Ahmed Jamal Pirzada
@ajpirzada
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Economist at @BristolUni . Interested in macroeconomics. Retweet is not endorsement. From #Bhera / #Islamabad !
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I have put together links to my 'threads' & newspaper articles on my website (see ). This makes it easy for me to access these when I need to. And, perhaps, will also make it easier for anyone else interested.
DISCLAIMER: I do change my views over time!
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Imran Khan putting forward his narrative on CNN in as blunt a manner as he normally does in Pakistan. No appeasement.
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With the Army Chief now part of SIFC Apex Committee, we may see the biggest regulatory capture of our history. The military, which already runs 50 commercial entities, is now effectively in a position to bypass any law which collides with its interests.
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All this for appointing the army chief of your choice, forgetting that they belong to no one.
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My all time favourite quote from Machiavelli's book, The Prince, which is almost always relevant to Pakistan's politics:
"A king who comes to power with the help of the rich nobles will have more trouble keeping it than the king who gets there with the support of the people."
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Rulers demanding respect while going to extreme lengths to avoid coming clean on how they accumulated their wealth. Pretty convenient, no?
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The irony is that for decades the beggers have been financing the lifestyle of ruling classes and their progeny who in return only remind them that they are still beggers.
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Need to stop trivialising what's going on by continuously comparing this with similar events under Zia or elsewhere. This is horrific.
Imran Khan’s political games leave him isolated as Pakistan army destroys party
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The drying up of geopolitical rents is proving quite fateful. Establishment has nothing to offer to the young population except references to "30-40 years" of service which usually ends with generals bestowing acres of public land to themselves to celebrate their (in)competence.
"No one wants to be labelled a traitor after serving for 30-40 years. We can be weak, we can make mistakes, but we can never be a traitor or conspirator. The army is nothing without the people," the DG ISPR said.
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Crazy stuff going on here. Backup of the backup of the backup.
لودھراں والو
یہ ہے آپکا نمائندہ پاکستان تحریک انصاف کا نمائندہ عمران خان کا نمائندہ جسے آپ نے 8 فروری کو ووٹ کر کے جتوانا ہے۔
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#PTI
has not been able to push through key reforms: local govts, police, judicial, FBR, south punjab etc. PTI shud push for these in the time they hav got left. Otherwise, apart frm IK's financial integrity, there will be little to differentiate PTI from others in 2023 elections.
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If your politics is leading you to disenfranchise people to preserve your electoral strength, you have lost it!
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With heavy heart, this is the reason why liberalism will continue to fail in Pak. The mind games its adherents play to effectively normalise nepotism, corruption and whatnot is really wat fuels the other side. To win, we must not 'welcome' corrupt-dynastic politics but reject it.
Fascism Vs Dynasty. With a heavy heart, I welcome Hamza Shahbaz as the new Chief Minister of Punjab.
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Partly agree and partly disagree. First the agreement part. PTI govt could not implement any meaningful reforms to improve productivity of economy. Broader policies were hijacked by technocratic & business elites: amnesty schemes, untargeted subsides & protectionist policies.
🇵🇰 PM voted out of office by parliament after 3.5 years
He inherited a bad economy, but leaves it in even worse shape
🧵
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QFI and co worked hard to throw every roadblock in the way of a simple constitutional point of election in 90 days. He is now working hard in helping the authoritarian setup destroy what is left of democracy in Pakistan.
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🧵 Understanding DAR's Folly:
Imagine, u think rupee will loose its value by a significant amount in near future. It will then make sense for u to convert whatever rupees u hold to $. If everyone believes so and starts doing the same, rupee will indeed end up loosing its value.
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(1/n) This is one of the least appreciated policies which Raza Baqir had to implement and which possibly cost him an extension. His predecessor expanded the size of SBP balance sheet (via lending to govt) by almost 6 trillion in just one year - an extremely inflationary policy.
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PTI's popularity has increased further from 41% to 46% over the last two weeks. The surprising part is that, unlike before, all of this increase in popularity has come at the cost PDM. I really wasn't expecting that people will switch sides in such a polarised environment.
The political story is all about those 15% who were sitting on the fence and have now (mostly) joined PTI camp. The challenge for PTI is to keep them in their camp and the challenge for PDM is to make them leave. The odds r against PDM due to wat is about to come on econ front.
