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Posted by Dr. Manzer Durrani in Economics on April 3rd, 2010
Protection of Women (Criminal Laws Amendment) Act, 2006
December 1, 2006
A BILL further to amend the Pakistan Penal Code, the Code of Criminal Procedure and other laws
WHEREAS it is necessary to provide relief and protection to women against misuse and abuse of law and to prevent their exploitation;
AND WHEREAS Article 14 of the Constitution ensures that dignity of man and, subject to law, the privacy of home, shall be inviolable;
AND WHEREAS Article 25 of the Constitution guarantees that there shall be no discrimination on the basis of sex alone and that the State shall make provisions for the protection of women;
AND WHEREAS Article 37 of the Constitution encourages promotion of social justice and eradication of social evils;
AND WHEREAS the objective of this Bill is to bring in particular the laws relating to zina and qazf in conformity with the stated objectives of the Constitution and the injunctions of Islam,
AND WHEREAS it is expedient for the aforesaid objectives further to amend the Pakistan Penal Code (Act XLV of 1860), the Code of Criminal Procedure, 1898 (Act V of 1898, the Dissolution of Muslim Marriages Act, 1939 (VIII of 1939), the Offence of Zina (Enforcement of Hudood) Ordinance, 1979 (VII of 1979), and the Offence of Qazf (Enforcement of Hadd) Ordinance, 1979 (VIII of 1979) and for the purposes hereinafter appearing,
It is hereby enacted as follows:
Posted by Dr. Manzer Durrani in Economics on March 26th, 2010
March 25, 2010
Posted by Dr. Manzer Durrani in Economics on November 20th, 2009
Posted by Dr. Manzer Durrani in Economics on October 1st, 2009
Pakistan signed an MOU with India earlier this year to provide transit facilities for their goods. However no agreement has been signed to provide these facilities. Though in the MOU it is not specifically mentioned but, these facilities are actually intended for the transport of Indian goods to Afghanistan either by railways or by road.
Posted by Dr. Manzer Durrani in Economics on June 19th, 2009
Here are a few facts relating to central bank anchored fractional reserve banking system prevailing in Pakistan. It (Central bank + private banks) have a monopoly over the issuance of money, i.e. money supply. Even though, money supply is measured as currency and deposits in the banking system, new money is not created by increase in deposits; it is created only when a new loan is made out by the banking system.
So there is contradiction number one. Money is measured as currency and deposits, but new money can only be created through making out a new loan… This contradiction is apparently resolved by arguing that since the freshly made loan immediately appears as a deposit in the borrowers account, deposits rather loans are used as a measure of money supply. In my view this is just a very clever way of masking the fact that entire money supply of Pakistan is one giant loan at a usurious rate of interest-historically ranging between 8-18%. The weighted average rate of interest on the outstanding domestic bank debt currently stands at around 13%.
This one giant loan has to be repaid with interest (13%) over an average period of about 5-7 years. At a 13% interest rate, total repayments on an Rs1, 5 year term loan would be Rs1.39, assuming five annual principal repayments.
When a loan is made the money supply increases only by the principal amount of the loan, the interest component (Rs 0.39 for every rupee) is not created as money supply at the time of lending. In other words not enough money exists to repay the interest component. Therefore the system has to make additional loans to create the money supply to pay interest on the past loans. However, these additional loans will have their own interest component which is absent from the system. That is contradiction number two. Hence, the overall loans within the system have to keep on increasing exponentially to keep this system going. If the rate of new loans creation or the rate of growth in the money supply falls below a three year average interest rate, the economy will experience a recession brought on by a money shortage. Or more accurately, there is a shortage of new loans to service the old loans.
The end result is that system wide debt keeps on increasing, always as a function of its base, i.e. at a percentage growth rate. This process is known as an exponential growth. And this is exactly the part not grasped by most. One of the greatest failings of mankind is their inability to truly grasp the true nature of exponential growth. Allow me to illustrate this with an example.
A billion rupees compounded at a 14% interest will double every 5.29 years. In 25 years it will be 25 billion and in 50 years Rs700 billion, Rs18.530 trillion in 75 years and in a hundred years Rs490.326 trillion. Every 25 years it grows by a factor of 26.Now since the economic growth rate seldom exceeds 6-7%, GDP will double every 10.25 years. Suppose the base economy was Rs1 billion as well then in 25 years it will be 5.43 billion, in 50 years Rs30 billion and in a hundred years Rs868 billion. I suppose it is clear where this trend is headed. Debt creeps initially to overtake GDP in size, and then gallops to a size no longer sustainable by the GDP within a relatively short period in the life of a nation.
The situation in Pakistan is as follows. Pakistan’s GDP in 2008 was US$160 billion, growing at an average rate of 5% for the last 60 years and its total outstanding debt, public and private, domestic and foreign was US$118 billion. The weighted average rate of interest on Pakistan’s total debt is around 9%. In 25 years at the average GDP growth rate of 5% Pakistan’s GDP would be US$542 billion. Its total debt on the other hand would have ballooned to US$983 billion. In 50 years the situation becomes more interesting. The economy would have grown to US$1.8 trillion and the debt would have grown to about US$8.4 trillion. So between, 25-50 years from now the current monetary system would force a system wide bankruptcy. Since Rupee is not the reserve currency of the world, I doubt if the country can sustain total debt of more than 200% of GDP. At current rates that is likely to happen within 25 years. As a nation, we do need to look at least 25-50 years forward. In fact we should be looking at 100 years out. However, let make the leap from a 1 year horizon to a 25-50 years horizon first.
The crisis that US Europe and Japan are facing has been brought about by these contradictory dynamics of the monetary system. They are at crisis point today because this system has been running in their economies for almost a hundred years now. Pakistan will reach the same crisis point in the not so far off future.
Here is a fact Pakistan’s monetary system is also the standard in almost every single country in the world. And here is the problem; the logical end point of this system is disaster. Are we then doomed? Or is there is a solution. The good news is that there is a solution and further good news is that it is not new. It has worked remarkably well in the past and some of the evidence of the abundance it generated can still be seen standing today.