Loud Thinking

Archive for the ‘Pak Loan Write-off’ Category

Dear Mian Muhammad Nawaz Sharif PM Pakistan.

Sir,

The below mentioned analysis of Mr. Asad Omar is really alarming and needs an impartial high level inquiry into the fact that why certain key indicators of Pakistan’s economy and business have gone down in your current tenure, to the level even below than than the previous PPP government led by Asif Ali Zardari during 2008-2013.

Quote.
“Pakistan’s ranking in the world economic forum global competitiveness index has dropped from 124th at the end of the Zardari era to 129th this year. The doing business report of the World Bank dropped Pakistan from 107th to 128th. The combination of this eroding competitiveness and the piling of exorbitantly expensive debt is sinking Pakistan further into a debt trap imperiling future generations of the country.”
Unquote.

Dear Mr. Prime Minister,

Sir,

Please peruse the below quoted analysis of Mr. Asad Omar, which is a fit case for a highest level inquiry to find out the reasons for playing with the economy and destiny of Pakistan right under your command:

Quote.” The Government in its latest offering last week was only able to sell 500 million dollars at a yield of 8.25% which is the same pricing it got last year when Pakistan had re entered the international bond market after several years gap. Everything else remaining the same the pricing this time should have been lower as there was no re entry premium to be paid. Hence, the markets were essentially saying that things are getting worse. Umar stated that comparison with recent bond issues by other emerging market countries makes for shocking reading. Just two examples would suffice. Kenya doing its first ever issue last year and raising 1.5 billion dollars at a yield of 6.875%. Similarly Sri Lanka just a few months back raised 650 million dollars at a pricing of 6.125% which is more than 2% lower than what Pakistan is going to pay!”Unquote.

---

 

Mr. Ishaq Dar, the nation wants to know why you issued Euro Bonds at 8.25% when for comparison, Nigeria’s dollar debt carries a yield of 7pc these days, and the average for other African and Middle Eastern countries surveyed by Bloomberg was 2.8pc?

Link:- http://www.dawn.com/news/1209679/analysis-eurobond-attracts-controversy

 

Analysis: Eurobond attracts controversy
KHURRAM HUSAIN —
THE latest Pakistani Eurobond, issued last week, has hit controversy even before the finance team has returned to the country.

Pakistan offered 10-year paper at an 8.25pc yield, and received bids worth $1 billion. The last Eurobond was issued in April 2014, when the government also targeted to raise $500 million, but attracted bids worth almost $6 billion and ended up raising $2bn from the exercise. The yield then was also 8.25pc.

The diminished participation, as well as the unchanged yield from the last bond offering in 2014, has led people to suggest that the exercise ought to have been delayed, since markets were still in the grip of jitters following a steady stream of unnerving news from China and hints from the US Federal Reserve that a hike in interest rates may be coming soon.

Also read: Pakistan issues $500 million Euro bond

According to data obtained from Reuters, Pakistan’s 10-year US dollar-denominated bond issued in April last year traded at 104.883 cents on Monday — still well above its issue price but below the record high of almost 110 cents hit earlier in the year. The premium suggests investors see those bonds as a lucrative asset, although it would be necessary to know how long they intend to hold the bond to determine whether the premium means the bonds may have been overpriced.

“It’s important to keep a presence in the private debt markets,” says a high-level source in the banking industry who closely follows the money markets, “but in this particular situation, the timing could have been changed in the light of negative sentiments in global markets. This bond is also likely to be traded at a premium right away, given its pricing.”

The finance ministry justified the issue, saying in a press release that it was necessary to cover repayment of a maturing bond of the same size that was issued in 2006. That bond matures in March. The ministry also saw it as a positive sign that despite difficult global conditions, “the bond was twice oversubscribed”.

Former State Bank governor Salim Raza agrees that the timing presented challenges, and adds it is reasonable to expect that the yield on this bond should have been lower than the last one. “With improvement in underlying inflation and current account flows, compared with the last issue, we should have seen a better coupon rate,” he says, expressing some puzzlement at the urgency with which the government pursued the bond. “Perhaps they have a reserve target in mind which would warrant additional borrowing.”

