Foreign Loans

Only a curse for Pakistan

On the eve of elections in 2018, the leadership of the PTI pledged to the debt-ridden nation that it would break the begging bowl and enable the country to stand on its own feet without financial cushion from lenders. In contrast, the incumbent dispensation has broken all previous records by taking huge loans from multilateral lenders and friendly countries. The utter economic failure of the PTI has made the people realize that political parties employ fancy and empty slogans before elections to rally public support for victory.

Practical experience matters a lot in politics and economic affairs; lack of it lures a person to make his adherents daydream. Prime Minister Imran Khan pledged to reduce the total debt and liabilities to Rs20 trillion from Rs30 trillion he had inherited. But stagflation, failure of macroeconomic policies of the PTI and uncontrolled circular debt, all played havoc, surging the total debt to a whopping Rs50.5 trillion. Apparently, dark shadows of bankruptcy are hanging like the sword of Damocles over the country’s economy. If the upward trend in debts is not arrested, Pakistan’s lenders – mostly neo-colonial powers – will sit in the driver’s seat and decide the fate and direction of the country’s economy. After all, beggars can’t be choosers at all.

According to available reports, Pakistan has taken 20 bailout packages from the IMF so far. Besides, successive governments, both democratic and military, have also sought financial aid from almost all friendly states. Resultantly, the debt of this resource-rich country has mounted to almost 80 percent of its total gross domestic product (GDP). As per PM Khan, his government is paying 60 percent of revenue collected to service the debts of the country. And much of the remaining 40 percent goes into payment of salaries of public-sector employees. Don’t forget that corruption also eats away the faltering fortunes of the country.
The only positive effect of foreign debt for Pakistan is the short-lived stability of its forex reserves. If the government optimally utilizes billions of dollars received in the form of remittances, and prevents increasing smuggling of the dollar – over $10 billion as per the US State Department – the country would not need to knock at the door of the select lenders for dollars. Moreover, diversification of exports can also help churn out adequate forex reserves. Unfortunately, the ‘imported’ economic team of the PTI sorely lacks the insight to devise long-term, pragmatic policies for the sinking economy.

Both the state and the individuals encounter crises as part of their natural growth. It is a divine process to test and strengthen the mettle and grit of an individual or entity before elevation. Sometimes, both the state and the individuals commit major mistakes in this process; they resort to seeking help from others. Resultantly, they do not bother to diagnose the underlying causes of their fall and possible panacea for it. Similarly, due to the virus of economic reliance, Pakistan has, since its birth, dismally failed to produce a much-needed pool of effective and efficient indigenous economists. Besides, the dependency syndrome has not strengthened the state to the level so that it can withstand a pressing financial crisis without a helping hand.

The spectre of debt has hamstrung the government in terms of providing jobs and shelter to the burgeoning population. The government is spending about 60 percent of its revenue on debt-servicing which has rendered the state bereft of monetary resources, making it unable to inject quality reforms into its educational and socio-political spheres. In June 2018, the country spent $7.5 billion in external debt payment and servicing. This cost has increased to $13.4 billion this year, a surge of 79% in three years. The state is left only with the begging bowl to get money for its development projects.

The presence of a pool of uneducated and unskilled youth will prove a crushing liability for Pakistan in the future. Like the incumbent government, its successors could also be preoccupied with the thought of paying back the debt of the country. Thus, the current 38 percent poverty ratio may rise to around 50 percent.
No nation can rise to the height of glory by turning a blind eye to its human development. A jobless, poor and disillusioned populace could explode like a volcano, if the state does not redress its grievances.
Developed countries such as South Korea, UK and Japan strive to hand over a potentially growing economy to their next generations. They, too, remain in the throes of financial shocks, but do not carry begging bowls so that their future generations do not face financial obstacles and don’t become the butt of jokes worldwide; whereas we are leaving a debt-ridden economy for our upcoming generations. As seen from reckless borrowing of the present political dispensation, the debt-to-GDP ratio is likely to jump to 100 percent in a couple of years.

What is the fault of the people of this country that we have chained them in debt of billions of dollars? What is the sin of today’s young Pakistanis that they have been exposed to derision and national ridicule on account of debt? The father of this nation carved out an independent state that is rich in resources for the people. Our successive governments have so aggressively taken loans that each Pakistani is presently burdened with over 0.2 million rupees of debt. Our rulers are going to outshine Louis XVI – the monarch of France before the French Revolution of 1789 – in terms of amassing debt of the ‘geo-economically’ important country. Where is our purported policy shift from geopolitics to geo-economics?

A country with a debt-ridden economy cannot be able to safeguard its prestige and project its power in the comity of nations. The loss of status on the world stage brings forth dire consequences for a nation. Today, the world does not pay earnest heed to Pakistan’s repeated warnings about atrocities committed on hapless Kashmiris by India’s supremacist BJP regime.

Moreover, despite Pakistan’s compliance, FATF is reluctant to remove it from the grey list. The Westphalian nation-states have always preferred wealth to human rights. India is a market of 1.38 billion customers having the 6th largest economy in the world. Therefore, the world has turned a blind eye to recent uranium black marketing in India, blatant human rights violations in IIOJK and New Delhi’s disruptive role as disclosed in the EU DisinfoLab.

The shocking story of debt does not end here. Sovereignty is a key element and pride of an independent nation. Nations sacrifice their lives for the protection of their supreme power. Under the burden of debt, Pakistan had to compromise on its sovereignty, time and again, during the war on terror. American drones used to penetrate Pakistan’s airspace and carry out attacks. Islamabad couldn’t bar Washington due to its heavy reliance on the IMF and the US.

In short, nobody can deny the fact that the country is on the edge of an economic precipice. But, there is still a light at the end of the tunnel for Pakistan. What should be kept in mind is that it isn’t going to be a meteoric rise for the struggling economy to be out of woods in the near future.

The writer is an independent researcher. Email: ayazahmed6666@ gmail.com