF Program

On the size of the fiscal deficit, the IMF Report claims that this has been reduced from 8.5 percent to 4.6 percent of the GDP. A number of steps have been taken to report smaller deficits. For example, holding back refunds and forcing  commercial entities to pay taxes in advance to jack up revenue, privatization proceeds and foreign grants treated as non-tax revenue to inflate overall revenue rather than treating them as financing items, engaging in quasi-fiscal operations outside the budget, allowing for large statistical discrepancy each year (cumulatively Rs. 600 billion in three years) to show lower expenditures, exaggerating the size of the Provincial cash surplus, retaining earmarked revenues in the Federal consolidated Fund and building up large contingent liabilities (over Rs. 1400 billion of power sector circular debt, accumulation of debt in commodity financing and pending tax refunds). The IMF staff has either been blissfully unaware of or has condoned this creative accounting. Adjusting for these practices implies a fiscal deficit each year in the range of 7.0 to 8.0 percent of the GDP.

Other areas, where serious distortions exist, are: the estimates of the GDP deflator; investment and saving rates and rate of inflation, especially for poor households. A case ought to have been made for complete operational autonomy of the PBS.

Yet another “success” of the program as stated by the IMF Staff Mission is the sharp reduction in inflation rate. It has declined from 7.4 percent in 2012-13 to 2.9 percent in 2015-16. Does this decline owe to the ‘prudent’ fiscal and monetary policy pursued during the program period? The answer appears to be in the negative. The international oil and commodity prices started collapsing since June 2014. Such a collapse in the oil and commodities prices led to a worldwide decline in inflation, including in Pakistan. Furthermore, as stated above, the pursuance of stabilization policy for a prolonged period weakened the domestic demand, resulting into deceleration of prices. Thus, the sharp decline in inflation during the program period owes to the weakening of domestic demand, as well as a collapse in the international prices of oil and commodities and not to the prudent use of monetary and fiscal policy. In fact, when inflation rate was rapidly on the decline, the SBP was pursing an easy monetary policy.

The quarterly reviews have ignored the deterioration in key economic indicators. They failed to discuss big decline in exports – to – GDP ratio, stagnation in the overall and private investment – to – GDP ratio, fall in FDI, rise in external debt and public debt – to – GDP ratios, fall in total PRSP pro-poor expenditure to GDP and very importantly, a rise in the rate of unemployment especially among young, educated, and female workforce. Only 750,000 jobs were created annually in 2013-14 and 2014-15 as against 1.1 million jobs annually earlier.

As stated above, Pakistan was asked to implement a wide-ranging reforms under the IMF Program. What has been the performance on the reform side?

Power Sector Reforms

The glaring failure of the Fund program is in the implementation of power sector reforms. The 12thReview Report declares victory primarily by demonstrating that the subsidy to the sector has fallen massively from 2percent of the GDP in 2012-13 to only 0.6percent of the GDP in 2015-16.

How has this been achieved? The answer is not by any major improvements in efficiency through big reduction in losses. Instead, the policy has been to raise the power tariffs to generate more revenues and thereby reduce the need for subsidies. From 2012-13 to 2015-16, the average electricity tariff (including surcharges) has been enhanced by 40percent, leading to extra revenues of distribution companies of over Rs 250 billion. The tariffs have been increased at the time when the fuel costs have fallen by over 49 percent.

On top of this, contingent liabilities have increased exponentially in the sector. Today, the circular debt of the sector stands at almost Rs 630 billion, over 2percent of the GDP. Sooner or later, this debt will have to be retired, as happened in 2012-13, if a breakdown is to be avoided in supplies due to liquidity problems in the sector.

IMF also claims on behalf of the Government, that power load-shedding has been substantially reduced, especially in industry. Evidence to the contrary is the large continuing demand-supply gap according to NEPRA, and the fact that electricity consumption per industrial consumer has fallen in nine out of ten distribution companies, in comparison to the level achieved in the pre-load-shedding years.

Tax Reforms

The IMF Twelfth Review has highlighted, as one of the key successes of the Program, the over two percent points increase in the tax-to-GDP ratio. Much of the improvement has come in 2015-16. How has this been achieved? The main contribution is actually from enhancement in effective tax rates and not by broadening of the various tax bases. The tax structure has become more regressive and created more distortions in economic activity. Furthermore, various levies which used to be the part of non-tax revenues prior to the IMF Program were renamed as ‘other taxes’ and added to the tax revenue collected by the FBR to arrive at ‘new’ tax – to – GDP ratio. Such a practice has made the ‘new tax – to – GDP ratio non-comparable with the pre-IMF Program period.

