Without write offs, Pakistan can’t ever be rid of its loans

Without write offs, Pakistan can’t ever be rid of its loans

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If it was only a ‘magic solution’ to Pakistan’s economic problems that led to the appointment of Ishaq Dar as the country’s new finance chief, then that solution could have been provided to ex-finance minister Miftah Ismail for implementation too. Instead, there is ostensibly a bigger political goal that will be achieved through the move.

The real purpose of the change of the finance minister is to strengthen the Sharif family’s hold on the coalition government. While Miftah was just a PML-N leader, Dar is former prime minister Nawaz Sharif’s daughter’s father-in-law.

With Dar in the saddle, the Sharif family has become more influential in the set-up compared to any other family. PM Shehbaz Sharif and Finance Minister Dar belong to the same family. Until recently, Shehbaz Sharif’s son Hamza was also the Punjab chief minister. Maryam Nawaz, daughter of the former premier, though not holding any government office on account of being disqualified as a result of a court order, is calling the shots from behind the scenes.

Likewise, although Nawaz Sharif has been in London for the past three years and does not hold any position in the government, all decisions are taken with his approval. He tells the government what is to be done and when. Other PML-N leaders, no matter how senior in the party, have only to follow the guidelines given by the three-time former prime minister.

The ones – like Chaudhry Nisar Ali Khan – who can’t blindly follow the instructions, have to part ways with the party despite decades of their affiliation. Nisar had left the party years ago because he did not want to work under the leadership of Maryam Nawaz.

This means that the Sharif family is dominant in the coalition setup.

As for Dar’s ability to rein in the numerous challenges, the nation will have to wait for some time to see the results of the rabbit he lets out of the hat.

The real purpose of the change of the finance minister is to strengthen the Sharif family’s hold on the coalition government. 

Ashraf Mumtaz

At present, Pakistan which was once an independent state capable of helping many developing countries, has become totally a dependent state.

Though a nuclear power, it is literally buried under foreign loans. Its foreign exchange reserves are close to $9 billion only, and it has to beg for more loans to be able to clear its debt servicing liabilities.

Pakistan’s total foreign debt stood at $130 billion a few months ago. Against these loans, the country has mortgaged all important assets and is also tolerating intolerable conditions.

There is no ray of hope that even in the distant future the country will be able to clear its liabilities.

Without exaggeration, all governments in power added to the debt burden to run the system. The idea of self-reliance was bidden goodbye to long ago.

Imran Khan’s PTI, for example, borrowed $52 billion in three years and eight months. (It is said that his government retired $36 billion during this period).

The PML-N government that stayed in power for five years got $49.76 billion during its term. It paid back $27 billion during this period.

Its predecessor, the PPP government had borrowed $25 billion in five years, retiring $14 billion. Pakistan got loans worth $17 billion during General Pervez Musharraf’s rule (1999-2007).

Pakistan’s new finance minister is supposed to work out a strategy to clear $130 billion in outstanding foreign loans, and bring down prices of essential items at any cost. Controlling the price hike is a must as only then can the PML-N expect votes in the next elections (expected to be held in August 2023).

Although the rupee has slightly appreciated, stabilizing the economy will not be an easy task.

The devastating floods have hit the economy hard, the aftershocks of which will be felt for a long time to come. The international community’s support is much less than expectations and the country may be facing food shortages in the months ahead.

In this situation, the only course left for Pakistan is to seek loan write offs. The government will have to approach the relevant countries and organizations to seek this favour. Otherwise, simply put, Pakistan will never ever be able to pay back its loans. The government will keep changing but the situation on the economic front will be much less likely to witness any major or lasting change.

— The writer is a senior and veteran journalist with a career spanning 40 years with major national and international newspapers.

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