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(1/2) Surplus or not, sustainable CAD is a must. There is no example of a developing country sustaining growth while running large CAD, defending overvalued exchange rate, & having little reserves!
Any such debate is either poor understanding or partisanship. Dar was a disaster!
CAD surplus or GDP growth
PMLN govt gave GDP growth and said we will sort out CAD later
PTI has given CAD surplus and says GDP growth will come later
Both are routes worth debating and deliberating on.
Which path u support?
@rogueonomist
thanks for triggering this and graph
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National government is a ploy to enjoy it all with no one there to challenge you on governance front. In simple words, khao aur khanay do!
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Half of the mess is due commentators who think of political parties as a 'project' implying millions of party supporters could not think for themselves. They went around advising the state to use 'force' to undo the 'project.'
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🧵 IMF numbers in the staff report for Pakistan look ridiculous. Here is why:
IMF expects that Pak will be running an annual current account deficit of around $10bn. This adds up to $54bn over the next five years. But this is not where the problem lies. Instead, the problem ...
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(Thread on sugar report: 1/n) Sugar inquiry report has done a good job highlighting systematic problems in sugar industry. But it has not answered y sugar prices increased between Dec-18 & Aug-19. This thread provides an explanation for y prices increased during this period.
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So what does it even mean when PMLN says they expect PPP to share the political cost of making tough economic decisions? They have nothing to share, literally.
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If the surplus capacity is as high as NEPRA projected then almost Rs8 in per unit tariff everyone is paying is due to capacity which no one is using. In June 2023, govt went on to sign another contract for 1200MW in additional capacity with China. Why?
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Hammad has been one of the few sane voices who is willing to push for what is right: trade with India, deregulating sugar sector, improving the efficacy of export subsidies, pushing for IGCEP, and now this. None of this gets you brownie points with status quo but must be done.
WACOG bill has been passed today by senate as well. It is a historic and long pending reform that will ensure the energy security of Pakistan. We are now able to embark upon the reform of the gas pricing structure, remove anamolies and enhance supplies of imported gas. 1/2
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(Short: 1/n) Wat caused
#Pakistan
's economy to grow between 2013-18? Short answer: consumption fueled by debt! Let's break it down: Data from recent econ survey shows that high growth rate in FY17 & FY18 was driven by consumption. But wat was behind this increase in consumption?
@ajpirzada
ciuld u please shed some light on gdp growth from 13 to 18 which couldn't exist or evaporated just in few months or a year??
what were basis of that growth?
except CPEC whats big investment?
we had import based economy so how that growth there ?? thnx
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(1/4)
#Pakistan
's national income (GNI) has increased by an impressive 7.1% this year. In other words, per capita income has increased by 5%. This helps explain y there is significant improvement in econ activity even wen real wages r still to recover. Even more so, this also ...
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Looks worse than what I was expecting. And contrary to wat I previously thought, SBP continued to use reserves to finance CAD and support exchange rate in July. Reserves fell by $1.77bn. With net capital outflow of around $800mn, much of the decrease in reserves was due to CAD.
1/2 The current account deficit shrank to $1.2bn in Jul from $2.2bn in Jun, largely reflecting a sharp decline in energy imports & a continued moderation in other imports. Visit
#EasyData
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The political story is all about those 15% who were sitting on the fence and have now (mostly) joined PTI camp. The challenge for PTI is to keep them in their camp and the challenge for PDM is to make them leave. The odds r against PDM due to wat is about to come on econ front.
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Pak 'constitutionalists' scapegoating QFI & co after cheerleading them into disenfranchising masses at every stage on procedural grounds in the last one year. Now rediscovering their vocabulary.
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(THREAD: 1/n) This figure shows how much the world owes Pakistan (+ve bars) and how much Pakistan owes to the world (-ve bars). The net amount Pakistan owes to rest of the world (net IIP) has increased from $29bn in 2005 to $127bn as of Dec-21. The scary part is that ...
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Special Investment Council formed to encourage investment when the state cannot tire itself of picking women and children as a tool to persecute the largest part of the electorate! Zia 2.0!
Family members of PTI leaders arrested today:
- Former Punjab Governor Omer Sarfaraz Cheema's wife
- Member AJK Assembly Ghulam Mohiyudin Dewan's wife & daughter.
- PTI Chakwal President's Nasir Bhatti's school going son.