The biggest failure is in lack of development of the direct tax system. The elite continues to enjoy wide ranging tax exemptions and concessions like the virtually no or low taxation of global income, profits of private companies, agricultural income and unearned capital incomes. The IMF clearly prefers not to antagonize the ruling elite through its reform agenda.

Improvement in Living Standards

Contrary to the claims by the IMF, living standards have probably fallen in Pakistan during the tenure of the Program. A number of reforms undertaken have contributed to rising unemployment and poverty.

The anti-poor actions include, firstly, the rise in input costs of fertilizer and electricity in agriculture due to hike in power and gas tariffs and additional taxation in the form of the GIDC. The result is that food prices have risen faster than the overall CPI and wages of unskilled workers. Today, Pakistan has the extremely serious problem of malnutrition. In the 2016 ranking of the Global Hunger Index, Pakistan has the 11th lowest position, even below Bangladesh, out of 118 countries. The non-implementation of the PMs agricultural package of September 2015 under the IMF pressure has contributed to the recent debacle in the sector.

Secondly, the primary adjustment mechanism for achieving the fiscal deficit targets in the Program has been large cut backs of up to 30percent in budgeted development spending by the Federal and Provincial governments. In 2015-16 alone these cuts have implied less employment generation of almost 300,000 jobs.Thirdly, hikes in indirect taxes have affected the cost of living adversely. This includes the levy of minimum import tariffs on basic food and other items and jump in GST rates on petroleum products, especially HSD oil.Fourthly, the decline in exports has contributed to loss of employment in labor-intensive sectors like SMEs and textiles. Consequently, as highlighted earlier, the underlying unemployment rate has gone beyond 8 percent. Fifthly, social indicators have shown only minor improvement in three years. This is due particularly to the pressure on Provincial governments to spend less on social and other sectors so as to generate large cash surpluses.

Anti-Export Bias

According to the original Program projections, exports were expected to show a steady annual growth rate of 8 percent and reach $30 billion by 2015-16. Instead, they have been falling since 2012-13 to below $22 billion last year, a short fall of over 23percent. This is perhaps one of the single most important failures of the Program. It has adversely impacted on growth and employment in the country and frustrated the achievement of greater self-reliance.

How did the Program reinforce the anti-export bias? The record level of external borrowings during the last three years has led to a form of ‘Dutch Disease’. Larger reserves, based completely on external borrowing, have created artificial stability in the value of the rupee, thereby reducing competitiveness. Enhancement of electricity tariffs by over 40percent and gas price to industry by 64percent, further affected competitiveness. In an effort to meet the Program revenue targets, FBR has held back over Rs 200 billion of refunds, leading to liquidity problems for exporters. Further, levy of a minimum import duty on raw materials and intermediate goods has added to costs.

Today, the decline in ability to service external debt obligations, including those to the IMF, is clearly demonstrated by the phenomenal increase in the external debt to exports ratio. It was 193percent in 2012-13 and has risen to 266percent by the end of 2015-16. It is likely to continue rising and go beyond 300percent by 2017-18. There is no other option now in the post-Program scenario but to present a strong export incentive package, including significant depreciation of the Rupee.

External Financing Requirement

The original Program projections were that external financing requirements, consisting of external debt amortization and the current account deficit, would reach $9.2 billion by 2016-17 and fall to $8 billion in 2017-18. However, following the much larger build up of external debt, the latest estimates of the financing requirement in the 12th Review is $ 10.9 billion in 2016-17, rising to $13.2 billion in 2017-18.

However, these estimates are based on significant positive growth in remittances and exports and a big jump in FDI. This is highly unlikely given the current trends. A more realistic estimate of external financing requirement is $15 billion in 2016-17 and $18 billion in 2017-18. This is more than 5percent of the GDP, which is considered the danger point. Part of this requirement will have to be met by a sizeable depletion of foreign exchange reserves. There is a high likelihood that by June 2018, reserves may fall to about half of the present level.

Where is the sustainability of our external position? Has the IMF Program reduced our vulnerabilities? Are we doomed to go back once again to the IMF? Will conditionalities next time go beyond the usual prior actions? Already, two weeks after the end of the IMF Program, Pakistan has been forced to float relatively high cost bonds externally of $1 billion. This indicates a lack of confidence in the sustainability of reserves in coming months and years.

