What will be the likely scenario if Pakistan defaults?
Source : Express.pk

While all predictions and analyses suggest that it is unlikely that Pakistan will default on repayment of external debt, one can still try to assess what a post-default Pakistan will likely be.

 

Some of the possible economic consequences of this include conscious inflation, a huge increase in poverty, devaluation of the rupee, withdrawal of capital, closure of industries, large-scale unemployment, brain drain and the stoppage of the wheel of economic development.

 

However, in any such scenario, the country will have to pay the biggest price in the form of social unrest in the context of inequality of income and wealth.

 

Almost all economists agree that there is apparently no possibility that Pakistan will default on its loans, and the reason for this coincidence or belief is not due to Pakistan’s economic health, but because of the expected social and strategic response, which is related to the relevant stakeholders because these stakeholders cannot afford these possible effects.

 

In the event of a default, its economic cost will be quite significant, but with the right economic policies and recovery mechanism, we can see some hope or light at the end of the tunnel to return to normalcy in a few years, however, it is certain that the biggest cost or loss to the country in the event of a default will arise in the context of the current inequality of income and wealth. There will be social unrest. This issue can lead to a serious situation and also create an internal security crisis.

 

The situation on our borders is worrisome and extremist forces are already operating inside the country, so in the event of default, the country can be more chaotic than is expected.

 

So it is not just the economic cost of default that we need to pay attention to, but also the cost of social and internal security, for which we have to be prepared. Moreover, it will not be a short-term trend, but it will be quite long-term and it will be deep-rooted, it can be assumed that the recovery process will be slow and painful.

 

In this context, analysts still believe that it is unlikely that Pakistan will default. The social impact of a possible default, security costs, economic costs will be so high that all internal and external stakeholders will try their best to avoid such a scenario.

Pakistan has nuclear energy, how did it end up with a power shortage?

Last year, total production capacity of electricity in Pakistan was 43 thousand 775 MW. This includes 26,683 MW thermal (owned by the private sector), 10,635 MW hydroelectric and 1,838 MW wind. Electricity was generated from nuclear energy. So, how did a country with nuclear power become a victim of power shortage?

Pakistan’s energy policy of 1994 has had the longest and most negative impact. The country was no longer being trusted in the capabilities of the company that provided 13,000 MW of production capacity and 29,000 km long transmission lines. The World Bank, which was once WAPDA’s best friend, also started criticizing it.

The policy introduced a bulk power tariff of 6.5 cents per kilowatt-hour for the initial 10 years of the project and 5.9 cents thereafter. As a result, WAPDA lost thermal power and was left with only hydel dams. They generate cheap electricity but they do not get the attention of commission agents.

The bulk power tariff is made up of two parts: the energy price, which includes fuel costs and operating costs, and the capacity price. Capacity price includes debt repayment, fixed operating costs, maintenance costs, and equity. The transfer of bulk power tariffs and dividends abroad was guaranteed.

WAPDA’s losses due to faulty transmission systems and theft were 21 percent in 1997-98, which now range from 10 to 40 percent. The transmission system was placed under the National Transmission and Dispatch Company. Local distribution companies employing retired soldiers were formed, employing ex-soldiers to distribute electricity.

After the decentralization of WAPDA, several regulatory bodies came into existence. Responsibilities became fragmented and the accountability system weakened. Today the country is saddled with mounting revolving debt. In 2013, this debt was 450 billion rupees. In 2020, it has increased to 2 trillion 30 billion.

According to a recent report, high electricity generation costs, delay in tariff fixation, extraordinary losses in transmission and distribution, failure of DISCOs to collect revenue, and partial (often delayed) government power disbursement to DISCOs and K-Electric. Tariff differential subsidies, high finance charges, and late payment penalties increased revolving debt. These reasons are old and their solutions are not with the beleaguered users who have grown accustomed to the darkness.

An independent, competitive and private-sector-led energy sector can be a sustainable and low-cost means of meeting potential growth in demand. In October 2021, the government released the Pakistan Energy Demand Forecast (2030-2021). Its aim was to ‘enhance the capacity of government institutions for analysis-based decision-making’.

The IEP has predicted the primary electricity demand to be 28,300 MW in 2025 and 33,600 MW in 2030. Oil demand is expected to hit 205 million barrels in 2030, including oil used for power generation.

