Economic Hit of Pakistan and Illusion of Monetary Policy’s Independence from Fiscal Policy

Central Banks are required by law everywhere to manage and control monetary policy or value of money. There is nothing “natural” about value of money or forex rates. Monetary policy (always artificially crafted) works in tandem with fiscal policy and international policy to establish value of money. Tools used by fiscal/monetary policy include (1) interest rate changes, (2) unemployment rates, (3) inflation reports, (4) gross domestic product numbers, (5) manufacturing data, and (6) commodities. 

Macroeconomics 101 course has chapters on Monetary policy where SBP (central bank) is given all the tools, strategies and techniques to control (of course artificially) value of money or exchange rate. Mantra of Central Bank autonomy and “artificial” forex rates is taught by IMF/World Bank to nincompoop policy makers of developing countries through their economic Hitmen/henchmen. See how USA defends value of dollar through trade wars, even military wars, regime changes and neocolonial hegemony.

Role of Dr Raza Baqi

Raza Baqir is doing to pakistan what he did to Egypt. As an economic hitman for Egypt, he is proving a similar economic Hitman for Pakistan. Step by step, measure for measure.
In November 2016, IMF reached a $12Bn agreement through Raza Baqir with Egypt which pushed classic austerity-based policies in Egypt, which aggravated poverty and inequality on a large scale.

At the end of CY15, Egypt’s Central bank interest rate was 9.25%. However, before disbursement of IMF program funds, Central bank of Egypt increased interest rates up to 14.75%. It went up to 18.75% in November 2017.
Average inflation rate of Egypt in 2015 was 6.9% . In November 2016, when Raza Baqir came the inflation number reached the level of 11.7% with extra ordinary increase in December 2016, to close the year 2016 at inflation rate of 23.2% and 2017 at 31.8% due to Increase in electricity/fuel prices, the value-added tax (VAT) and passing through of exchange rate depreciation.
There was No extra ordinary currency devaluation in Egypt during the 3 years in 2014, 2015 and during 11 months of 2016. However, after Raza baaqir’s arrival, in December 2016, Exchange rate shot up to EGP 17.9x from 8.5x in Nov 2016.
He is replicating in Pakistan what he did in Egypt.
کاش عمران خان اپنے وعدے کے مطابق خودکشی کر لیتا مگر آئی ایم ایف کے پاس نہ جاتا – کاش اس اکنامک ہٹ مین کو نہیں لے کر آتا

Economic Hitmen of IMF and their neocolonial implants in bureaucracy and judiciary destroyed the economy of Pakistan by (1) fixing interest rate to high 13.5% when countries around the world were decreasing it to 0% or even negative interest rates, (2) hounding the bureaucracy by NAB to abandon all the development projects, stall CPEC thereby substantially reducing the employment, (3) increase dollar rate to “artificial rate” of Rs 160+ which triggered massive inflation as our machinery and other inputs of manufacturing are sensitive to import prices, (4) massively reduce GDP by campaigns against small shopkeepers and hawkers in the name of anti-encroachment drives uprooting businesses established for decades paying rent and taxes to government in Saddar and other areas around the country, and unleashing NAB on even private businesses, (5) stalling LSM and other manufacturing by increasing cost of imports, massive increase of utilities and costs of inputs and (6) creation of artificial shortages of petrol, LNG, commodities through political witchhunt of businesses and big growers in the name of Mafias destroying the commodities sector.

Please note that fixed or pegged rate is also determined by the government through its central bank. The rate is set against another major world currency (such as the U.S. dollar, euro, or yen). To maintain its exchange rate, the government will buy and sell its own currency against the currency to which it is pegged. 

How Economic Hitmen duped IK’s policy to astronomically increase the loan interest burden on Pakistanis.

  1. By increasing the policy rate from around 5% to 13.5% after tabdeeli, IK government doubled the interest payments (markup expense) to nearly half of the total expenditure. That is double of what was being spent during previous regime.
  2.  Markup suddenly became the single largest outlay even more than the entire military expenditure and military pensions.
  3. To compensate for this government had to stop/slow down all development expenditures, forcing an increase in utility rates and petrol prices, thereby severely decreasing the GDP and employment.
  4. SBP demand based rationale was that higher policy rates will reduce inflation. However, inflation in Pakistan skyrocketed to around 12-14%. SBP demand rationale was contrary to the cost rationale emerging worldwide where countries like Brazil had by decreasing the policy rate decreased their inflation. Ironically , SBP website shows research papers which also establish that Pakistan’s inflation will decrease with decreasing policy rate.
  5. The myth sold to Pakistan through the Economic hit media brigade that Pakistan has too much debt. This is again contrary to the fact that many of the countries around the world have even hundred percent to 200 percent debt to GDP ratio, and they are not having such problems. Analysis shows that it is not the higher debt, but the higher policy rates which creates the burden. Most of the countries that have higher debt to GDP ratio than Pakistan have policy rate of less than 2% , in some cases even negative policy rates. Pakistan suffered because of high policy rates not because of high debt.

Do you know that yearly pensions expenditure of government is as large as the yearly civil government expenditure.

