Debt Re-profiling| shahbaz claim busted| friendly country cooperate?|testing time for M. Aurangzeb
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- čas přidán 8. 09. 2024
- I will be very careful with my words, but let me put what Federal Finance Minister Muhammad Aurangzeb Khan has mentioned in press briefing yesterday
“He said the process of debt and equity rescheduling had been started and would now go to the working groups with relevant financial institutions and sponsors of Chinese projects for which Pakistan was hiring local Chinese consultants”
“The minister, however, clarified that Pakistan was seeking the reprofiling of payments and not “haircuts” - debt waiver or interest rate cuts”
Finally, with admission by Pakistan Authorities are out with “Debt Re-Profiling”. This has dumped the claim of Shahbaz led PDM1 & PDM2 govt that they have saved Pakistan from Default
It was inevitable since PDM had busted the economy, failure to attract foreign capital public& private, and failed to continue 23rd IMF program etc. Clogged the economy after taking bad policy actions like import restrictions
While, PDM failed to sustain exports, remittances, non-debt and debt capital market flows (Bonds & commercial deposits), it has overlooked the Financial Account balance
Now Financial account has reached to point, where it can’t be sustainable without Re-Profiling or Re-Structuring
Now we know the reason for opting Muhammad Aurangzeb Khan as Finance Minister, as PMLN don’t have in house expertise on debt side management
To an extent of debt Re-Profiling Aurangzeb khan is best choice, given his experience, exposure and International Networking
But he need internal honest support to run the Financial affairs within PMLN, PDM and Finance Ministry come Bureaucracy
The crisis is serious but offering an opportunity
As indicated in article www.dawn.com/n..., the Re-Profiling so far circling around on friendly countries (China, Saudi & UAE). It’s not widened to other lenders (Multilateral & Paris club). Also not to domestic lenders
The question now will this exercise spread to entire debt portfolio? Because other lenders may demand for it
The other question on equity restructuring, primarily focus on re-writing of agreement and outstanding payables deferment. Is it easy or manageable in coming weeks? Will these firms knock the order of international arbitration Forums?
Let’s take two recent times case studies (Ghana & Siri Lanka). Former did re-profiling and later restructuring
Encouragingly, IMF has entered into Staff level Agreement with Pakistan. But it’s important to see whether we need to re-profile the debt as prior action or structural benchmark?
If prior action then it will take months to fulfill this
What are the options?
We need to draw parallel home grown plan
I remember Shahbaz Sharif had appointed FCDO Economist to prepare plan. I wish, he should come up with creative plan
Summary…
PMLN & PPP (PDM) have maintained their legacy of taking Pakistan into un sustainable/default terrain.
1973, 1999, 2009, 2018 and 2022 to date are all the inflection years of semi/default and belongs to PDM party
How long they will take to learn from their past mistakes? Or they don’t have the capacity?
Time to design a template to learn from history...
Cheers,
As usual Muzzammil shb you make the language of economics simple words explanation with examples, thank you; may you have a big role t play in the future PTI govt.
Thank you
Thank you for sharing
Incomplete without comparison with India, Banglades. Were did their finance ministers came from? We can now add ,Afghanistan...
Best in-depth analysis and good suggestions ❤
Good
Well explained !
MA SHAA ALLAH SIR
❤❤
If pakistan economy is not good why all political parties including PTI join hands and work for Pakistan. 😢 why PTI is behaving selfish and not looking for Pakistan interest? I wish Pakistan economy grow, people of Pakistan fed up now with political wrestling and instability
Good Blame The Incompetence Of Showbaz On PTI Too
Sir plz tell why stock market go high if economic is not good
Excuse me ??? Best choice? All previous ones were Brettonwoods trained.i guess he is too.