Aijazuddin, F. S. “&Rsquo;آخر ایٹمی توانائی کا حامل پاکستان بجلی کی قلت کا شکار کیسے ہوا؟&Lsquo;” Dawn News Television, 27 Jan. 2023, www.dawnnews.tv/news/1196100.

Stigma on Karachi, 513 women rape victims in 2022

Crimes and incidents like killing young people, raping women, and killing innocent children are a black mark on Karachi. In 2022, there were more crimes against women, and more than 500 women and girls under the age of 18 were sexually abused.

In the last 12 months, more than 500 women and young girls were raped, according to a report in the Dawn newspaper. This is one of the most shameful and dehumanizing things that has happened in the country in 2022. Targeted.

.The medico-legal officers at Jinnah Postgraduate Medical Centre, Dr. Ruth Fow Civil Hospital, and Abbasi Shaheed Hospital in Karachi worked together to come up with these shocking numbers.

Statistics compiled by police surgeon officers show that there has been an extraordinary increase in cases of rape and murder in Karachi.

Dr. Sumia Syed, a police surgeon, told Dawn that 513 women had been sexually abused and that 3,649 women who had been abused at home had been brought to the hospital for medical care.

Lawyer and human rights activist Maleeha Zia Lari says that official statistics on rape cases lead her to believe that the real numbers may be higher.

He told Dawn that the good thing is that 27 courts have been set up across Sindh to hear cases of violence against women and girls because of the anti-rape bill.

Maleeha Zia Lari added that a recent survey she and her organization conducted revealed that more than 11% of cases of gender-based violence end up being found guilty in court. Only 14% of Sindh’s population was found to be “satisfied” with how these courts performed.

t also shows that punishments for such crimes are improving in the courts, but we need to focus on preventive measures,” he said.

Ali, Imtiaz. “شہر قائد پر بدنما داغ، سال 2022 میں 513 خواتین ریپ کا شکار.” Dawn News Television, 31 Dec. 2022, www.dawnnews.tv/news/1194665.

Pakistan’s economy : Employees at embassies haven’t been paid in six months.

Employees at Pakistani embassies in Europe, the United States, Canada, and the United Kingdom haven’t been paid in six months because of the bad economy. They are having a hard time.

According to Express News, employees working in Pakistani embassies in the United States, Canada, Europe and the United Kingdom are deprived of their salaries due to the high flight of the dollar and bad economic conditions. Salaries have not been received.

There are rumors that employees are having trouble paying their bills and rent because they aren’t getting paid. Every month, they are told that they will get paid this month. Notices have also been sent out, and dozens of employees have to stay with family because they can’t pay their rent.

The employees say they earn thousands of dollars per day for machine-readable passports, but they are not being paid. The employees and officers have written to the Ministry of Foreign Affairs and the Ministry of Finance, but the issue has not yet been resolved. It didn’t happen

Pakistan’s economy is on the verge of collapsing says Financial Times

The Financial Times says that Pakistan’s foreign exchange reserves are very low and that Pakistan’s economy is about to fall apart.

Businesses may have to close due to a severe lack of foreign currency. The government is trying to reinstate the IMF program to end the economic crisis. Pakistan is at a crossroads and faces the threat of having its economy collapse, according to a report in the British Journal.

The Association of International Companies and Airlines says that Pakistan is withholding the most money owed to the industry. The group has warned that Pakistan has kept dollars from foreign airlines. Hundreds of containers full of imported goods are stuck at ports because buyers lack the necessary dollars, report says.

Officials say textile factories are closing to conserve energy and other resources. Islamabad’s Macroeconomic Insights’ Saqib Shirani said that many industries have shut down and may lose money if they don’t restart.

Pakistan’s foreign reserves have dropped to less than $5 billion, which is not enough to pay for a month’s worth of imports. There is no way out. Even if Pakistan can roll over one or two billion dollars, there is no clear way out of this situation.

The steel industry has threatened to stop making things because banks won’t open letters of credit (LCs) for importers. Pakistan is still trying to recover from last year’s terrible floods, which caused damage worth nearly $30 billion. International lenders promised more than $9 billion to help Pakistan’s economy.

Tomorrow, exchange companies will abolish dollar rate cap.