- Ex Minister Punjab, Hussain Jahania Gardezi's
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Ishaq Dar is not completely off the mark when he says the 'true' value of exch rate is lower than what we see today. If debt maturity profile was more favourable, this would hav indeed been the case. But favourable maturity profile can only be achieved through debt restructuring.
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MashAllah! Khurram Dastagir has so much confidence that the appointment of additional judges and fast-tracking of corruption cases would have led to the disqualification of the entire top leadership. Truly redefining 'fascism.'
Khurram Dastagir always has been the one with clarity of thought.
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(1/2) Had a quick look at Social Studies class 4-5 curriculum. Covers ancient civilizations, constitutionalism, cultural diversity including festivals of minorities, interfaith harmony, citizenship & so on. The curriculum & learning activities look pretty good to be honest.
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Constitution mandates fair elections to allow people to vent out their anger in an orderly fashion. What happens when you block off all the vents?
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Feels good to be nominated for Bristol Teaching Award but feels even better to read the following coming from my student, "Ahmed always combines theoretical knowledge with famous historical events and makes me feel that I am applying my learning."
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There is considerable improvement in the recovery of electricity bills in FY21 compared to previous years. As per Nepra report, the recovery rate increased from 88.7% in FY20 to 97.3% in FY21.
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Economists in
#Pakistan
need to do a better job to explain as simple a concept as 'real' vs 'nominal' to commentators. The same $ gets u more goods/services in Pak today than 2 yrs before. Alternately, anyone earning $300 two yrs before was poorer than someone earning $300 today.
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PTI has shared data on Form-45 for 47 constituencies so far. This is how the number of votes changed between Form-45 and Form-47 for these constituencies. Almost nonsensical for votes to fall by more than half a million and that too just for PTI.
Link:
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🧵 1/n: Since APTMA is back with asking for more of taxpayers money, lets see what is going on with textile exports. For starters, in its letter to the PM, APTMA makes a big deal of energy subsidy it was getting and how it increased textile exports by so much in just two years.
Dear APTMA, can we ever trust you? Is it fall in exports or parking proceeds abroad and diversion of export proceeds through illegal channels?
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They dont realise that another generation of the future voter is watching what has been happening in front of their eyes. They lost the current generation and are loosing the next one.
#Elections2024
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Imran Khan is probably right when he says that sugar mills behave like a 'mafia.' Some of the information shared in the recent judgement by the
@CCP_Pakistan
is just insane. There is collusion all over the place.
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wow... that is so busy. This has removed critical infrastructure constraints our industry was facing. We hav become much more productive now & can access markets which were previously inaccessible.
Ever wonder why the debt increased but the economy collapsed? This is it!
Going to PMLN Workers Convention Burewala via Lahore-Multan Motorway. Another
#PMLN
landmark project.
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Dar sb learning the hard way. What was worse is that the SBP Governor also believed that the true value was somewhere around 230. Did SBP set the policy rate based on this assumption?
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As per the book Military Inc, military was already in control of millions of acres of agri land by 2007. If that couldn't transform agri, why would it this time? Solution is to reform seed market, invest in disease control, introduce crop insurance for small farmers, and more.
زراعت میں انقلابی تبدیلیاں لانے کے لیے جو رقبہ پاک فوج کو دیا جائے گا کیا پھر کوئی ان سے واپس لے سکے گا؟؟؟
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This confirms what we already know about Pak's economy. Whenever GDP growth increases for few years, we end up seeing a BoP crisis. The sharp increase in import duties between 2016-20 could not prevent it. Repeating similar policies again will bring us back to the same place.
The National Accounts Committee (NAC), in its meeting, reviewed and finalized National Accounts for FY22.
The estimates of GDP growth for FY22 came out to be 5.97% compared to 5.74% growth recorded in FY21.
@StateBank_Pak
#SBP
#Economy
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Rich coming from people who will hide behind multiple jurisdictions and compromise on the party's electoral prospects to avoid coming clean about their family wealth. But lets talk 'political economy' and policy shenanigans in the name of protecting the poor.
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(Comment: 1/6) Deficits r not always bad but can be catastrophic if markets lose faith in ur repayment capacity. Unlike India & Bangladesh, growth episodes in
#Pakistan
(2004-08 & 2015-18) came at expense of falling Exports-GDP. High CAD was unsustainable!