The relatively secure position of the reserves, at the moment, leaves many confused as to why it was necessary to go ahead with the exercise at a time when global markets are spooked by a sustained rout on Chinese stock markets as well as possibilities of rate hikes in the US.

“It really doesn’t make sense why they were so keen to pick up $500m at a high price when they have $18.5bn in reserves,” says Sakib Sherani, former adviser to the finance minister who has advised the government in earlier Eurobond flotations. “It’s not just $500m, it’s expensive $500m,” he says.

For comparison, Nigeria’s dollar debt carries a yield of 7pc these days, and the average for other African and Middle Eastern countries surveyed by Bloomberg was 2.8pc.

Pakistan’s credit rating was upgraded by Moody’s right after the budget this year. The credit rating agency cited “continued strengthening of the external payments position; and sustained progress in structural reforms under the government’s programme with the IMF” as the key reasons behind the move.

But on Sept 18, days before the bond exercise, it issued a more guarded assessment of Pakistan’s creditworthiness. That assessment, which assigned a provisional rating of B3 to the Eurobond, spoke of “factious relations between the executive, military and judicial branches of government” as well as “very low fiscal strength and high susceptibility to event risk” as key weaknesses holding back Pakistan’s creditworthiness.

That same assessment pointed to a key concern regarding the rising reserves: they are primarily driven by borrowed money. Moody’s said any strength in Pakistan’s creditworthiness stems from “support from multilateral and bilateral lenders”, underlining the importance of Pakistan’s relationship with international financial institutions like the IMF and the World Bank as principal drivers behind its strengthening reserves.

That concern appears to have been raised during the road shows leading up to the bond issue, prompting the federal finance secretary to say on record that Pakistan may yet consider another IMF programme once the current one ends next September. The secretary’s remarks indicate that investors attached high importance to Pakistan’s ongoing programme as a driver of reserve accumulation and sound fiscal management.

Despite its many problems, investors remain interested in Pakistani debt mainly because of the high yields that it offers, and an abiding faith that great powers will never let the country veer towards default. Pakistan’s external debt repayments eased in recent years as the major repayments to the IMF from the 2008 facility drew to a close. But in its last Annual Report, the State Bank cautioned that these are going to rise again from 2017 onwards, “with the onset of repayments of rescheduled Paris Club debt, Eurobonds” as well as repayments from the ongoing IMF programme. “This scenario emphasises the need for caution while framing debt management strategy of Pakistan.”

Published in Dawn, September 29th , 2015

 

Many months ago in the year 2013, I passionately advised the PM to take personal charge of the affairs of the country, before these finance and foreign affairs advisors messed up the the whole thing and bring the government to its knees:

Mr. PM! you will have to take personal charge

 

H’able Mian Nawaz Sharif Sahab,

Salaam.

The above mentioned news reported today on 10 July, 2013, by the jang.com.pk that Saudi Arabia and UAE are providing (interest free and conditions free) cash and kind assistance of $8 billion to Egypt, further highlights the importance of my three doable suggestions put forward for your kind consideration in my article titled “Mr. PM! there are three options to avoid IMF loan”.published in the daily “The News” dated 27 June, 2013 links:-

http://www.thenews.com.pk/Todays-News-13-23752-Mr-PM!-There-are-three-options-to-avoid-IMF-loan

http://images.thenews.com.pk/27-06-2013/ethenews/t-23752.htm

In this regard, vide my email dated 9 July, 2013 addressed to your honour, titled “Few Suggestions to Revive Economy, Fast Track Improvements in Energy Crisis and Nation Security Policy” the possibility and practicability of option No.2, of my above mentioned article was duly elaborated for the convenience of your finance team as below:

Quote. “Your kind attention is invited to my earlier email informing that the news that Abu Dhabi has planned a $50 billion investment in India; and the negotiations are at a very advanced level. Abu Dhabi has the WORLDS BIGGEST SOVEREIGN WEALTH FUND . Now considering the following plus points of Pakistan:

i. Pakistan is the only country in the world which allows foreign investors to repatriate 100% profit and investment without any hassle.

