The IMF report on Pakistan is out and its has some interesting pointers on where things are and where they are headed.

Some key points in the 🧵.

TLDR -- Pakistan's economy expected to be in flux for the next 2-3 years, at least, and faces significant risks. This is the most important table of the report.

Gross external financing requirements are $80+bn in the next three years.

To meet these requirements, successive govts. must pursue prudent policies, meaning that "relief" and "growth" in the traditional sense is a tough ask.

Khan live.

Starts w/ talking about "hikmat" and "aql" otherwise "tukrey wapis ikathay" nai kersekein ge.

Shows a Republic Policy think tank poll as evidence of his popularity... Says they are scared of him because they all want to protect their corruption.

"NRO wapis na le ley"

This is why they are putting PTI against the armed forces -- they scare the military chief that he will be removed if Khan returns

Khan says I sent message that I won't do it.

Was talking to an Insafian friend who wanted to understand why some of us continue to argue with them over democratic norms and constitutional rights, pointing out what they didn’t speak up for in the recent past.

Some points 👇🏽 that I hope Insafian friends will reflect on. Friends in the PTI watched in near silence from 2017-22 when basic freedoms were suspended and people were harassed and bullied.

Many of us have were targeted by the party’s troll army.

I personally have.

Torn between a lot of conflicting views over the last few days.

On the one hand is a regime that has shown a blatant disregard for the constitution and rule of law in 🇵🇰.

On the other is a party and leader who has a track record of the same.

How does one deal with this? We know that the PDM and its backers — the mil. establishment — doesn’t care for the constitution.

If they did, they’d hold elections in Punjab and KPK on time.

The way they’ve suppressed dissent and inflicted brutal oppression on dissidents is evidence enough.

If you look at 🇮🇳, you’ll notice a growing divergence between coastal and heartland states.

This is because coastal states can trade more easily with the world and are more open due to that.

Now compare 🇵🇰’s coastal regions: Khi is a mess and Gwadar has no water… Rather than invest in these coastal regions to grow economic, trade, and cultural integration with the world, Islamabad has just used these regions to extract resources as needed.

So long as the coastal regions remain mismanaged, 🇵🇰’s economic prospects will remain bleak.

Spent the week in DC meeting a a few folks to understand the global debt crisis, 🇵🇰’s outlook, and what folks in the country must understand about the 🇵🇰’s debt crisis.

🧵 on a few key takeaways. Emerging and frontier market debt is a key issue and is unlikely to go away anytime soon.

This is made more complicated by the growing strategic competition between 🇺🇸 and 🇨🇳.

🇮🇳 is a key stakeholder as well, using its G20 presidency to push for reform around debt relief.

In 2019, when PTI was in power, the @BradSherman demanded that Pakistan do more to reign in terror groups on its soil.

I guess at that time the Congressman felt that the PTI govt was failing to curb terror troops and that 🇵🇰 was at times supporting terror orgs…

https://twitter.com/fawadchaudhry/status/1646026937226129408

@BradSherman also called on 🇵🇰 when @PTIofficial was in power to investigate the abduction of a university professor.

At that time, many folks were being picked up those in power at times mocked folks for pretending to go missing.

https://twitter.com/bradsherman/status/1169645838576115717

I know what it was.

And if you bother reading the reference document, you’ll find that the court didn’t even bother reading the law they declared constitutional.

They were just “informed” about things and took them at face value!

https://twitter.com/xmubashir/status/1646257010541748226

And see the black law they are citing it as the model for this law.

Anyone who is a lawyer will tell you that the 1992 law they’re referring to was a disaster and a half.

@Jaferii talked about it on my podcast. And even @SShabbarZaidi has spoken against it!

Some folks are asking how can the SC take note of a law that hasn’t even been passed yet.

The SC declared a law constitutional (Reko Diq) before it was even tabled before parliament, without even reading it!

That law, and the way it was passed, was a joke! That was in everybody’s interest so folks just went along for the ride.

Top lawyers were in on it as well, as were the justices of the SC.

No debate happened in mainstream media.

This is also the same SC that imposed a fine for Israeli settler colonization by Malik Riaz.

Societies have evolved to be run on the rule of law. A key tenet of this is equality before it.

Humans must aspire to belong to a just and equal society,.

It is this equality that all great societies have aspired to achieve.

🧵on today's events in 🇵🇰 and the rule of law. In medieval and pre-modern times, law did not treat humans in a society equally.

A king did not have the same laws applicable to him as a common citizen.

Slaves were considered below the law.

Those with influence structured law to favor them.

I finally had the honor & privilege to visit my ancestral memon home in Bantva and Ghed Bagasra in Indian Gujarat.

What I experienced was surreal and what was unforgettable was the warmth of locals who I met while walking around.

🧵 on Memons, Gujarat, and protecting heritage. We started by driving south from Rajkot, a city of ~2m people whose municipal budget is 2X that of Karachi’s!

