The cost of winning an Oscar award: BBC report

Film studios spend millions of dollars each year campaigning to get their movies in the minds of the 6,000 or so Oscar voters, hoping to win their acclaim. But does it work?

Heard the one about the actress who paid for her own full-page adverts telling Oscar voters to consider her performance? Or the Hollywood producer banned from the award ceremony for campaigning against a rival blockbuster?

Just two of the most high-profile attempts to influence what must be the most select group of voters on the planet, the 6,000 members of the Academy of Motion Picture Arts and Sciences. Estimates for the total amount Hollywood spends on Oscar campaigns range from $100 million right up to $500 million in a single year.

It’s not the kind of figure studio bosses like to talk about. But the film producer and blogger Stephen Follows has crunched anonymous data provided by some of his industry colleagues. He puts the cost of a successful best picture campaign at around $10m with most of the cash going on advertising, media, talent costs and publicists.


In Oscar season, studios aggressively pay for adverts in the trade press, politely reminding voters about the merits of their films and the performances of their stars.

film poster
Image captionThousands of dollars are paid for billboard posters and adverts

The phrase “for your consideration” plastered on billboards and in print is now something of a Hollywood cliché itself. A front page advert in the Hollywood Reporter in Oscar season is thought to cost up to $72,000 – industry magazine Variety is likely to charge a similar fee.

In 2011 the actress Melissa Leo, frustrated at a lack of mainstream press coverage, paid for her own adverts to push her performance in the film, the Fighter. She was accused of “going rogue” by some. It worked and she took home the best supporting actress award that year.

Dirty tricks?

Then there is the murkier side of all this: a select group of Oscar consultants whose job it is to get their films into the minds of Academy members.

They are paid between $10,000 and $20,000 a movie but can easily double or triple that fee if the client gets nominated or goes on to win.

Academy members are invited to select screenings in Los Angeles, New York or London. Stars will often make a personal appearance or take part in an audience Q&A.

epaThe Revenant, starring Leonardo DiCaprio, leads the Oscar nominations this year

“These are highly-paid, shark publicists who know the Academy members, know how to get to them and know what they like,” Hollywood reporter Gayle Murphy says. Outright bribery is banned of course but voters say they are swamped with free gifts and trinkets ahead of the official nominations.

“I’ve gotten books, cookbooks and just about everything short of Lincoln condoms,” one anonymous voter told the Hollywood Reporter in 2013. “It’s ridiculous.” Under official Academy rules revised in 2011 any direct lobbying by email or telephone is banned.

After the nominations are announced, studios are not allowed to hold screening receptions with free food or drink, a favourite tactic in the past.

Negative comments

Comments, either made directly or on social media, that attempt to “cast a negative or derogatory light” on rival movies are particularly frowned upon.

In 2010, Nicolas Chartier, one of the producers behind the film the Hurt Locker, was banned from the Oscars for sending out an email asking voters to back his movie over “a $500m film” – a clear reference to rival best picture nominee Avatar.

Photographers at the Oscars
A best picture Oscar can add $3 million to a film’s takings

The Hurt Locker was victorious that year and he did eventually get his statue a month after the ceremony itself. But it’s thought this kind of practice is far from a one-off.

It’s suspected that those Oscar consultants may be partly responsible for the steady stream of negative stories which appear in the press in awards season. Whether that’s Slumdog Millionaire accused of employing badly paid child actors or Zero Dark Thirty criticised for condoning torture.

Is it all worth it? Figures put together by Edmund Helmer, a data analyst with Facebook, in 2013 suggest maybe not. Stripping out other factors, he calculates a best picture Oscar win adds only $3m to a film’s box office takings, far less than the $14.2m boost after a win at the Golden Globes.

That might be because the Oscars come at the end of the long awards season when films tend to have been on general release for some time. A separate study in 2014 found winning an Academy award boosts the pay of an actor by $3.9m but actresses see a much smaller $500,000 rise.

The man behind the study, the academic Kevin Sweeney, says he can’t explain the discrepancy for certain, but industry-wide gender bias with more starring roles for men is likely to play a part.

All this is about far more than money of course. Hollywood politics and recognition from your peers play an important part.