Economic Hit on Policy Rate and Loan Interest Payment

How Economic Hitmen duped IK’s policy to astronomically increase the loan interest burden on Pakistanis. 
1. By increasing the policy rate from around 5% to 13.5% after tabdeeli, IK government doubled the interest payments (markup expense) to nearly half of the total expenditure. That is double of what was being spent during previous regime. 
2. Markup suddenly became the single largest outlay even more than the entire military expenditure and military pensions. 
3. To compensate for this, government had to stop/slow down all development expenditures, was forced to increase the utility rates and petrol prices, thereby severely decreasing the GDP and employment. 
4. SBP demand based rationale was that higher policy rates will reduce inflation. However, inflation in Pakistan skyrocketed to around 12-14%. SBP demand rationale was contrary to the cost rationale emerging worldwide where countries like Brazil had by decreasing the policy rate decreased their inflation. Ironically , SBP website shows research papers which also establish that Pakistan’s inflation will decrease with decreasing policy rate. 
5. The myth sold to Pakistan through the Economic hit media brigade that Pakistan has too much debt. This is again contrary to the fact that many of the countries around the world have even hundred percent to 200 percent debt to GDP ratio, and they are not having such problems. Analysis shows that it is not the higher debt, but the higher policy rates which creates the burden. Most of the countries that have higher debt to GDP ratio than Pakistan have policy rate of less than 2% , in some cases even negative policy rates. Pakistan suffered because of high policy rates not because of high debt. 
Do you know that yearly pensions expenditure of government is as large as the yearly civil government expenditure.
یہ کسی صحافی یا نو آموز سیاستدان کے سطحی خیالات پر مبنی رائے نہیں، عرصہ دراز تک لٹریچر کو پڑھنے، سمجھنے، اور خود سے تاریخی ڈیٹا کا تجزیہ کرنے کے بعد پوری ذمہ داری سے لکھا گیا تبصرہ ہے۔ اس میں مذکور ہر انفارمیشن کی صداقت ثابت کرنا میری ذمہ داری ہے، اور اس مختصر نوٹ میں جن آرا کا اظہار کیا گیا ہے ان کے لئے دنیا بھر میں بے شمار واقعاتی شواہد موجود ہیں جن کا ثبوت دینا میری ذمہ داری ہے۔ اپنے اپنے حلقہ احباب میں جو لوگ سیاست یا پالیسی سازی میں کردار ادا کر سکتے ہوں، ان تک یہ حقائق پہنچا دیجیے۔ اللہ ہمیں اس ملک کی بہتری کے لیے کردار ادا کرنے کی توفیق دے
ڈاکٹر عتیق الرحمن
1. پاکستان میں بجٹ اخراجات کی سب سے بڑی مد اندرون ملکی قرض پر سود کی ادائیگی ہے۔ اس مد پر رواں مالی سال میں 2631 ارب خرچ ہوئے، جبکہ آمدہ مالی سال میں اس سے زیادہ اخراجات کا تخمینہ ہے
2. اخراجات کے اس قدر زیادہ ہونے کی وجہ پاکستان میں سرکاری شرح سود یعنی پالیسی ریٹ کا بہت زیادہ ہونا ہے۔ اس وقت پاکستان میں پالیسی ریٹ 7 فیصد ہے جبکہ امریکہ میں پالیسی ریٹ محض 0.25 فیصد، اور تھائی لینڈ میں 0.5 فیصد ہے
3. اگر پاکستان میں پالیسی ریٹ امریکہ والی سطح پر چلا جائے تو پاکستان کو سود کی ادائیگی کے لیے محض 100 ارب کی رقم درکار ہو گی۔ یعنی 2500 ارب کی بچت ممکن ہے۔
4. سٹیٹ بینک اف پاکستان کے مطابق شرح سود بلند رکھنے کی وجہ افراط زر پر قابو پانا ہے۔ سٹیٹ بینک کے مطابق اگر شرح سود میں کمی کی گئی تو ملک میں مہنگائی میں بیحد اضافہ ہو جائے گا
5. سٹیٹ بینک کا یہ مفروضہ دنیا بھر میں غلط ثابت ہو چکا ہے۔ کرونا بحران سے نمٹنے کے لیے دنیا بھر میں شرح سود میں کمی کی گئی، جب کہ کہیں بھی اس اقدام کی وجہ سے مہنگائی میں اضافہ نہیں ہوا
6. سٹیٹ بینک کے پاس ایسی کوئی دستاویزی /تاریخی شہادت موجود نہیں جو یہ ثابت کر سکے کہ واقعی شرح سود میں کمی سے مہنگائی ہوتی ہے۔ پاکستان میں تاریخی شہادتیں اس مفروضہ کے خلاف ہیں
7. اس لئے گذارش ہے کہ سٹیٹ بینک کو اس بات کا پابند کیا جائے کہ وہ تاریخی ڈیٹا سے بلند شرح سود کی افادیت کا ثبوت فراہم کرے
8. اگر سٹیٹ بینک کے پاس ایسی کوئی دستاویزی شہادت موجود نہیں جو اتنی بلند شرح سود کی افادیت ثابت کر سکے، تو شرح سود کو عالمی معیار کے مطابق 1 فیصد پر لایا جائے
9. شرح سود کو 1 فیصد پر لانے سے 2200 ارب سالانہ کی بچت ممکن ہے۔ اس طرح ایک سال میں ہونے والی بچت دفاعی بجٹ کے دگنا کے قریب ہو گی
10. شرح سود کو کم کرنے سے سرکاری قرض پر سود کی رقم میں کمی کے علاوہ کاروبار کے لیے قرض سستے ریٹ پر دستیاب ہوگا، جس سے کاروباری سرگرمیوں کو فروغ ملے گا

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