The highway was top notch and we soon were in the city.

The Mahabat Maqbara is a sight to behold. We couldn’t go in as it is being renovated to promote tourism.

Prices are the most important signal in any economy.

They help consumers make choices about purchasing decisions today and into the future.

They help producers make decisions about what to produce and where to invest.

🧵 on why the Dar Peg is distorting prices. 🇵🇰 imports a lot of necessities, ranging from energy to pulses.

This means that the price of most things in the economy is a function of the price of the USD.

Distort the USD price and you distort pricing across the economy, even in decent economic times.

Early elections do not suit any key player in 🇵🇰’s game of thrones.

In fact, early elections create the very conditions for a more rapid collapse of the post-2008 status quo hybrid democracy.

Which is why the current drama in Punjab over dissolution.

🧵 on my thinking 👇🏽 For PMLN, early elections are a disaster. They’ve expended so much political capital since April that polls now would lead to a drubbing in Punjab.

For PTI, early elections may deliver a win at the polls, but would be a Pyrrhic victory.

Why?

It’s the economy, stupid!

Question: did the Supreme Court of Pakistan read the Draft Foreign Investment Bill 2022 before penning the document 👇🏽?

If so, why wasn’t the draft released for public review and comments?

supremecourt.gov.pk/downloads_judg… Question: who drafted this Bill and under what authority?

Was this debated in parliamentary committees?

Why was it not released to public for comments and debate?

How many days did parliamentarians have to review legislation before vote?

Reading the the Foreign Investment (Promotion and Protection) Bill, 2022 passed by the National Assembly and just aghast at what this legislation contains.

🧵on the Bill and the salient issues with this that will come back to haunt the country. First up: Why is the NA still uploading scanned copies of a PDF.

Like this is the 21st century -- get the basic idea of uploading a legislation right

Secondly: can someone tell me when the draft of this was released to the public for debate and comments? Did we all miss that?

So long as the Dar Peg continues, the spread in the $ rate will persist and likely grow.

As a result, remittances and perhaps even export receipts will fall.

The Dar Peg is a mindless tax on formal $ flows into Pakistan.

This govt has been an abject disaster for 🇵🇰’s economy. My first proper analytical article was run in Oct 2016 by @MahimMaher at @TFT_.

To think that six years later I’m still analyzing the disaster that is Daronomics, at an even larger, more devastating scale is tortuous.

PMLN has really outdone itself with the Dar Peg.

Lots of folks will say give more resources for fencing and border control

It is folly.

The smuggling happens because price in pak < price in global markets.

So long as that happens a rational person will find ways to get these products abroad.

dawn.com/news/1725569 Afghanistan and Iran are convenient routes.

Iranian petroleum products are cheaper than global rates. So they get smuggled to Pakistan.

If only folks making national security type policies understood basic economics…

We have more videos about farmers' property rights being violated for RUDA, but this isn't everything

The expansion of "plotistan" is a violation of 🇵🇰's national security policy pushed by @YusufMoeed for @ImranKhanPTI's govt.

🧵below on why RUDA is a national security threat. ~40% of 🇵🇰's workforce is in the agri sector.

Even before the catastrophic floods, 🇵🇰 was becoming increasingly food insecure.

Food imports skyrocketed - the country became a net importer of wheat.

At the same time, the country's external sector situation became vulnerable.

According to Sindh PDMA 7.3m people are displaced.

But the Sindh PDMA, months into the disaster, has only provided 384k tents and 1.7m mosquito nets.

It’s setup only 17 RO plants, and barely distributed 200k liters of clean drinking water.

This is just criminal. They’ve provided ONLY 20 hospital tents!

It is one thing to claim the scale of the floods was unimaginable and so immediate response was slow.

We are now weeks into this disaster and the Sindh govt has barely been able to increase its pace of relief and recovery.

Shameful!

The more I read about what’s coming, the more concerned I get about how 🇵🇰’s ruling elites are behaving.

Exogenous shocks are going to pummel the economy in an unimaginable way.

Nobody, I repeat, nobody across the political aisle is interested in dealing with the coming storm. You have 3 core shocks in global markets:

1) fed ⬆️ rates
2) stronger $
3) ⬆️ commodity prices

🇵🇰 is vulnerable to all 3 shocks and has tapped out of sources of $ that can build resilience against the 👆🏽

The prudent policy would be to slow down & build buffers.

But no.

The elite obsession of a strong PKR makes sense if you understand 🇵🇰 elites.

They extract wealth from their homeland and siphon it abroad.

When this is the goal, a weak currency means extracted PKR can’t fetch foreign assets cheaply.

That’s why they all love a strong PKR. And ofc a strong PKR also provides cheap imports, meaning that things like an Audi Etron or a nice Rolex watch are relatively cheaper.

So a strong PKR means that ordinary citizens not only subsidize imported consumption of elites, but also their foreign asset purchases.