The dollar rate cap will be lifted starting on January 25 according to a statement made on Tuesday by the Exchange Companies Association of Pakistan (ECAP) (tomorrow).

The sharp decline in the central bank’s foreign exchange reserves, which have dropped to $4.6 billion, has had a significant negative impact on the exchange rate. The rupee has been declining “despite being managed,” according to currency experts, by the State Bank of Pakistan (SBP).

Due to a lack of dollars, the difference in rates between the interbank and open markets has grown significantly, severely harming the economy and diverting remittances away from the official banking system and toward the black market.

The trade and industry, as well as the agricultural sector, which depends on diesel during the harvesting season, may be negatively impacted by the rationing of gasoline and diesel in the coming two to three months due to the lack of dollars.

Tuesday saw an association meeting that was presided over by ECAP Chairman Malik Bostan and General Secretary Zafar Paracha.

Bostan claimed that the decision to cap the dollar rate had turned out to be “negative” in a thorough statement released after the meeting.

“Instead of declining, the dollar rate increased, leading to a shortage of dollars on the market and the emergence of the black market.”

He also bemoaned the fact that people had to turn to the black market in order to purchase dollars for travel, paying for their education, or paying for medical expenses.

The government, he claimed, believed exchange companies were “deliberately blackmailing” them as a result of the situation’s “panic in the market,” which had caused the situation.

“We made a decision with these things in mind.” He added that the association would be meeting with the central bank at 9 a.m. tomorrow.

As the governor is in Islamabad, we have a meeting with the SBP deputy governor tomorrow morning, Bostan said. We’ll trust them with the decision because “the cap imposed in the national interest has proven to be negative.”

He continued, “Once the black market shuts down, the dollar rate will start to fall. I want to inform everyone in the country that there is a shortage of dollars because exchange companies can’t find any sources for them.

He claimed that it was necessary to suppress the black market. He claimed that lifting the dollar rate cap is the only way to achieve this.

The ECAP chairman asserted that “when people can buy dollars easily, the rate of the greenback will automatically start to come down.” When the intermarket and pre-market rates are equal, remittances will also rise.

The NA had passed a law stating that the government could not borrow more than 65% of its GDP.

During the Musharraf administration, the National Assembly passed a law stating that the government could not borrow more than 65% of its GDP, and that those who did so would be subject to disciplinary action. The National Assembly will then review the details of the loans.

This situation has probably increased to 115%, as if we will return 15% of what we earn in a year.

As if everything you can think of is extinct, there is a lack of food, necessities of life, health, medicines, respect, and education. However, the question of “Who are those people who populate large shopping centers where foreign goods are being bought and sold on a large scale?” naturally arises.

Chaudhry, Azeem. “&Rsquo;ساری سیاست کا دارو مدار معیشت پر ہے&Lsquo;” Dawn News Television, 21 Jan. 2023, www.dawnnews.tv/news/1195796.

The writer of the above mentioned article says that it is law. It means those who have borrowed more than the specified amount have violated law and has put the country into a quagmire.

People of Pakistan should decide. Should they vote for parties or persons who have pushed them into a serious mess.

Who pocketed the profit earned on Shaukat Khanum’s fund?

Imran Khan admitted in court that he put money from Shaukat Khanum’s fund into a private housing project. He said that the board of Shaukat Khanum told him about this, but he can’t remember the name of the project. When the lawyer asked Imran Khan if the board had told him in writing, Imran Khan said he didn’t remember being told in writing at the time.

Shaukat Khanum's fund
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The PTI Chairman stated that the board member paid back $3 million and that the matter was closed. The lawyer stated that the matter does not end there; when 3 million was invested, the dollar rate was 60 rupees at the time, and when it returned, the dollar was worth 120 rupees.

On this occasion, Imran Khan’s lawyer requested that the hearing be adjourned, but Khawaja Asif’s lawyer stated that the hearing had already been adjourned.

Khawaja Asif’s lawyer has raised a valid question.

If they had invested the money, then the profit should have also been returned to Shaukat Khanum’s account.

Three million dollars is a substantial sum of money. It is not easy to take out this amount from Shaukat Khanum’s account and invest it without proper authorization and approval. Publc will not accept the lame excuse given by Imran Khan.

The question is : who pockets the profit on the investment?

A case should be filed against the person who did not deposit the profit earned on the money and instead diverted it to personal accounts.