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Pakistan is drowning under the mountain of debt
- ssoni43
- Jan 19, 2023
- 4 min read
Updated: Jan 20, 2023
Analysts who monitor Pakistan say that the country is going through perhaps worse than the economic crisis of 1971 and is being surrounded by floods. Bangladesh came into being as a separate country from Pakistan in 1971. Last week Pakistan's Prime Minister Shahbaz Sharif and Pakistan's Army Chief Syed Asim Munir went to the UAE and both offered financial assistance. Shahbaz said that the UAE (United Arab Emirates) has pledged to extend the debt repayment period of two billion dollars and provide an additional loan of one billion dollars. Shahbaz Sharif's government is doing everything possible to prevent Pakistan from declaring its debt. Miftah Ismail was made the finance minister when Shahbaz Sharif took office last year. Currently, Ishaq Dar is the finance minister of Pakistan, who is considered loyal to Shahbaz's elder brother Nawaz. Miftah Ismail says that Pakistan has a foreign debt of 100 billion dollars. Out of which 21 billion dollars of debt is to be repaid during the current fiscal year, while 70 billion dollars of debt is to be repaid over the next three years. Pakistan has foreign exchange reserves of barely four billion 30 crores. Which is the lowest level in recent years. With the help of this amount, Pakistan cannot even pay for one month's imports. Pakistan's economy is heavily dependent on imports. Many videos of Pakistan are being posted on social media. In which Pakistanis can be seen fighting each other for food items. One person has also died in this incident. Those writing about Pakistan's economy are focusing on only two problems prevailing in the country - one is the current account deficit and the other is the revenue deficit. Western countries are no longer helping Pakistan. There will come a day when even Saudi Arabia and China will not help him. No one should help for free without protecting his own interests. This is the situation not only in Pakistan, but in the whole of South Asia. Similar was the situation of India in 1991 and the coming days are not good for India either. All of South Asia is a consumer for the West and can only consume as long as there is money. Pakistan's trade deficit is increasing and India's situation is not good either. India has become a three trillion dollar economy and has overtaken Britain. But, if we compare India and Britain per capita, it becomes clear where we stand. India is a market for the world. Who does not sell, but buys. We are told that Pakistan is the enemy and arms dealers supply arms to both countries. We need to understand the basic difference, but no one is willing to understand this.
When it comes to receiving funds from the IMF, Pakistan is ready to accept its terms, but once the IMF program ends, it goes back to the old ways. Pakistan's economy was never dependent on foreign aid and debt. No one honestly strove for economic supremacy. The government is celebrating by getting debt from friendly countries and international organizations, which is extreme, to the point that even the media is talking about getting loans. Foreign debt will not end the country's economic problems. During the Cold War, Pakistan sided with America, due to which it got cheap and easy loans from Western countries at that time. Governments of Pakistan considered these loans as the only solution and did not make any kind of economic reforms. They thought that the tax they got was enough. Pakistan's reliance on foreign debt and aid continued to grow, both for development and consumption. Friendship with the US during the Cold War also resulted in a military alliance. Then in the 1980s, after the invasion of the then Soviet Union in Afghanistan, Pakistan received financial assistance from the Western countries. After the 9/11 attacks, Pakistan became strategically important for the US. Hence he gets financial package. Because of America, the IMF was also helping Pakistan and it would have got an extension in the debt repayment period. During this period, the government of Pakistan from General Zia-ul Haq to Pervez Musharraf continued to thrive on foreign aid. As long as Western aid continued, Pakistan's economy seemed to have no problem. However, progress on the strength of foreign debt and foreign aid could not be sustained. Help stop or the balloon starts to deflate. It is said that Pakistan has never addressed the fundamental problems of its economy. The availability of foreign debt and remittances from Pakistanis living abroad were the only source of income and no economic reforms were made. Never tried to solve the structural problem in Pakistan's economy. As a result, the easy and cheap loans from the western countries were stopped, leading to expensive foreign debt. This type of debt-driven development is short-lived and comes at a heavy price. Due to which Pakistan was buried under a mountain of debt.
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