The Army Chief’s keynote address at the Seminar in Karachi was nothing but the stark truth, which sent our Interior Minister into a frenzy of angry theatrics. Now, the honorable Minister is an Engineer with a lot of experience in tractor building, which does not qualify him academically or professionally to comment on the linkage between economy and security and therefore, Pakistan Army’s concern on the prevailing state of our monies. If Mr. Ahsan Iqbal had done his homework instead of shooting from the hip (something that he frequently does, much to the embarrassment of some of his more sensible colleagues), he would have realized that a strong economy develops a nation’s war potential and stamina. He would also have understood that a key principle of modern military doctrine is to cripple this potential thereby reducing the adversary’s capacity and sustainability to defend itself. If the honorable minister had read military history instead of spouting venom and displaying a perpetually knitted brow, he would have discovered that it was the entry of the United States, with its huge economic and industrial might that turned the tide in favor of the Allies during the Second World War.
Perhaps the Minister concerned should attend the funerals of those young men in uniform, who are laying their lives to defend our frontiers and our homes from both seen and unseen threats. He and his like-minded cronies should perhaps offer their shoulders to carry the biers of our martyrs still clad in their blood stained battle dresses or they should lend their ears to the words of their next of kin, who are ready to offer more sons to the motherland. I don’t see this happening, since this coterie of self-preserving individuals have not suffered the loss of a near and dear one in battle – they have offered nothing to this land in return for getting richer by the day.
All is well with the economy , the honorable Minister said, getting an endorsement days later by a Finance Minister, who has lost all sense of professional morality and who faces television cameras without batting an eyelid, in the knowledge that he is under trial for massive corruption. Here then are some indicators of the real magnitude of Pakistan’s economic and financial crisis – indicators that elude cognizance of our worthy Ministers.
Open sources indicate that we are under debt to foreign banks to the tune of $ 2 Billion. It is also reported that these loans were obtained without drawing the Cabinet or the Parliament into the loop and include amongst others, $ 275 Million from Citibank; $ 700 Million from Standard Chartered Bank; $ 650 Million from Credit Suisse; $ 40 Million from ECO Trade and Development Bank and $ 55 million from Dubai Islamic Bank.
Economic and financial gurus confirm that Sovereign Guarantees and not subsidies amounting to PKR 563 Billion were issued to institutions, so that these figures did not appear in the budget. Now a Sovereign Guarantee is a promise by the Government to discharge the liability of a third person or institution in case of his or its default. A case demonstrating our financial fragility is the news that around 13 Independent Power Producers (IPPs) of the country have invoked sovereign guarantees through notices to the Government, in order to recover unpaid overdue invoices of more than PKR 48 Billion.
The term ‘trade deficit’ is an economic measure of international trade, wherein a country’s imports exceed its exports. This undesirable phenomenon is manifested by an outflow of domestic currency into foreign markets and is a credible benchmark of a state’s economic health. What our honorable Ministers have deliberately chosen to ignore (or mislead) is the fact that Pakistan’s deficit is reported to have risen above $ 32 Billion, which is 37 percent more than the previous year.
‘Circular debt’ can best be defined as a cyclic liability where A owes B, B owes C and C owes A. In our case it is best illustrated in subsidies which the government provides to electricity consumers, who in turn do not pay their bills to the power company. The power company does not have funds to pay its oil supplier, which has no money to pay for imported oil. The government is then forced to borrow from banks to inject funds in this viscous cycle (increasing its debt burden) or the IPPs reduce and even stop generating power. In a contemporary scenario, petrol supplies to the private and public sector may even be disrupted. If our economic health is as rosy as vehemently emphasized by the Ministers, then why in God’s name has Pakistan’s circular debt crossed PKR 800 Billion. No petrol or lack of it, means no mobility for the armed forces and law enforcement agencies and no power means munition factories coming to a standstill. This my dear Minister is why the Army is a big stake holder in the state of our economy and this is why it has every right to speak out on the subject.