Every morning when one wiggles out of bed, there is a new set of dismaying and despairing stories regarding the impending economic collapse of Pakistan. And engulfing it actually is.
Macroeconomic and financial fundamentals suggest that Pakistan is heading towards a fatal fall. The tall stacks of foreign debt stand still taller. The government in its casually callous way is trying to beam out the issue. With eyes and ears shut and hands in pockets they think ‘God is in His Heavensand all is right with the world’. But all is not well, at least this time around. And deep down they know it.
Pakistan is committed to paying 50$ billion debt due and overdue by year’s end (already on average grace period of 6.6 years) - a head-spinning increase of 79%duringthe last three years. In 2013, a loan for $6.6 billion was secured from IMF to avoid an external debt payments slump. The debt servicing got close to $7 billion in 2014, (almost 50% of foreign exchange reserves) and $6.820 billion in 2015.
The ruthless and senseless borrowing during the past 7-8 years has pushed the country into a disastrous debt trap meaning that it has to solicit and beg for more money to pay off the loans it already owes. Since the present government took over in 2013, the external debt situation has become alarming and a bucket full of almost $10 billion alone has been added to our misfortunes, cracking our knees nearly beyond repair.
Lamentingly enough, half of what is generated through revenue is paid off in debt as against 40% during the year gone. With a view to diverting more funds towards social sector and poverty alleviation, this ratio ought to be someway near 30% mark. The low tax revenue collection, meek exports growth, negligible foreign investments, yawning balance of payments gap, depreciation of currency and financial mismanagement have contributed to the nurturing and unleashing of this fattened monster.
Heaving heavy under this high heap every Pakistani owes a debt of about 120,000 rupees. This figure roamed around 90,772 in 2013, Rs80894 (2012) and 37,170 (2008).Before assuming power, tall claims were made by the present rulers that the country would be rid of cancer of debts, and the begging bowl would be smashed.
In reverse, the country has been sent spinning, staggering and grappling desperately. Ishaq Dar, the financial wizard – the artisan at work- has done his homework making sure the collapse comes full circle this time.
Despite thisun-rosy script, countries still survive through bail-out packages, recovery plans and contingency cosmetic surgeries. Recently Argentina, Greece and Zimbabwe faced defaults and bankruptcy situations. On various occasions, Pakistan has been close to defaulting but saved by emergency loans. However the situation does not look bright this time. The agenda might be different and the $20+ billion foreign exchange reserves, growth rate of 4.5%, floating of Euro Bonds, sell-off of state-controlled losing as well as earning units and self-praising prudent economic measures may prove insufficient to rescue us from complete financial chaos and collapse. Once Pakistan defaults, the external debt figure will jump to $77-80 billion mark and fears are the country will lose its economic sovereignty, providing the world an excuse to make the defaulter dance to its tune.
Already displeased and fidgety over our nuclear program, fast developments and formation of different blocs and alliances in and around south and Central Asia, its diminishing role in post-Economic Corridor Pakistan and Pak-China-Russia-Iran alignment, the West, as part of last ditch efforts, will see to it that this finally happens. A financially crippled Pakistan will suit its interests.
PML-N Senator Anwar Beig, through a series of letters to his own government, had conveyed serious concerns of a foreign diplomate against free-fall borrowing spree. The dignitary warned of a conspiracy being hatched to trap Pakistan into this IMF-World Bank debt-web and then dictate its terms.
The Armageddon has begun. The country is on the verge of a default and its economic sovereignty threatened. A far-fetched conclusion suggests the benign world will come forward, hold our hand and lead us out of this abyss on one condition– ‘the roll-back of nuclear assets’ for a peaceful world. A sweeping statement it though may sound, the challenge looms large.