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Received more than $100bn in remittances during the four yrs of previous govt. But debt servicing burden still increased to $26bn in FY23. Getting more & more $ frm across the world without addressing issues around rent seeking & irresponsible macro policies is not going to work.
"Pakistan must do debt restructuring and raise investments from expat in real estate "
Shaukat Tarin
@shaukat_tarin
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Heard some in
#Pakistan
saying that lockdown will cause the epidemic to end sooner. No! According to epidemiologists lockdown will decrease peak # of cases but the epidemic will take longer to end. Makes the health crisis much more manageable but increases economic cost of it.
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(1/n) Based on some straightforward calculations, it turns out that if we do not want the capacity payment per unit of electricity consumed to increase any further, GDP growth rate must be more than 27% in next two fiscal years. And this ignores existing stock of circular debt.
This is how Take or Pay capacity payments in the power sector are rising. And not because of any contract that PTI government signed.
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(Thread: 1/n) I dont know how World Bank has reached this conclusion. It is near impossible to work this out frm just lookin at data. This is imp because using reserves to defend the currency can be quite different frm providing dollars to the market. Let's consider an example...
Proof——A new World Bank report has confirmed that the State Bank of Pakistan pumped $1.2 billion to defend a weakening rupee and also underlined that the government’s decision to impose regulatory duties would not solve the current account deficit problem.
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Building more and more infrastructure funded by external debt in a protected economy will not work.
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(Thread: 1/n) Is it the entrepreneurial spirit of Tabba sb., as being celebrated on twitter? Or, like always, it is the govt of
#Pakistan
facilitating business groups by make it expensive for citizens to buy better products from abroad?
Samsung, the world's largest smartphone maker, is set to assemble mobile phones in Pakistan by December in a joint venture with Lucky Group
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Budget targets off by more than a trillion. Rs750bn in revenue from petroleum levy and around Rs400bn decrease in energy subsides requires drastic increase in both fuel & electricity prices. Rs200bn under GIDC and Rs800bn under provincial surplus (in election year) also fanciful.
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(Thread on
#ElectricityCrisis
: 1/n) The more I look at data, the more it seems that electricity crisis in
#Pakistan
is less to do with excess capacity and more to do with nature of contracts & governance. A recent webinar by
@PIDEpk
& a presentation by
@EngroCorp
makes it clear.
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SBP's economic policy uncertainty index is at its peak as of May-22. Can see details here:
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(1/n) While there is a general upward trend in food prices in
#Pakistan
, there is also a lot of heterogeneity is how prices of key food items have changed across cities. This points to a mix of local, national and global factors underlying the upsurge in food prices recently.
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🧵 There is some concern tht recent appreciation in exch rate may hav to do with SBP using reserves to support currency. While SBP did support rupee in previous months, I dont think this is the case today. There r several reasons for this to hav happened without SBP intervention.
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THREAD: Here is an interesting question we may want to ask ourselves. Between 2010-2013, global commodity prices were record high, government was also running large fiscal deficits, but CAD remained under control throughout this period. Why?
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More of a lesson in not doing establishments' bidding at the expense of your political capital. All the fights PTI and its support base had to fight for no good reason only to be thrown under the bus. Lesson learned 🤔?
*DG-ISPR Gen Asif Ghafoor* in 2019 tells us that *Mohsin Dawar* and *Ali Wazir* are funded by RAW. Both are now ministers in *PM SS* cabinet. Institutions loose credibility by such actions . We should tell public the truth .
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After all the effort to make these happen, LHC just so easily suspended local govt elections in Punjab on a petition involving neither govt nor ECP?
The Lahore High Court on Monday suspended the schedule for the first phase of local government elections in Punjab and sought detailed replies from the Election Commission of Pakistan and other relevant authorities.
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It is hard to appreciate the need for macro stability since it often comes at cost of growth. But today - with CA deficit even less than $3bn -
#Pakistan
is in a much better position to survive the panic in international financial markets than 2 yrs before
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Some of us were trying to fight rentseeking and here the country has been handed over to the worse of them all 🍾 Sprinting towards the Egyptian model where military's stranglehold on both freedoms and the economy will choke any progress towards a prosperous country.
The most comprehensive institutional transfer of power to the military in generations. Army's role codified in economy, legal impunity granted to all its commercial & pol activities, mly courts strengthened, COAS granted unlimited power. Pakistan's democratic experiment is over.
