Pakistan

The world owes Pakistan

Pakistan has, over the years, had a continuous stream of trade deficits, some small, others not so small

Saljooq Altaf May 02, 2016

There might be some truth in the fact that the world owes Pakistan, but the logic behind how is a bit shifty and this logic originates from an unlikely source – Donald Trump.

Trump, in some of his recent speeches, attempted to explain how he would convince Mexico to build the ‘big beautiful wall’ that would protect the American businesses and citizens from the Mexican immigrants. The wall, he said, must be financed by Mexico since the US ran a trade deficit with Mexico, which meant that US has been buying up more of Mexico’s goods and services, rather than the other way round. Since Mexico owes the US because of that trade deficit, it must finance the wall.

I find the logic quite attractive, especially keeping in mind the economic history of a country like Pakistan. It has been ages since Pakistan has run a trade surplus. If it weren’t for the remittances, Pakistan’s currency might have been forsaken long ago.

Since Pakistan runs a (net) trade deficit against the rest of the world, then by that logic the whole world owes Pakistan — big time.

It is about time Pakistani politicians start rallying alongside Trump and popularise the Trump-onomic. Because if his logic were to become the order of the day, Pakistan could start calling in all the ‘favours’ that have been accumulating in the shape of external debts for all these years.

Pakistan has, over the years, had a continuous stream of trade deficits, some small, others not so small. In order to finance these ‘favours’ Pakistan had been forced to borrow from IMF and other international lending agencies. Recent numbers from SBP indicate that Pakistan’s total debt accrued to an astounding $69 billion, last calculated for December 31, 2015.

The recent trade deficit that the US ran against Mexico in 2015, was $58 billion. That seems to pale in comparison to all the effort a small country like Pakistan has made over the years.

Trump is right, the world owes Pakistan and it is about time we start seeing Trump for what he is — Pakistan’s unlikely benefactor.

Published in The Express Tribune, May 3^rd, 2016.