As Edmund Helmer himself writes, both the Golden Globe and Oscar races “are not just about selling tickets to the films that win. (Courtesy:



Greek’s Minister quits over wife’s 1-month rent-allowance issue

Greek Finance Minister

Monitoring Report/ATHENS: Greece’s Economy and Development Minister Dimitri Papadimitriou has quit his post in response to public anger over his wife’s use of a housing allowance, a move that will likely expedite a mini-reshuffle of Prime Minister Alexis Tsipras’s cabinet.

Papadimitriou’s wife, Rania Antonopoulou, stepped down from her role as junior labor minister on Monday after media reported that she had claimed a €1,000 a month rent allowance. The reports, some of which described the pair as the ‘richest couple in government’, incensed Greeks who have suffered years of austerity brought on by a debt crisis that many blame on political corruption and a spendthrift state, Arab News reported today.

Papadimitriou, whose remit involved promoting Greece abroad for investment projects, bowed out “for reasons of political sensitivity,” an economy ministry official told Reuters.
Antonopoulou said that she stopped drawing the benefit in mid-2017, and has offered to pay back the allowance. Although there was nothing untoward about claiming the benefit, it touched a nerve in a country that has suffered the effects of a debilitating financial crisis and where a third of the population lives in poverty. The average monthly salary of a Greek is €770, and lawmakers on average earn €5,000, without benefits.

Athens has cut wages and slashed pensions at least 13 times since 2010, as part of measures to shore up its finances. Papadimitriou contacted the prime minister late on Monday to announce his resignation, the ministry official said, adding that “he wanted to facilitate Tsipras in dealing with political pressures,” which emerged after the row over the rent allowance. But opposition politicians said the couple should have shown common sense, and sensitivity.
“It is sad,” said leader of the center-left Potami party Stavros Theodorakis.
“We are not talking about a worker who suddenly took over a ministry,” he said. “It’s a well-off family… which should have shown more care for citizens’ money particularly in a period that cuts are prevalent across the board.”
The benefit that Antonopoulou claimed is extended to members of government whose main residence is outside Athens. It was attached in a bill on the third bailout, which was approved by a wide majority of lawmakers in the 300-seat parliament in 2015.

China again supports counter-terrorism efforts of Pakistan

China supports Pakistan

Monitoring Report/BEIJING: China on Tuesday again said that the global community should shed bias and take look at Pakistan’s efforts of curbing the terrorism. China has issued this statement a couple of days after it saved Pakistan from being put on the grey-list of the Financial Action Task Force (FATF) meetings which deferred the matter till June 2018. The 37-nation FATF at its plenary meeting in Paris last week gave June 2018 deadline to Pakistan to overcome the counter-terrorism and money laundering issues to stay away from the watch list of the countries where terrorist outfits are still allowed to raise funds.

Though Pakistan has not been named, it has to submit the action plan to implement UN Security Council resolutions on anti-money laundering and countering the financing of terrorism by April, failing which it would figure in the list.

China Turkey save Pakistan in FATF meeting

“Pakistan government and people have made enormous sacrifices for counter terrorism,” Chinese foreign ministry spokesman Lu Kang told a media briefing here today.

China earlier opposed the United States move along with Saudi Arabia and Turkey that aimed at putting Pakistan on the grey-list for which India, the United States and Israel carried out hectic lobbying before the FATF meeting in Paris.

Asked about China’s stand at the Paris meeting, Lu said Pakistan’s efforts (on counter terrorism) also reflected in the financial areas.

“In recent years Pakistan has taken measures to enhance finance regulations and combating financing for terrorism. China highly recognises this,” he said.

“We call on the relevant parties of the international community to view Pakistan’s efforts in an objective and just way, instead of criticising it with bias,” he said.

“As the all-weather partner of Pakistan, China will continue enhancing close coordination and communication with Pakistan in counterterrorism,” Lu said.