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implement ker bhe do bhai... dhai saal say theory parh parh ker thak gay hain 😐
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(2/n) Raza Baqir took on the task of reversing this to contain inflationary pressures over medium to long-term. Over the three years of his tenure, he decreased SBP's holdings of government bonds by more than a trillion.
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A thing or two on the importance of adhering to the constitutional provisions on holding elections instead of passing resolutions to subvert it under the very same roof could have improved the optics. But the judge sb has his own priorities.
What could possibly be worse optics at a fragile and fractured time for the Supreme Court?
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On LUMS and Rickshaws... Islo elites do not pretend to be paupers. They live their (parents) wealth to boredom, effectively demonstrating why not to be like them. Way better moral standing than lahori elites' socialist pretence while sitting on handsome inheritance.
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Even if you want to use taxpayers money to supposedly 'manage media' by funding half page adds, there are more productive ways of doing it: public services messages, science quizzes, ethics for kids, and maybe just games.
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Most think an early election suits PTI, whereas a late one suits PDM. I think the exact opposite. 71% of ppl who r happy with the outcome of VoNC r happy bec of high infl in recent yrs. But infl is only going to get worse. This may force these ppl to reconsider their past views.
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🧵 Here is one way to understanding why taxing 'reserves' may be a bad idea. To understand this, lets consider Lucky Cement as an example. Note that its balance sheet shows 132bn in 'reserves' (see at the very end). But what r these 'reserves'? That is where it gets interesting.
Is one Mr. Tola — “Dean of the Dar School of Economics” — behind these regressive taxation proposals?
What does the
#PDM
Govt. want? Capital flight 💸?
@javedhassan
@samirahmed14
@samigodil
@ahsansoorani
@Sabbandkardo
@SayemZA
@ajpirzada
@MuzzammilAslam3
@AbdulRehman0292
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(Thread on
#Growth
&
#Productivity
: 1/n) Everyone wants growth but it must come from increasing productivity for it to be sustainable. But how do we increase productivity? Unfortunately, we dont hav definite answers but there r some low hanging fruits for countries like
#Pakistan
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Need to roll back the Balochistan model of running things, not mainstream it to rest of the country. Political aspirations of masses will continue to find ways to express themselves. East Pak had the geo/population advantage to part ways. Balochistan doesn't. None good for Pak.
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Liquidity issues getting worse
The 6M KIBOR increased by 30bps DoD and reached at 15.68% (a 13.4 years high), the highest level since 01-Jan-09 (15.70%).
@StateBank_Pak
#Economy
#Pakistan
#AHL
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Government borrowing from banks has started to normalise over last two months. This is good new for CAD in future. Also, if this trend continues, it will create room for the SBP to not be overly aggressive in the next MPC meeting.
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CDS (an indicator for default risk) has shot up by another 500 basis points or so in the last one week. Stands at more than 2000bps now. Still have some control over our fate but very much entering a territory where economic outcomes just become unpredictable.
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(n/n) Borrowing from
@AzamAKhan2
, I wish King Baqir all the best. You served this country well in the toughest of times. Thank You!
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Textile exports have fallen significantly in July. An important factor behind this 'may' be the collapse in cotton prices in international market. Remember that more than half of the increase in dollar value of textile exports was always due to the price effect.
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Turkey is still trying to manage the crisis which started in 2018. In contrast, Pakistan not only successfully managed its 2018 BoP crisis but is now getting ready to manage another one 😀
Money changers in Turkey will be required to record the identities of their clients under new rules issued after the lira hit another low this week
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I think CSS offers the quickest way to climbing the social ladder in Pak, at least in terms of prestige. If u grew up seeing ur parents frequenting doorsteps of local elites, passing this exam will flip everythin for u. Returns from becoming part of the 'system' r too attractive.
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(1/n) SBP is trying to manage more than its share and, in the process, exposing itself to criticism. SBP needs to communicate that it cannot do much when it comes to fiscal policy and global commodity prices, both of which influence the exchange rate.
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When foreign diplomats offer 'forgiveness' against certain political outcomes, the country's global image and of those who call shots is pretty lowlife anyways. Further cemented by statements from political leaders such as "beggars can't be choosers."
