Warda Rehman
Pakistan had recently been assured by China & KSA of financial support. Subject to this financial package of $13 billion, including the rollover of sovereign loan deposits, additional rollovers are supposed to be released soon. However, to consider it a remedy to current account deficit is absurd and deceitful. For a country already indebted of trillions, it is simply not rational to borrow more. Therefore, Pakistan needs a break from International Financial Institutions and wide-ranging domestic reforms to ensure economic security. Although economic security is placed at the core of the National Security Policy of Pakistan as a “comprehensive” concern that would complement the geo-strategic structure of the state no concrete and fruitful steps have been taken to elevate financial growth.
The nation’s call for financial assistance continues to echo. Since 1988 there has been a vicious cycle of resorting to the IMF due to our inability to maintain our economic structure. Dependency on external finances marked the inception of the debt trap. Unfortunately, followed by the inability to develop a sustainable economic model or pathway to overcoming the vicious cycle of debt. Pakistan has gone through 22 IMF programs all of them short-term, destabilizing and necessitated another one. Besides IMF, we share a history to secure billions in financial commitments from friendly countries like China, Saudi Arabia, UAE and Qatar. The thought that bilateral negotiators are easy to deal with comparatively is not wrong. However, such funding has proven not to be enough to pull Pakistan out of its deep economic crisis and has only increased debt liability. The “Borrowing” policy has only been successful in decreasing FDIs, unwelcoming economic activities, declining labour productivity and stagnated exports. In short “financial packages” have just acted like a booster, a short-term stimulus but a long-term deterrent to economic growth & development and resulted in unemployment.
To keep the balance of payments in check and to meet financial obligations government of Pakistan unfortunately always resort to lenders. As Prime Minister Shehbaz Sharif laid concerns that how long will Pakistan take to stand on its own feet and for how long will it keep relying on money lenders and friendly countries. It is high time to address and overcome those grass-root level disturbances that add volume to Pakistan’s economic woes. Pakistan faces challenges of structural deficiencies and policy implementation that have made any such financial assistance unsustainable, uncertain and unstable. Still relying upon packages reflects a prevailing strategy that is simply myopic and an easy escape to complicated issues such as lack of investment and problem of balance of payments.
Instead of borrowing more govt needs to reevaluate trust-deficit along with trade and fiscal that can be resolved with policy prioritization and management. The cure to disease lies in sticking to a long-term economic policy that focuses on nation-building by increasing domestic labour productivity. At first, there is a need to change the public discourse to bring a general realization that the economy is an issue that can’t be solved with the magic trick of any political leader. A radical change in mindset needs to be hammered and accepted as the harsh reality that subsidies for popular gains are not going to fill the current account deficit. Second, the administrative apparatus needs to ensure stable policy focused on trade increase, investments in productive sectors & reasonable taxation on services sectors. We are borrowing more to repay loans while accelerating our troubles and mounting debt burden. Nonetheless, Pakistan shares magnificent economic potential. We need to tap opportunities and bring diversity for a lucrative economy. Sticking to programs would only bring stability not sustainability. Borrowing from friends in difficult times could provide a boost to the domestic financial ecosystem only if government materializes strategically and for a long-run cause. Therefore, Pakistan needs a fresh restart, instead of going out for loans to bring investments home.