MCB: Hell with your customers care system

The Financial Daily publishes my
new column on Feb 23, 2018

Unbridled Banking Logo

Rapid expansion and modernization in the Pakistani banks in recent years has not changed the mindset of some big banks/policy-makers of the banks regarding the customers’ facilitation. On Feb 22, 2018, this writer visited the MCB G-8/4 Corporate and I&T Center branch to get bank statement of my account. I was maintaining my account with NIB for over a decade but in 2017, the MCB has acquired the NIB Bank and merged it with the MCB. This merger has opened a chapter of embarrassment for me and other customers of the NIB that I will discuss in this column.

I needed my bank account statement to submit it along-with other documents to apply for a scholarship of my son who has shown outstanding result in O’Levels and wants to apply for a prestigious scholarship being offered by a famous and high-profile Lahore-based university. Why the MCB officials refused to give me statement of bank account statement is very interesting? I have migrated to Islamabad two years ago, from Karachi and maintaining some accounts with different banks in Karachi. My Account Number is 0045-1826123 – West Wharf Road Branch, Karachi.

First of all, a bank officer of above mentioned MCB branch said that the bank statement is issued by the mother branch. When I told him that my branch is in Karachi, he said that your Karachi branch will issue the statement and we cannot issue it here (in Islamabad) as it is not the policy of the bank. On his advice, I met the Branch Manager Qaiser Iftikhar Janjua and told him that I needed my bank statement on urgent basis to apply for a scholarship for my son. He too gave the same reply “we cannot issue the statement, it is not the policy of the MCB Bank and that only the mother branch can issue the statement,” he said. When I told him that I have got my bank statements from United Bank branch in G-8 Markaz and Bank Al-Falah branch in G-9 Markaz in Islamabad and both the branches did not ask me to go to Karachi to get bank statements.

The MCB Manager said that MCB Bank’s policy is different than those banks. When I said that would you/your bank give me the tickets to travel to Karachi to get the bank statements, he smiled sarcastically and said “’it is not the policy of the bank’’. So what is the policy of the bank _ sheer embarrassment for the customers? If the UBL and Bank Al-Falah branches in Islamabad are issuing bank statements of Karachi-based accounts without any hesitation, then why MCB is not doing it facilitation. What is the logic behind this policy of the MCB that is annoying the customers? Why MCB is not going along with other banks in facilitating its customers?

Can you believe that the MCB is among the top-2 private commercial banks in Pakistan and this is the way this bank is pursuing its customers’ facilitation policy. A problem for me and my family is that March 1, 2018, is the last date to apply for the scholarship being offered by the Lahore-based prestigious university to the A’Level 1st year students who have obtained more than 80% marks in O’Levels in 2017. It is the requirement of the university that the parents of the students must submit all their bank statements with the scholarship application. Now I have no other choice, but to submit the application without having my MCB bank statement.

Another problem that I am facing from the date the MCB has acquired the NIB Bank is that I am not getting the bank’s SMS alerts about the amount of money that is credited into my account every month. The MCB Bank is sending me SMS each time when it deducts charges from my bank account, but the bank’s system becomes dumb and deaf when some money is credited into my account. MCB helpline officials are terming it a technical problem, but how is it possible that the bank is sending SMS for deducting charges and not sending SMS for receiving credit into my account. This is very pathetic policy and embarrassing system of the MCB bank that must be changed. I hope the State Bank of Pakistan would also look into this anti-customers approach of the MCB. (Writer is Chief Editor of Weekly Corporate Ambassador/Columnist of The Financial Daily and a Founding-Member of Karachi Editors Club. Readers facing problems with banks can share their issued with us at the following emails: &



China secretly seeking Balochs help to secure CPEC projects: British newspaper claims

OBOR image

Monitoring Report/NEW DELHI: China has been secretly holding talks with Baloch militants in Pakistan for more than five years to secure protection for its $60 billion worth China-Pakistan Economic Corridor (CPEC), British newspaper Financial Times (FT) on Monday. Three people with knowledge of the talks told FT that Beijing had been in direct contact with militants in Balochistan, the restive province where several key CPEC projects are located.

“The Chinese have quietly made a lot of progress,” a Pakistani official was quoted as saying by FT.  If true, it would explain a curious statement by China’s envoy to Pakistan earlier this month. Yao Jing asserted without proof or explanation that Baloch militant organisations are no longer a threat to CPEC.


