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In the run up to the 1996 election, the prolific Governor of Texas Ann Richards told the Democratic convention. “All it takes is a jackass to bring down a barn. It takes an architect, an engineer, a plumber, a mason and others to build a barn.”  In Pakistani vernacular we hear “one can convert biryani into poo poo very quickly, but it takes a long time to grow the rice, rasie the chichken and make good biryani.” Also one can convert biryani to poo poo, but you can’t make biryani out of poo poo!

Malaysia deja vu: Pressure on currency: IMF back into Pakistan!

In November 2007, Rupee News wrote an article on the CIA plan to:

1) Assassinate Benazir Bhutto, create shortages of food, destabilize Pakistan and then impact the economy. Baitullah Mehsud an Indian agent and his mercenaries trained by the UK in Helmund were unleashed in a series of bombings in Pakistan. The sitting government that had kept a tight lid on the economy lost the elections and Mr. Dar, king of deficit financing and Voodoo Supply Side Economics got into the seat. Within a few weeks, he raised the deficit to $100 Billion and destroyed the equity built over the past decade. Today the foreign exchange reserves re down from a high of $19 Billion to 12 Billion–all within a span of a few weeks.

2) All these have been accomplished. Now the agencies are in the process of harming the currency of the country to invite the IMF back so that it can dictate to Pakistan to roll back the Nuclear program

Pakistan Foreign Currency Rating Lowered to B by S&P (Update2)

By Khalid Qayum and Farhan Sharif

May 15 (Bloomberg) — Pakistan’s foreign currency rating was cut one level to B by Standard & Poor’s, citing government spending that’s growing faster than revenue collection and political instability. The outlook is negative, S&P said.

“The downgrade reflects rising pressures from the combination of expanding fiscal and external imbalances, against a volatile and uncertain political setting,” according to a release from New York-based S&P today. This is the first time S&P has cut Pakistan’s rating since President Pervez Musharraf seized power in a 1999 coup.

The rating cut comes two days after nine ministers including Finance Minister Ishaq Dar quit as Pakistan’s six-week old coalition government split over a dispute on the reinstatement of judges sacked by Musharraf. Prime Minister Yousuf Raza Gilani hasn’t appointed a new finance minister yet.

“It’s negative news, and will have a negative impact on foreign investors,” said Farhan Rizvi, an economist at JS Global Capital Ltd. in Karachi. “Ratings by these institutions are closely watched by overseas investors.”

Overseas investment in Pakistan, which reached a record $6.5 billion in the year ended June 30, 2007, has since fallen 21 percent, according to central bank data. Foreign direct investment declined to $3.03 billion in the nine months ended March 31 from $3.85 billion a year ago.

Overseas Investors

The rating cut may further deter overseas investors who have already retreated from the South Asian nation, selling a net $53 million of Pakistani stocks in the nine months ended March 31, compared with purchases of $1.69 billion a year ago.

The benchmark Karachi Stock Exchange 100 index, which has risen 2.9 percent this year, declined 113.57 points, or 0.8 percent, at the 2:15 p.m. local-time close today.

The fiscal deficit in the first eight months of this year widened to 4.7 percent of the $146 billion gross domestic product, exceeding the full-year target of 4.5 percent.

The Pakistan Peoples party, headed by Asif Ali Zardari, and former prime minister Nawaz Sharif’s Pakistan Muslim League, had formed the coalition government in March with the help of two smaller groups, ending Musharraf’s eight-year military rule. The president sacked 60 judges in November before the Supreme Court was about to rule on Musharraf’s re-election for a second term.

The PPP-led government is constrained by the highest inflation in 25 years and economic growth that is slowing to 6 percent of gross domestic product this fiscal year ending June 30, from 7 percent last year. Almost half the population of Pakistan, the world’s seventh-most-populous nation, faces difficulty gaining access to affordable food because of the soaring cost of cereals, according to the United Nations World Food Programme.

Security Risks

Political and security risks are an additional constraint on Pakistan’s rating as the split in the coalition government “foreshadows a period of political stability,” S&P said.

Pakistani militants accused the U.S. of carrying out a missile attack yesterday that killed as many as 20 people in the country’s tribal region bordering Afghanistan, GEO television reported. Pakistan, which is fighting Taliban and al-Qaeda supporters in its tribal regions, has supported the U.S.-led campaign against terrorism since 2001.

S&P also lowered the South Asian country’s local currency rating to BB- from B.

“The decision is a little late since the rupee has already been through a decline and everyone has priced it in,” said Nasim Beg, chief executive of Arif Habib Investments Ltd. in Karachi, who manages 24 billion rupees ($350 million) in stocks and bonds. “There will be no major impact at this stage.”

Pakistan’s rupee, which has declined 13 percent this year, fell to 69.70 on May 9, the lowest level since at least 1998. The currency has weakened as the current account deficit widened to $9.86 billion in the nine months ended March 31 from $6.17 billion a year earlier.

To contact the reporters on this story: Khalid Qayum in Islamabad at kqayum@bloomberg.net; Farhan Sharif in Karachi at fsharif2@bloomberg.net.