Finally, in the immediate aftermath of the IMF Program, the economy has begun to unravel. Agricultural growth was negative last year and the prospects for the current cotton crop are not much better. Growth of the large-scale manufacturing sector has also turned negative in the last four months for which data is available. Seven out of the twelve industrial groups are showing declining output. The fall in exports continues and the trade deficit has risen sharply. Remittances are also contracting, along with a sharp reduction in FDI. FBR tax revenue growth has plummeted and large borrowing has been resorted to by the Federal Government from SBP. Development releases of funds have been relatively small and the process of implementation of CPEC infrastructure projects is very slow. Contingent liabilities have reached alarming levels and the bleeding of public sector enterprises/utilities continues. Can we still say that the reforms implemented during the tenure of the Fund Program have left the economy in a ‘sustainable position’? The answer, unfortunately, is an unambiguous no.

 

* The authors have worked for the Ministry of Finance and dealt with the IMF at the highest level for a long time.

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Maryam Safdar is exaggerating the seriousness of the procedure.”just to gain sympathetic element from masses to divert attention from #PanamaLeaks

  1. AThe procedure takes less than 45 minutes, preparation takes about an hour and it requires a couple of days in hospital for observation ‏@AsadKharal  Maryam Safdar is exaggerating the seriousness of the procedure.”just to gain sumpathetic element from masses to divert from #PanamaLeaks
     
     
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    The procedure takes less than 45 minutes, preparation takes about an hour and it requires a couple of days in hospital for observation

     
  3. Following procedurennn according to a friend UK doctor working in same hospital. “Atrial Fibrillation Ablation is NOT an open heart surgery

     

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The Big Story that went unreported from Washington:Red Alert for Corrupt Leaders by Shaheen Sehbai

 

The Big Story that went unreported from Washington:Red Alert for Corrupt Leaders

by Shaheen Sehbai

 

 

 

 

 

 

 

 

 

 

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THE PROPAGANDA BLITZKRIEG BY CROOKS AGAINST IMRAN KHAN:Nawaz Sharif & Crooked Cronies use diversionary tactics to shift focus from stolen offshore $50-200 Bn

THE PROPAGANDA BLITZKRIEG BY CROOKS AGAINST IMRAN KHAN BY PAKISTAN’S CORRUPT POLITICIANS

AIM:DIVERT ATTENTION FROM NAWAZ SHARIF’S OFFSHORE INVESTMENTS

 

 

 

IMRAN KHAN:A RARE HONEST POLITICIAN IN A CESSPOOL OF CROOKED PMLN,PPP, ANP,JUIF, PMLQ BODY POLITIC

 

 

 

 

 

 

 

Pakistan's Honest Man

 

 
 
 
 
 
 
 
 
There is no denying the fact that Imran Khan is still a novice politician compared to seasoned crooks of PMLN,PPP,ANP,MQM,JUIF. He also does not have the luxury of good and seasoned advice. Lastly PTI party organization is still in shambles with severe differences and divisions among its various groups and very few persons of substance, political acumen and standing among its ranks. Mostly consists of youth or light weights.
 
Having said all that lets get to the bare facts in the current onslaught of undermining IK.
 
MY OPINION
 
I personally feel this mud slinging Blitzkrieg will have no bearing on Imran Khan end of the day as he is not a thief. They cannot implicate him as a crook no matter what they do or try.
 
He continues to stand tall as far as his honesty , persistence and dedication is concerned. He is also lucky in a way that at this juncture despite all his faults there is no other politician in our national arena with credentials of honesty. There is just no choice. IK also maintains his appeal, charisma, crowd drawing ability and individual popularity among the masses. He remains a one man army and the only person who stands in way of the agenda of crooks bathed in worst corruption.
 
POT CALLING KETTLE BLACK: CORRUPT NAWAZ SHARIF & POLITICAL CRONIES BEST DEFENCE IS OFFENCE: PERSONAL ATTACK ON IMRAN KHAN BASED ON SCURRILOUS LIES AND INNUENDOS
 
Now coming to the current defaming campaign against IK.
 
These are two very different cases but an effort is being made to confuse the issue and make it murky..
 
The bare fact remains that Imran Khan legally brought his hard earned legal monies from cricket and from the sale of his flat in London to Pakistan. He has already presented the documentation and money trail of that sale and acquisition of property in Pakistan.The same has been declared to ECP and FBR and tax returns filed accordingly.
 
While on the other hand these thieves and thugs have been consistently laundering illegal monies and kick backs from Pakistan unchecked and unobstructed for decades to their totally illegal off shore fat accounts abroad set up to hide illegal monies with no documentation and money trail. What is the comparison.
 
Everyone in this nation understands that very well now. These smoke screens, dramas and diversions by the thugs will not help in any way end of the day. It is too late to do that in any case.
 