Activists in Balochistan allege China and Pakistan are aiming to change the demography of Balochistan. They also allege Pakistan has illegally occupied Balochistan and that it has been committing atrocities against Baloch people, Times of India reported today (Feb 20, 2018).

Last year, 10 Pakistanis were killed by unidentified gunmen while the former were working near Gwadar port, a key part of the economic corridor.


Secretary-General of Sahari Welfare Association, President of Karachi Editors Club Mubasher Mir is speaking at a CPEC conference organized in Karachi in 2017.

“Even though separatists occasionally try to carry out the odd attack, they are not making a forceful push,” said the Pakistani official. More than one Pakistani official told FT the powers-that-be in Pakistan welcomed the talks between Baloch rebels and the Chinese. “Ultimately, if there’s peace in Balochistan, that will benefit both of us,” said one official in Islamabad.

(Glimpses of a CPEC seminar organized by Mubasher Mir in Karachi in collaboration with Sahafi Welfare Association. Corporate Ambassador was Media Partner along with The Financial Daily and Arz-e-Pak News).

What could explain Pakistan not being unduly worried about China’s interference in its internal matters, is the fact that US-Pakistan relations are probably at the worst they’ve ever been. Last month the US suspended as much as $2 billion in security assistance to Pakistan, saying it isn’t doing enough to end terror safe havens.

Pakistan’s ‘all-weather friend’ China has been very supportive of Islamabad through its crisis with Washington. Beijing’s direct dialogue with separatist militants in Pakistan might be seen as small price to pay for that support.



NBP reports Rs23.03 billion post-tax profit for 2017

Saeedahmad NBP

J. Choudhry/Corporate Ambassador/KARACHI: Despite tough situation, the National Bank of Pakistan has reported post-tax profit of Rs. 23.03 billion, 1.2% higher against Rs. 22.75 billion similar profit for 2016. This translates into highest ever earnings per share of Rs. 10.82 (2016: Rs. 10.69). Bank’s pre-tax profit amounted to Rs. 35.6 billion, 4.1% lower against Rs. 37.14 billion for prior year. Pre-tax and after-tax return on average equity were 29.0% and 18.7% (2016: 31.5% and 19.3%) respectively.

NBP head office

The NBP announced its financial result in meeting of the Board of Directors (BoD) of National Bank of Pakistan (Bank) that was held on February 20, 2018 at the Bank’s Head Office in Karachi. The BoD approved the financial statements of the Bank for the year ended December 31, 2017.

NBP logoMaintaining its position in the industry, the Bank reported highest ever profit after tax numbers in its 69 years history. Despite a generally difficult year for the banking industry, NBP recorded an overall positive performance. Operating income of the Bank for the year amounted to Rs. 85.3 billion (2016: Rs. 84.8 billion). While net interest / mark-up income amounted to Rs. 54.3 billion (2016:Rs. 54.8 billion); a 3.7% growth was observed in non-interest / mark-up income which amounted to Rs. 31.1 billion.


Healthy growth in balance sheet size was also recorded as the same reached to Rs. 2,370 billion depicting a 20 % growth YoY. Banks’s gross loans & advances increased by Rs. 75.5 billion reaching to Rs. 857 billion. A nominal growth of 1.16% only was observed in non-performing loans. Investment also increased by Rs. 72.4 billion and reached to Rs. 1,296 billion. Similarly Bank’s deposits also increased by Rs. 69.8 billion and reached to Rs. 1,727 billion.


The Board deliberated at length whether or not cash dividend and / or bonus shares should be recommended. However, the likely impact of pension case, despite some positive signals, still remains a cause of concern. The first priority of BoD is to maintain continuity of Bank’s business which is very much dependent upon the capital base of the Bank. The BoD is conscious of the fact that the shareholders look forward to receiving dividend. However, eventually it was considered more prudent to retain the profits for the time being and once the position becomes clearer and positive, the Bank may consider declaration of dividend at a later stage. Accordingly the BoD does not recommend any dividend for the year 2017.

The Bank has filed review petition against the judgement of the Supreme Court of Pakistan in the pension case and has also moved an application for constitution of a larger bench which has been accepted. Pending the decision of review petition, financial impact of the subject case has not been included in the financial statements as the Bank looks forward to a favourable outcome of the case.