ii. There is no income tax on IPP’s in Pakistan.

iii. The Indians are severely annoying the Abu Dhabi people with objections on their deal of Etihad Air with Jet Airways of India, which will give EA rights over 37,000 weekly seats in India, after EA purchases 24% shares of Jet Airways. Pakistan must grab this opportunity and offer a suitable agreement with PIA. Indian Jet Airways is in much more bad financial shape than PIA and is owned PRIVATELY.

iv. Pakistan should also offer to Abu Dhabi, management sharing in other avenues like, Port Qasim, KPT, steel mills, OGDC, PNSC etc., in lieu of their investment.

v. Pakistan can also offer to Abu Dhabi to invest in new Islamabad Airport, expansion and development of other airports, helicopter and small planes air taxi service to and from big cities to many smaller cities and towns, and development and export of world class fisheries, corporate farming, export of dairy products, fruits, flowers etc.

vi. Abu Dhabi had a very long and successful JV experience with Pakistan viz., Pak Arab Fertilisers Limited. Now they can be offered such JV’s for Refineries, Oil and Gas explorations, defence related production items and air craft manufacturings etc.”Unquote.

Mr. Prime Minister, this news of cash and kind (interest free and conditions free) financial help of Egypt, by the KSA and UAE proves that Pakistan was deliberately forced to take IMF loan with very high repeat very high interest rate of 3%, coupled with conditionality’s. Further, it has also proved that we have completely failed in convincing our Arab friends and 49 NATO countries led by the USA, that helping Pakistan is helping the world and its neighbours, against the menace of terrorism, mainly because Pakistan is the front line state against this world war of terrorism, for the last 13 years. Our friends and allies should be cognisant of the fact that the more Pakistan goes into poverty and economic deprivation, the more this situation will breed the terrorists.

In view of the foregoing, Mr. Prime Minister, you are passionately requested to personally take the charge of the economic policies of Pakistan, vis-a-vis it’s friends, to save Pakistan from the stranglehold of IMF and the World Bank; and from the tunnel vision of our financial and foreign affairs experts. This is all the more necessary because business as usual will never deliver (like the lousy suggestions of increasing tax burden and enhancing utility services rates, so that the ages old policy of penalising the honest common man and rewarding rich scoundrels, continues in this tenure as well, which obviously is the best recipe of an early demise of ANY government).

Pakistan needs nothing, except out of box solutions, which is only possible from a fearless leader and not a timid person, because a timid person like Pervaiz Musharraf, can rule a country, but he can never rule the hearts of his subjects.

With Best Wishes and Kind Regards,

Syed Nayyar Uddin Ahmad
www.snayyar.com
Lahore.

Sent from my iPad3 4G LTE

Respected Mian Muhammad Nawaz Sharif Sahab,

AoA.

Sir,

Now when your party has won almost every possible winnable seat in the senate, it is not the time to rejoice. Rather, you must rise to the occasion, with more humility and statesmanship, to serve the nation in a unique way, by uniting all the political forces and the stake holders, on a plan of charter of development for next hundred years for Pakistan, wherein, every aspect of economic activity, affecting the poorest of the poor, should be decided with consensus.

In this regard, all the national stake holders should decide now, about all future plans for the next hundred years (these plans should be divided in 20 five year plans) in the educational, health, infrastructure, science and technology, housing, social services, communications, IT and all other segments of civil and military sectors.

And after a consensus is developed amongst all the stake holders, on the charter of development for Pakistan for the next hundred years, for example, which dams, roads, ports etc., will be constructed during the next century; no politics should be allowed on this rebuilding of the country and all future governments must be bound (as per a law passed from the parliament) to adhere to this agreed plan, in a most sacrosanct manner.

Sir, it must be made clear to all and sundry that during the last almost 68 years, our preferences of self serving politics, over the development of Pakistan (for example not allowing to build certain mega dams and projects) has practically made the nation bankrupt, where a stage has arrived that we have to borrow fresh loans, to repay the old loans; and against about $15 billion foreign exchange reserves, foreign debt of Pakistan stands above $70 billions.