CABAL OF CROOKS
 
Najam Sethi’s, Danyials, Zubairs, Talal Chaudhrys,Abid Sher Ali,Ishaq Dar, and Khawaja Asif’s etc are worthless touts who have no standing and credibility of their own. Not one of them can become a counselor on their own. They are just paid pimps speaking the language of their thug masters as a meaningless propaganda which does not mean anything.
 
 
The unfortunate fact and irony remains for Pakistan remains that it appears that at this critical juncture in our checkered history IK is the only hope and he has to fight this herculean battle all alone with the help of the battered and helpless people of Pakistan. IK must understand this loud and clear.
 
The people if they want to rid Pakistan of corruption must stand with him. It is certainly not an easy job on hand by any means to rid Pakistan of these well entrenched rich and evil masters of corruption, loot and plunder. May wrath of God Almighty be on these corrupt elements and may God Almighty in his infinite mercy help Pakistan and its people wriggle out of their evil grip. Ameen.
 
Wishing Imran Khan best of luck and hoping for a better and brighter future for my Pakistan.

 

 

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PANAMA LEAKS, PAKISTAN AND COMING TIMES – The Sharif Network of Corruption

 

 

 

 

 

 

 

 

 

 

 

Thought provoking reality to no avail

 

 

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PANAMA LEAKS, PAKISTAN AND COMING TIMES
 
While world is again shaken by LEAKS this time linked to big time money; we all wonder what will or should happen in our part of world.


– West is taking stock of situation and waiting for more leaks out this LEAK to come
– UK is grilling its PM and the PM is putting up brave but unconvincing defence.
– While it is estimated that 2.4 trillion dollars are stashed in various bank, key question is that what will governments do?
– Apparently US and West is eyeing money and how to take away.
Powerful Jewish Groups in America headed by George Soro and Michael Blomberg are having a field day, West have left them alone to take money and keep on truckin’
– Tax evasion, Corrupt money or genuine money is what would or should determine action
– However, strict scrutiny of politicians must be done as invariably this not a clean money and more or less has been at the expense of public (mostly of poor countries)

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At home ie Pakistan it is one shock out of many (involvement of our PM and his family ) that the nation keeps getting on fortnightly basis
– Ideally following should have happened:
* National Accountability Bureau should have come into action
* Chief justice should have taken suo moto
* Opposition should have united
* Media should have castigated entire government party for putting up shameless defense
* Election Commission should have come into action to declare PM and his family ineligible for not declaring assets correctly.   WHAT IS HAPPENING:
1. PM is depressed and talking less and less
2. In house sources say that he is also suffering from lack of sleep (he is otherwise having lot of health issues because of bad eating habits)
3. He has despatched emissaries all over the world for all corrupt Pakistani politicians to come to his rescue
4. Fissures within the family are equally depressing for him
5. Good part of media is dismantling him day in day out
6. Opposition as always is disunited
7. Only Imran Khan is on a solo flight. Though his party is also appearing lack lustre
8. Masses expect that Army (the COAS precisely) would do something
9. He is sending his emissaries to important capitals posing threat from Army takeover WHAT IS LIKELY TO HAPPEN?
– Most corrupt Mr Zardari, Asfandyar Wali, Maulana Fazlurrehman etc will unite to bail him out in return for major political and accountability concession
– Would target Army and National Action plan with a view to clip the wings of Army and Rangers
– Would unite to bring ISI under their control (though difficult but not impossible)
– Courts (since on their pay roll) will remain quiet
– They will help PM’s internal family patch up
– National Accountability Bear will remain busy in unknown investigations with no time left for this corrupt family– Army Chief will keep giving dirty looks and will not be in a position to dictate to anyone; he has his hands full. Past experience of Army is not all that comforting.
– Commissions or any other government nominated group would grant clean chit with help by prolonging the findings. It may turn out that typically commission may fail to find fault
– No step will be taken whereby it is found out as to gravity of offense
– Imran Khan characteristically will organize siting. However like in the past it will exhaust itself into political oblivion
– International forces will come to their rescue in the garb of protecting democracy
– Masses will continue armchair criticism and watch from their drawing rooms the CLAN OF CORRUPTION washing themselves clean
– Something would happen and these leaks will fade away in background. Short memory of nation will come to their rescue once more. WHAT SHOULD HAPPEN: 1. Election Commission must jump in to disqualify them, there is enough admissible evidence
2. Masses must not sit back and watch from sidelines; they must come out in streets
3. Investigation must be done by forensic experts
4. USA and West must act as they acted to arrest and investigate corrupt socially corrupt politicians
5. Army must increase pressure in their own way for a transparent investigation

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