NBP is continuously expanding its market outreach through adding to its product range, restructuring its business model, and adopting the modern-day delivery strategies. Provision of services through Alternate Delivery Channels and Customer Service Quality are now among top priorities of the Bank. During the year, Islamic Banking branches of the Bank increased from 118 to 169. With “AAA” credit rating, the Bank is a driving force in financial industry with its large distribution network domestic and international branches, and a wide range of products & services.

In order to address structural issues of the field management of the Bank, the BoD has approved restructuring of Commercial & Retail Banking Group set-up in the field by adopting a flat reporting system empowering the region & field management team and giving them distinct business targets to achieve better results. This has been in an area which needed attention for some time.

Current account deficit hits $9.47 billion in 7 months of FY17

The current account deficit of Pakistan has expanded to 9.47 billion dollars in seven months of the ongoing financial year, July 2016 to Jan-2017, says a latest update of the State Bank of Pakistan, issued on Feb 20, 2018. The current account deficit is almost 40% higher in comparison with 6.48 billion current account deficit in the corresponding period of last financial year. Here is data of the State Bank about balance of payment, exports, imports, current account position, etc.

current account deficit JulyJan2017

Faysal Bank’s Credit Card or Embarrassment Card

My weekly column published in The Financial Daily, Karachi, today (Feb 20, 2018).

 Faysal Bank's Credit Card or Embarrassment Card

In the last one decade, the banking sector in Pakistan has witnessed massive expansion, innovation, modernization in the use of technology and automation of the system. But the most worrying aspect is that the bank customers’ facilitation culture and automation systems are facing deterioration that are creating problems for the millions of the customers of the bank.

Last week, my friend and General Manager of The Financial Daily Ahmed Omar again faced embarrassment twice in one day when his Credit Card of the Faysal Bank declined payment at two different locations. Ahmed Omer is a customer of Faysal Bank and using the credit card for the past more than 14 years.

A consistent and unending trouble that he is facing for a long time is that the Faysal Bank fails to post the payment of the credit card the same day. In certain cases, the bank did not update the credit card payment even the following day that caused embarrassment to Ahmed Omar. The fresh episode of embarrassment emerged the last week when he made full due payment of the credit card, but the Faysal Bank did not update the payment even a day after receiving the payment that landed Ahmed in trouble and he felt ashamed twice, first time when he got fuel at Shell petrol pump Phase 1, DHA Korang Road and gave the card for payment. But he was shocked when the Shell staff told him that the card had declined payment.

At that time, a friend of Ahmed was also sitting with him in the car and unfortunately Ahmed did not have cash in his pocket to pay to Shell for getting 32 liters of petrol. Finally, his friend (Mubasher Mir, President of Karachi Editors Club, Resident Editor of Daily Pakistan and a senior TV analyst) felt the awkward situation and immediately made the payment to save his friend from the demoralization. Ahmed Omar’s bad-luck with Faysal Bank’s credit card continued to haunt him throughout that day and he faced another shock at night when he went for dinner with friends at Hot and Spicy in Delton Market in Defence, Karachi.

When he and his friends finished the dinner, Ahmed again handed over the credit card for payment, but the card again refused payment and once again the man faced unexpected shame before his friends. Again, one of his friends made the payment and rescued Ahmed from further humiliation. All this happened a day after he made full payment of his credit card. Every month, Ahmed consumes almost equal to the limit of the credit card (Rs 37,000/number is 5254-5200-9099-1877) and every month he deposits the full payment within the prescribed limit, but whenever he made the adventure of making payment from the credit card, the same day at evening, he had to face embarrassment as card always betrayed him in making payment. This time, the non-payment from the credit card a day after payment annoyed him and he finally shared his over a decade-long bitter experience of Faysal Bank’s credit card banking with this writer who had accepted the onerous task of exposing the weaknesses of the banks through his weekly column “Unbridled Banking” being published in The Financial Daily from February 2018. This column is also shared on the Weekly Corporate Ambassador website and Facebook.

