The picture of the economy painted by the Governor State Bank in his testimony on Monday to the Senate Finance Committee was bleak, because the government had indulged in massive borrowing, something which the bank has constantly mentioned as an inflationary danger. The Governor claimed that his bank could stop this, but said it was not doing so because it did not want to spoil the credibility of the government. The Governor’s testimony lent support to that by the new Secretary Finance, who disclosed that the national debt had doubled under the present government, going up to Rs 12,000 billion. Though he also said that the government did not intend to enter a new agreement with the IMF or the World Bank, which in its Country Partnership Strategy Progress Report, it said that it would lend $5.5 billion over the next three years to Pakistan. No matter how easy the terms, no matter how ongoing the programmes, it should be asked why Pakistan, which is already burdened with such a huge debt, is taking such massive loans.

The dirty little secret behind this borrowing and indebtedness is that these loans are meant to enable the politicians fund the luxurious lifestyles they are accustomed to, from the taxpayers’ money. Because there is a general laxness about the regime, there is a tendency to borrow indiscriminately, leaving the financial managers to pick up the pieces. It should be noted that the World Bank does not express even mutedly the reservations about government borrowing that the State Bank is expressing. This is because the World Bank loans depend on the borrower’s subjugation to the USA. It is likely that worsening US-Pak relations will have an adverse effect on its World Bank dealings, as well. As the Senate committee testimony showed, the bureaucracy contains elements helping the USA, who will bring pressure to bear on a government which has been allowed to do whatever it wants as the price of its subservience. The testimony was delivered by persons who had not resisted the government when it had been plunging the country into debt. The government should pay heed, noting that even the permanent civil servants were pointing out its free-spending ways. It must take measures which involve restraining its spending, starting with an austerity programme which should start at the very top. Only when there is some sort of balance restored between the government’s revenue and expenditure will it be able to stop contracting the new debt that is such a burden on the entire system.

The picture of the economy painted by the Governor State Bank in his testimony on Monday to the Senate Finance Committee was bleak, because the government had indulged in massive borrowing, something which the bank has constantly mentioned as an inflationary danger. The Governor claimed that his bank could stop this, but said it was not doing so because it did not want to spoil the credibility of the government. The Governor’s testimony lent support to that by the new Secretary Finance, who disclosed that the national debt had doubled under the present government, going up to Rs 12,000 billion. Though he also said that the government did not intend to enter a new agreement with the IMF or the World Bank, which in its Country Partnership Strategy Progress Report, it said that it would lend $5.5 billion over the next three years to Pakistan. No matter how easy the terms, no matter how ongoing the programmes, it should be asked why Pakistan, which is already burdened with such a huge debt, is taking such massive loans.

The dirty little secret behind this borrowing and indebtedness is that these loans are meant to enable the politicians fund the luxurious lifestyles they are accustomed to, from the taxpayers’ money. Because there is a general laxness about the regime, there is a tendency to borrow indiscriminately, leaving the financial managers to pick up the pieces. It should be noted that the World Bank does not express even mutedly the reservations about government borrowing that the State Bank is expressing. This is because the World Bank loans depend on the borrower’s subjugation to the USA. It is likely that worsening US-Pak relations will have an adverse effect on its World Bank dealings, as well. As the Senate committee testimony showed, the bureaucracy contains elements helping the USA, who will bring pressure to bear on a government which has been allowed to do whatever it wants as the price of its subservience. The testimony was delivered by persons who had not resisted the government when it had been plunging the country into debt. The government should pay heed, noting that even the permanent civil servants were pointing out its free-spending ways. It must take measures which involve restraining its spending, starting with an austerity programme which should start at the very top. Only when there is some sort of balance restored between the government’s revenue and expenditure will it be able to stop contracting the new debt that is such a burden on the entire system.