I find accounting gimmicks fascinating. I used to ignore budget news but since writing the blogpost I have realized there is material here.

By “keeping some expenses off the books” and not paying subsidies, the budget deficit remains within limits. 1/

tribune.com.pk/story/2279578/…
I wonder what expenses have been kept off the books and what is their quantum. @81ShahbazRana do you know?

WRT to subsidies, it appears the number is Rs.100 billion that has been added to circular debt so that it is not reported in deficit. 2/
Thirdly, if we go by what Hafeez Shaikh said wrt to IPP payments, at least 300b to be paid by June. 2/3 (Rs. 200 billion) to be paid as PIBs to avoid appearing in budget deficit.

dmkm.substack.com/p/circular-deb…
Does this mean we will be under reporting budget deficit by at least Rs.300 billion? due to
1. Not paying subsidies (Rs. 100 billion)
2. Paying IPPs in PIBs (Rs.200 billion) assuming not included in 1 above
3. Expenses kept off books (Rs.???)

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More from @2paisay

13 Jan
After needlessly arguing over the effect of discount rate and inflation, I decided to analyze its impact on the credit market myself. I used SBP monthly data from its website (stock). Flow data would have been better but I worked with what was available.

A thread.
Government borrowing was impacted by the discount rate. At 13.25%, GoP borrowed appears to have stopped increasing. As the size of private-sector borrowing is smaller than GoP borrowing, we will look at private-sector borrowing separately. Image
Private sector borrowing: stand-alone and starting the left axis from Rs.3 trillion so that changes are visible. It appears private sector borrowing kept increasing till Dec 18 when the discount rate was raised to 10%. Image
Read 19 tweets
11 Jan
Government and IPPs have reportedly agreed to sign Master Agreements. Payment to be made 1/3rd cash and 2/3rd in 10-year floater PIBs (6M coupon/reset) to remain within fiscal constraints imposed upon by IMF.

brecorder.com/news/40049706/… Image
No one explains how this mechanism helps Pak to remain within fiscal constraints imposed by the IMF. This is an accounting gimmick to underreport fiscal deficit as far as I understand it.
I talked to a few people to understand it and wrote a blog post about it. Abdul Hafeez Sheikh isn't much different than Ishaq Dar dmkm.substack.com/p/circular-deb…
Read 4 tweets
4 Nov 20
South Korea, Japan, Taiwan, Malaysia grew using industrial policy. They didn't get everything right. But some seeds found the perfect climate politically and economically such that the trees that grew, their branches extended over a wide area and bore fruit for a long period.
There isn't a perfect recipe for what an industrial policy should like. The main policies usually revolve around support to industrial-oriented or export-oriented industries in the form of
1. directed credit and financing subsidies
2. cost subsidies
3. wage repression
In return for these subsidies, the companies are expected to increase the exports, which leads to introduction of export discipline (increased productivity, trained workforce, technology adoption leading to value added products feeding back into the virtuous cycle).
Read 20 tweets
24 Oct 20
Was talking to a friend. He said he and his brother have submitted refund applications at Jamat e Islami’s camp for Bahria Affectees.

Don’t understand Bahria’s plan here as their reputation has taken a huge beating for non-delivery and development charges extortion at BTK.
They aren’t able to sell or develop the plots they already have in BTK. Last two launches were a complete failure.

Many banks do not allow mortgages on Bahria land. Probably won’t qualify for Naya Pakistan Housing.
Why is Bahria encroaching on more land?

The only thing I can think of is some quid pro quo arrangement with Sind government sorry PPP.
Read 4 tweets
20 Oct 20
In light of last few days entertainment, short serious thread on how General Bajwa achieved his hard earned extension. As always, a court reporter may be able to do a better job of chronologically organizing it and adding color to it.

Bajwa was due to retire on Nov 29, 2019
August 19, 2019
PM's office released a notification that PM has approved the extension of Gen Bajwa for three years. The notification was 3 months before the tenure of COAS was up. Image
The correct procedure is President can sign the summary on the advice of Prime Minister. It was stated that a formal notification under President's signature is being issued.

thenews.com.pk/print/515024-p… Image
Read 30 tweets
17 Jul 20
Thread

He has absolutely no idea what he is talking about. Never in a country money laundering has been such shamelessly celebrated.

The CPEC Authority chairman and the new overlord if the new proposed bill passes the parliament

The actual advertisement for the auction inviting all the money launderers to whiten their money Image
Read 7 tweets

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