The purpose of this column is to highlight the embarrassing mistakes of the banks so that the financial institutions take measures to prevent their customers from facing annoying situation and improve their performance and efficiency. Interesting to note is that Ahmed Omar contacted the helpline of the Faysal Bank and told the official who attended the call about his ordeal of embarrassment just because the bank did not update the payment even the following day of the payment of the card. The helpline official sufficed it to say that it happened due to a technical problem, but Ahmed wondered that why this technical problem is haunting him for the past many months.

The way the bank is posting payment very late, it seems that the bank is even not working at par with the manual banking days of banking sector (in 20th century) when the payment was updated the following day. This writer is also using different bank cards and has observed that most of the banks are posting the payment, the moment the customer delivers cash at the counter and the banks also send an SMS as confirmation. But what has happened to the Faysal Bank that is unable to post/update payment the same day, is really shocking and unbelievable for many.

Ahmed Omar is making payment in Phase-I branch of the Faysal Bank that is near to his office’s location. The Faysal Bank should try to follow other banks that are updating the payment in accounts and credit cards almost at the same moment when the customers deliver cash. After facing consistent embarrassment, Ahmed is in a position to file damage suit against the bank.

Here is link of The Financial Daily that published this column



World’s Internet users exceed 4 billion in 2017

Internet Stats graph 2017

Special Report by J. Choudhry/Editor Corporate Ambassador/ISLAMABAD

The global internet population has finally exceeded 4 billion by Dec 2017. Total internet users in the world are 4.05 billion+ by December 2017. The Internet World Stats report, provided to Corporate Ambassador today (Feb 14, 2018) points out the latest trend of global internet population. Mr Enrique de Argaez, CEO and Editor of the Internet World Stats shared this report today from Colombia.

Internet Stats2 Graph

Asia is leading the internet world with 1.992 billion+ users, followed by Europe with 700.015 million internet users. Latin America/Caribbean rank third with 424.628 million+ users, closely followed by Africa with 412.15 million users and North America, having 345.660 million internet users. Middle East hosts 147.117 million users by Dec-2017 while Oceania/Australia host 28.18 million population who are using internet. Total world population (estimated) is 7.634 billion (7,634,757,9432) in 2018 while actual internet users in the world in Dec-2017 are 4.05 billion (4,050,247,583). So, 51.8 percent of the people in the world are using internet. A most interesting aspect is that from the year 2000-2018, the internet population has shown 991.1 percent stunning growth.

World Internet Stats2

Internet-users penetration rate: North America has the highest rate of 95% penetration of internet, followed by 84.6pc in Europe; 68.3pc in Oceania/Australia; 65.1% in Latin America/Caribbean; Asia has 47.4 percent penetration of internet while 32pc penetration is in Africa, the lowest in comparison with the other regions in the world.

Growth-Rate 2000-2018: During the past 17 years, Africa has shown the highest growth of 9,029.7pc; Middle East 4,378.7pc; Latin America 2,250pc Asia 1,643pc; Europe 566.2pc; North America 219.8pc while Oceania/Australia reported 269.8pc growth.



IMF deliberately bluffed about current account deficit of Pakistan, says Dr Ashfaque

Former Economic Adviser to Ministry of Finance Dr Ashfaque H. Khan has claimed that the International Monetary Fund (IMF) deliberately belied about current account deficit of Pakistan in 2016-17 as the IMF was in league with the rulers. Here is the article of Dr Ashfaque H. Khan that he sent to the Chief Editor of Corporate Ambassador Javed Mahmood today.


Pakistan’s balance of payments has remained under severe pressure over the last one year with current account deficit surging to $12.4 billion (or 4.1% of GDP) in 2016-17 from almost $5 billion (1.7% of GDP) a year ago (2015-16). The country’s balance of payments is likely to deteriorate further during the current fiscal year (2017-18), thus creating serious challenges for the solvency of the state.

The most worrisome is the fact that this deterioration in the balance of payments is taking place at a time when the country is having a dysfunctional government with extremely weak and frivolous economic team at the helm of affairs. Furthermore, the country is heading towards a general elections within few months’ time. Doling out resources in the name of “Taraqiati Program” (Development Program) as well as Program for the ruling members of the parliament—all to win the election—will be the order of the day. Such a reckless fiscal stance would fuel aggregate demand which will not only widen fiscal deficit but would also accelerate import demand with a severe repercussion for the current account balance. But who cares, as long as I win the election?