The judgement notes how both Imran and Qureshi undermined country’s global image and diplomatic relations.
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Govt shud let Hammad take lead. The one decision he took as ECC head shows he is thinking straight & has the courage to take decisions if supported. I will rather bet on him than on run-of-the-mill technocrats habituated to loosing themselves in macro nos.
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The ugliness of Pak politics on full display: govt willing to risk default to blackmail establishment into ensuring their rule and opposition appealing to establishment to bring them back. Only thing I like about this is no one is being a hypocrite by pretending to be a democrat.
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(Thread: 1/n) Yes, textile machinery imports have gone up. But, it turns out that all of the increase in textile exports in Jul-Oct 2021 is due to increase in international prices. Let's look at the details & think about what this means for policy ...
Textile machinery imports are at all times high - the growth is surpassing imports in Musharraf time when textile exports grew by 82% during FY02-07
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(Thread: 1/n) This excellent article really made me think. If real wages did not drop between 2008-2013, why have they dropped during the current crisis? It turns out that the original article by Hafiz Pasha published in Business Recorder has few mistakes.
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Dar sb is living in 2013 when CAD was almost non existent and external debt servicing was $6-7bn. In the following year, commodity prices collapsed and remained low for next few years. Meanwhile, world central banks were extemely dovish. 2022 is an altogether different world.
Ex Finance Minister will try to bring PkR to 160/ USD. Not sure how will exporters/ IMF react. Subsidizing the rich & middle class at the expense of "sustainable growth". If with Rs at 160, you can grow exports 20% YoY, I am OK. No boom-and-busts!
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With Karachi incident, we may also want to acknowledge that outsourcing the 'management' of Balochistan to army generals continues to fail. If Balochistan had as much population as the then East Pakistan, we wouldnt have the luxury to run it through proxies planted by the state.
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(1/n)
#Pakistan
: Two interesting charts showing how year-on-year growth in private sector credit uptake for imports decreased from 35% at the start of crisis to close to 0% now & and how the growth in credit uptake for exports increased from close to 10% then to above 20% now.
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THREAD: Our debt-to-GDP ratio has been coming down since FY20. If I use available figures for deficit spending for Q4-FY22, public debt-to-GDP ratio is down from 76.6% in FY20 to 68.4% in FY22. If I include provincial surplus of 570bn, the number goes down to 67.6%. However, ...
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Closing mosques to stop covid19 will subvert religion. Revisiting 18th amend. will subvert civil supremacy. Opening trade with India/Afg will subvert national security. Everyone cultivating suspicion about everyone has stalled progress on everything. A case of low trust society!
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Islamabad is as far from Karachi as it is from old silk road cities i.e. Balkh, Bukhara, Samarkand etc. If only this region was stable, would hav made an enjoyable road trip. Apparently there is also a World Bank project (i.e. KPEC) aimed at making this a reality 🤞
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In my own assessment, ministry of commerce should simply be abolished. It is a den of elite capture in Pakistan. In the name of industrialisation, it robs people of their hard earned income to benefit business groups. Worse still, every robbery is celebrated as achievement.
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What a horrible idea to say the least. In the world of global value chains which require seamless flow of goods/transactions, we have this as the out if box solution to our problems. CAD is a macro problem with a macro solution.
Pakistan used to have a voucher based system and my friend Nasim Beg was kind enough to produce the concept on a paper this morning. Please read it seriously and give your comments. It is time for out of box solutions.
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(8/n) Finally, Raza Baqir's (and his team's) contribution towards putting in place infrastructure in the form of RAAST and technologies underlying RDA to jump start further developments in the financial industry must be applauded as well.
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The IMF program promises a lot. But it wont deliver! The assumption that net foreign investment will reach $9bn in FY24 and $13.5bn in FY27 from the annual average of $2.5bn is ridiculous. And since everything above depends on this, the projections in IMF report are misleading.
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SBP supplied $1.2bn in Forex from its reserves to the market during first three weeks of June alone. This is after adjusting for $2.3bn in inflow from China. Hardly surprising that CAD will shoot up. Also suggests that exchange rate would have depreciated by much more otherwise.
As expected, the import ban is turning out to be counterproductive.
"In June alone, the import bill edged up to $7.74bn from $6.28bn ... Imports increased by 14.32pc month-on-month in June. In May the import bill was recorded at $6.77bn."
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