As such, under the circumstances, denial for a consensus is not an option. If at this turning point of our history, the collective national leadership, will fail the nation, then the following couplet of Dr. Allama Iqbal, should also be remembered by replacing the word Hindustan, with Pakistan:

نہ سمجھو گے تو مٹ جاؤ گے اے ھندوستان والو
تمہاری داستان تک نہ ھوگی داستانوں میں

Best Regards,

Syed Nayyar Uddin Ahmad

Lahore.

My Twitter message to the US President Mr.Barack Obama:

@BarackObama Sir, media reports about your expected visit to Pakistan are really assuring and the entire nation is ready to very warmly welcome you, with open arms.
Perhaps, you will only realise after the visit to Pakistan that how big and monumental service you did to the cause of world peace, in helping Pakistan’s resolve, to resolutely fight the menace and scourge of terrorism.

Mian Muhammad Nawaz Sharif,

Honourable Prime Minister of Pakistan,

Dear Sir,

Please remember that MAN IS MORTAL HIS GOOD DEEDS ARE IMMORTAL.

Kindly peruse below a news item published on 16 November, 2014 by the Times of India, which reflects that the Indian PM is talking nothing at the G20 summit in Australia, except about the BLACK MONEY repatriation to India.

Mr. Prime Minister, we are very surprised that although, bringing back the BLACK and STOLEN money of Pakistan stashed in the foreign countries, was the main agenda of the PMLN’s Elections 2013 campaign with the famous election slogan:

اےطائر لا ھوتی اس رذق سے موت اچھی. جس رذق سے آتی ہو پرواز میں کوتاہی

yet, you have personally never ever talked on this issue, since you became the PM in June 2013.

Your Excellency, the nation demands that your government must seriously fulfil its promises on bringing back nations looted money from abroad; and also fulfil another extremely important promise of breaking the bowl of foreign loans.

Moreover, please also ask your finance minister that he should remember that he was the minister of the Pakistani government and not appointed by either the IMF or the Swiss government. He should not callously tell the nation that looted money repatriation from abroad was well neigh impossible; and at the same time our government officials are continuing excursion trips of Switzerland, as if they were employed by the nation to have joy rides.

Everyone going abroad on state expenses, must inform on return to the nation that what tangible benefits materialised for Pakistan, due to his foreign trip.

Mr. Prime Minister, please also stop your ministers and officials from taking the nation on a ride.

Mian Sahab, the nation wants results on your promises of bringing back the black money from abroad and breaking the bowl of the curse of the foreign loans. We Pakistanis do not want to be burdened with useless statements and more and more IMF and world bank loans, repayment of which is now eating up a very major and alarmingly high chunk of the nation’s revenues.

Kindly give the following ONLY Two tasks to Mr. Ishaq Dar for completion, during your current tenure:

– To get rid of Pakistan from the entire foreign debt, either by getting it written off or by any other way.

– Bring back the ENTIRE looted money of Pakistan of ANYONE and EVERYONE, parked anywhere in the world.

And, if the finance minister says that he can not accomplish these two assignments or to him these two tasks looks impossible … then please appointment someone else, as the finance minister, with these monumental assignments, which if achieved, will make the tenure of your current rule not only MONUMENTAL but IMMORTAL as well.

Mian Sahab, history will NOT judge you for how many times you became the PM, but it will remember you for your services to the nation, as is the example of the famous ruler of India, namely Sher Shah Soori. No one knows for how much time he ruled, but he is remembered for his monumental achievement of building the Grand Trunk Road.

MAN IS MORTAL HIS GOOD DEEDS ARE IMMORTAL.

Times of India news report published on 16 November, 2014, is as below:

“G20 summit: Narendra Modi calls for ‘close coordination’ on black money
BRISBANE: As India makes attempts to recover black money from abroad, Prime Minister Narendra Modi on Sunday asked every country, especially tax havens, to provide information for tax purposes in accordance with treaty obligations.
Raising the pitch on the black money issue, Modi in his intervention at the summit of the Group of 20 industrialized and major emerging economies called for close global coordination to address the challenge posed by it.
Modi voiced India’s support for a new global standard on automatic exchange of tax information, saying it would be instrumental in getting information relating to unaccounted money hoarded abroad and enable its eventual repatriation. He also extended India’s backing for all initiatives to facilitate exchange of information and mutual assistance in tax policy and administration.
The prime minister made the remarks at the plenary session on the subject of “Delivering Global Economic resilience” on the second and final day of the summit held at the Brisbane Exhibition and Convention centre.
He also expressed the hope that Base Erosion and Profit Sharing (BEPS) system would fully address concerns of developing and developed economies.
BEPS is a technical term referring to the effect of tax avoidance strategies used by multinational companies on countries’ tax basis. BEPS is known more commonly as “Transfer pricing”
This term is used in a project headed by the OECD that is said to be an attempt by the world’s major economies to try to rewrite the rules on corporate taxation to address the widespread perception that the corporations don’t pay their fair share of taxes.
The prime minister also said that increased mobility of capital and technology have created new opportunities for avoiding tax and profit shifting.
Modi underpinned the need for the world community to take coordinated decisions although each country has its domestic priority.
“Need for policy coordination among major economies remains strong,” he said.
“Close coordination is important not just for addressing the challenge of black money but also security issues like terrorism, drug trafficking and arms smuggling,” he said.
Touching upon the resilience of the financial system in the world, Modi said it will also depend on cyber security.”

Mian Muhammad Nawaz Sharif,

Honourable Prime Minister of Pakistan,

Dear Sir,

Please remember that MAN IS MORTAL HIS GOOD DEEDS ARE IMMORTAL.

Kindly peruse below a news item published today by the Times of India, which reflects that the Indian PM is talking nothing at the G20 summit in Australia, except about the BLACK MONEY repatriation to India.

Mr. Prime Minister, we are very surprised that although, BLACK MONEY was the main agenda of the PMLN’s Elections 2013 campaign, yet, you have personally never ever talked on this issue, since you became the PM in June 2013.

Your Excellency, the nation demands that your government must seriously fulfil its promises on bringing back nations looted money from abroad; and also fulfil another extremely important promise of breaking the bowl of foreign loans.

Moreover, please also ask your finance minister that he should remember that he was the minister of the Pakistani government and not appointed by either the IMF or the Swiss government. He should not ruthlessly tell the nation that looted money repatriation from abroad was well neigh impossible; and at the same time our government officials are continuing excursion trips of Switzerland, as if they were employed by the nation to have joy rides.

Everyone going abroad on state expenses, must inform on return to the nation that what tangible benefits materialised for Pakistan, due to his foreign trip.

Mr. Prime Minister, please also stop your ministers and officials from taking the nation on a ride.

Mian Sahab, the nation wants results on your promises of bringing back the black money from abroad and breaking the bowl of the curse of the foreign loans. We Pakistanis do not want to be burdened with useless statements and more and more IMF loans.

Kindly give the following ONLY Two tasks to Mr. Ishaq Dar for completion, during your current tenure:

– To get rid of Pakistan from the entire foreign debt, either by getting it written off or by any other way.

– Bring back the ENTIRE looted money of Pakistan of ANYONE and EVERYONE, parked anywhere in the world.

And if the finance minister says that he can not accomplish these two assignments or to him these two tasks looks impossible … then please appointment someone else, as the finance minister with these monumental assignments, which if achieved, will make the tenure of your current rule IMMORTAL.

Mian Sahab, remember MAN IS MORTAL HIS GOOD DEEDS ARE IMMORTAL.

Times of India news report published today, is as below:

G20 summit: Narendra Modi calls for ‘close coordination’ on black money

BRISBANE: As India makes attempts to recover black money from abroad, Prime Minister Narendra Modi on Sunday asked every country, especially tax havens, to provide information for tax purposes in accordance with treaty obligations.

Raising the pitch on the black money issue, Modi in his intervention at the summit of the Group of 20 industrialized and major emerging economies called for close global coordination to address the challenge posed by it.

Modi voiced India’s support for a new global standard on automatic exchange of tax information, saying it would be instrumental in getting information relating to unaccounted money hoarded abroad and enable its eventual repatriation. He also extended India’s backing for all initiatives to facilitate exchange of information and mutual assistance in tax policy and administration.

The prime minister made the remarks at the plenary session on the subject of “Delivering Global Economic resilience” on the second and final day of the summit held at the Brisbane Exhibition and Convention centre.

He also expressed the hope that Base Erosion and Profit Sharing (BEPS) system would fully address concerns of developing and developed economies.

BEPS is a technical term referring to the effect of tax avoidance strategies used by multinational companies on countries’ tax basis. BEPS is known more commonly as “Transfer pricing”

This term is used in a project headed by the OECD that is said to be an attempt by the world’s major economies to try to rewrite the rules on corporate taxation to address the widespread perception that the corporations don’t pay their fair share of taxes.

The prime minister also said that increased mobility of capital and technology have created new opportunities for avoiding tax and profit shifting.

Modi underpinned the need for the world community to take coordinated decisions although each country has its domestic priority.

“Need for policy coordination among major economies remains strong,” he said.

“Close coordination is important not just for addressing the challenge of black money but also security issues like terrorism, drug trafficking and arms smuggling,” he said.

Touching upon the resilience of the financial system in the world, Modi said it will also depend on cyber security.

An article of 2 October 2012 is still waiting for answers from the past and present governments and parliamentarians of Pakistan.

Our rulers owe us answers to the following 6 questions:

Hope our rulers and parliamentarians are aware of a research which reveals that suicide rates have gone up in the countries taking loans from the IMF etc.

Our worthy MNA’s and Senators Must obtain the answers to the following questions from the former Minister of Finance Mr. Abdul Hafeez Sheikh (who was also the key man in the privatisation of the PTCL) and also from the incumbent finance minister Mr. Ishaq Dar.

1. Pakistan is repaying $7.6 billion to the IMF. Did we receive exactly this much amount or the total sum was less than this figure?

2. How much amount of interest Pakistan will be paying over the principle sum of this loan of $7.6 billion from the IMF? Or the IMF will be charging interest on the whole sanctioned amount of $11.3 billion?

3. Did Pakistan pay and what was the total bill for the traveling, boarding and lodging of IMF delegations’s recent visit to UAE, for discussions with our economic team?

4. Besides the interest, how much service, handlers commission and or other charges were deducted by the IMF, on its loan of $7.6 billion to Pakistan? V V important question.

5. How much service charges or penalty was charged by the IMF to Pakistan, for not utilizing or obtaining the remaining $3.7 billion amount, from the originally sanctioned loan amount of $11.3 billion; because Pakistan got only $7.6 billion from IMF?

6. When will Pakistan get its overdue payment of $800 million from the Etisalat Telecom, which is controlling the whole PTCL management and other affairs, with a minority share holding? Why not reconsider the cancellation of the privatisation deal of the PTCL, in view of the serious default since the year 2006, by the UAE based telecom company ETISALAT? There is another option to resolve this problem by writing off this amount of $800 million (which in over 8 years must have grown over $3 billion) and treating it as gift, from the people of Pakistan to owners of the ETISALAT.

What else is corruption Mian Nawaz Sharif Sahab?

He (Mr. Zubair) said that the delay caused by a stay order granted by the Peshawar High Court on the petition of Pakistan Tehreek-e-Insaf led provincial government and the sudden fall in oil prices in the international market reduced the government’s earnings.

Mr. Prime Minister, if the above statement of Mr. Zubair (MOS and Chairman Privatisation Commission of Pakistan) is true then it looks all the more unwise decision that the government has given a 6% discount on the previous day trading of the OGDCL shares at the Karachi Stock Exchange.

The discount would alone cause about Rs5 billion losses on last day’s trading.