The purpose of this article is to raise concerns for those who matter in this country. Pakistan’s balance of payment started deteriorating right after the end of the IMF program in August/September 2016 which speaks volumes about the efficacy of the Program itself. I, Dr. Hafiz Pasha and a few other economists knew very well that all the Reviews (sixteen in numbers) of the IMF Program were based on manipulated statistics. Furthermore, these Reviews were deliberately conducted outside Pakistan (UAE) to avoid people who were writing on the Program’s outcomes. Such manipulation of statistics was in the knowledge of the IMF staff but they kept their eyes and ears closed. As soon as the Program ended, the compulsion for manipulating statistics also waned.
Furthermore, the country’s former finance minister became busy with Supreme Court and JIT and gave little time to ‘manage’ the economy.

As soon as the Program ended, the compulsion for manipulating statistics also waned. Furthermore, the country’s former finance minister became busy with Supreme Court and JIT and gave little time to ‘manage’ the economy. The true health of the country’s balance of payments started emerging thereafter. The current account deficit which was predicted by the IMF to be $4.7 billion for 2016-17 ended up with $12.4 billion or 4.1% of the GDP. How can the IMF staff go so wrong in forecasting a key macroeconomic variable? The answer is simple: the IMF never wanted to tell the truth. The staff of the IMF was fully in league with the former finance minister in presenting a rosy picture of the economy, thereby misguiding the people of Pakistan.

Pakistan’s balance of payments has further deteriorated during the current fiscal year (2017-18). The current account deficit has widened to $7.4 billion or 4.4 percent of GDP during the first half of the fiscal year (July – December 2017) as against the full year target of $9.9 billion and $4.66 billion or 3.1 percent of GDP during the corresponding period of the last year, showing a deterioration of 59 percent. This deterioration has taken place primarily on account of an extraordinary surge in imports (18.8%). Prominent import items that exhibited extra-ordinary growth included Petroleum (26.7%), Transport (24.9%), Machinery (19%) that include telecom (43%), electrical machinery and apparatus (62%) and power generating machinery (26%). Bulk of the contribution to the increase in imports has come from Petroleum (32.3%), machinery (17.1%), agriculture and other chemicals (14.5%) and metal group (12.3%). In other words, more than three fourth (76%) of the contribution to the surge in imports has come from these four groups.

Exports on the other hand did register reasonable growth (10.8%) after almost five years of perpetual decline. Nearly all (96%) the contribution to export growth came from four items,  that is, textile (41.2%), food (25.1%), chemical and pharmaceutical products (22.2%) and petroleum groups (7.2%). It is important to note that this relatively impressive growth in exports owes heavily (93%) to the autonomous rise in international prices of these export items and only 7 percent to the increase in quantity of exports. Should we celebrate the success of much touted export policy?

Inappropriate exchange rate policy appears to have encouraged the extra ordinary rise in imports. This is where the IMF staff did not do justice with the IMF Program. IMF believes in maintaining a flexible exchange rate policy, particularly, during the program period and yet they have tolerated a fixed exchange rate regime throughout the program period. Why shouldn’t we criticize the IMF for eroding our external competitiveness? Furthermore, the lack of desire to curtail imports through tax and tariff policy further aggravated the external balance of payments situation.

Prominent import items that exhibited extra-ordinary growth included Petroleum (26.7%), Transport (24.9%), Machinery (19%) that include telecom (43%), electrical machinery and apparatus (62%) and power generating machinery (26%). Bulk
of the contribution to the increase in imports has come from Petroleum (32.3%), machinery (17.1%), agriculture and other chemicals (14.5%) and metal group (12.3%). In other words, more than three fourth (76%) of the contribution to the surge in imports has come from these four groups. Exports on the other hand did register reasonable growth (10.8%) after almost five years of perpetual decline. Nearly all (96%) the contribution to export growth came from four items, that is, textile (41.2%), food (25.1%), chemical and pharmaceutical products (22.2%) and petroleum groups (7.2%). It is important to note that this relatively impressive growth in exports owes heavily (93%) to the autonomous rise in international prices of these export items and only 7
percent to the increase in quantity of exports. Should we celebrate the success of much touted export policy?

Inappropriate exchange rate policy appears to have encouraged the extra ordinary rise in imports. This is where the IMF staff did not do justice with the IMF Program. IMF believes in maintaining a flexible exchange rate policy, particularly, during the program period and yet they have tolerated a fixed exchange rate regime throughout the program period. Why shouldn’t we criticize the IMF for eroding our external competitiveness? Furthermore, the lack of desire to curtail imports through tax and tariff policy further aggravated the external balance of payments situation.

Based on the developments in the first half of the fiscal year, it is safe to predict that
exports are likely to end in the range of $23.5-24.5 billion in 2017-18. Imports on
the other hand, are likely to be in the range of $57-58 billion with trade balance further
deteriorating to $33.5 billion in 2017-18. Net service and net income are likely to be
$4.5 billion and $4.9 billion, respectively, in 2017-18. With net current transfers
projected to be $24.9 billion, the current account deficit is expected to be $18 billion
in 2017-18. With $8.5 billion external debt servicing, Pakistan needs $26.5 billion to
finance current account deficit and to meet external debt servicing payments

Pakistan is likely to receive external financing from various traditional sources, Chinese sources, and FDI amounting to $14.0-14.5 billion. This leaves a financing gap of $12.0–12.5 billion in 2017-18. How can we fill this gap? Who will provide $12.0-12.5 billion and at what cost? Who will answer this question? Pakistan’s foreign exchange reserves stood at $13.2 billion by the end–January 2018. How credible is this number? These reserves are borrowed reserves. We built these reserves through massive borrowing all around. Given the developments on external front, as discussed above, pressure on foreign exchange reserves is the logical conclusion. We have lost $3 billion of reserves since the beginning of the current fiscal year, that is, in 7 months. In order to protect the falling reserves at a certain minimum level, the State Bank of Pakistan (SBP) has resorted to
borrowing from commercial banks in forward markets which amounts to $5.4 billion by the end December 2017. In other words, Pakistan’s official foreign exchange reserves at the end-December 2017 stood at $8.662 billion and not $14.1 billion as reported by the SBP. It is unfortunate that the SBP is hiding facts from the nation by not telling the truth. Accounting gimmickries will not serve the purpose. It is better to tell the truth however bitter it may be, rather than hiding the facts.

The above analysis clearly suggests that Pakistan’s foreign exchange reserves will not be
sufficient to meet the financing gap of $12.0-12.5 billion for the current year. Where should then Pakistan go to get the additional external flows? In normal circumstances, the country goes to the IMF for additional external flows to meet financing gap. Is Pakistan ready to go the IMF once again? The present government has clearly stated that it would not seek financial support from the IMF.

What is then the strategy of this government for the remaining period of the tenure? In the absence of seeking support from the IMF, the only option left for the government is to borrow from right and left. It appears from the government strategy that it will borrow from wherever it is possible to survive for a few more months. Once the tenure of this government is over, they will tell the people that they did not go to the IMF, as promised. What will happen to the new government then? Will the caretaker government start negotiating with the IMF for a new program? It is clear that the IMF will not approve any new program with the caretaker government. Most probably, the caretaker government may start negotiation at least on a broad framework of the program and let the new government sign the agreement, if they desire. In my view, Pakistan should not think of going to the IMF in the presence of deteriorating US-Pakistan relations. Pakistan will be asked to take certain prior actions which it may not like to do. This is an opportunity for Pakistan to live without the clutches of the IMF. There are many alternatives that Pakistan can explore to meet its external financing requirement. Deft policy handling, good economic team, support from the leadership, structural reforms along with alternative available modes of financing would prevent Pakistan from facing serious balance of payments crisis.

The bottom line is that the present regime has severely damaged the economy and its key institutions. It has made Pakistan highly vulnerable to external shocks and drowned the country under debt. Has this been done deliberately or was it sheer incompetence of the leadership and its economic team? I leave it to the people to judge for themselves.
The author is Principal and Dean at NUST School of Social Sciences and Humanities, Islamabad. Email: