Price of a bailout package!

The year 2022 will be remembered in Pakistan for two reasons: one, the deepening political crisis, especially since April; and two, the economic meltdown. For nearly the entire year, political schism between the PTI and the PDM persisted, with each trying to let the other down. As a result, the economy of the country is ruined, manifested in a serious balance-of-payments crisis, depleting foreign exchange reserves and sharp escalation in the prices of essential commodities as well as oil, gas and electricity.

While the risk of default on foreign obligations looms, one needs to be mindful of the price Pakistan will have to pay if the government does get a bailout package to save the country from an impending default. Amid the worsening security situation in Balochistan, growing attacks from Afghanistan and the TTP-led terrorist attacks, there is no skillful management of political, economic or security crises faced by Pakistan.

As regards avoiding default on foreign payments and see through the ongoing fiscal year, there exist at least three possibilities.

One, seeking a bailout package from IMF, along with financial assistance from other multilateral donors. Two, requesting the friendly countries like China, Saudi Arabia and the UAE to extend a helping hand — yet again. Three, accepting a freeze on the country’s nuclear arsenal under international monitoring — as being speculated for quite some time.

In the past also, some irresponsible elements used to suggest that in order to seek financial assistance from world powers, Pakistan should sell some of its nuclear weapons to interested buyers. However, at that time, the custodians of Pakistan’s nuclear arsenal snubbed such proposals and made it clear that nuclear weapons cannot be put on sale as Pakistan is a responsible nuclear state with adequate safeguards under its control and command system.

Things changed in 2022 when Pakistan faced a dangerous economic crisis that turned even more serious in the wake of the ouster of the PTI government in April 2022. The economic managers, led by Federal Finance Minister Ishaq Dar, despite their tall claims, failed to set things right. The Pakistan rupee slumped to historic lows against the American dollar, resulting in more expensive oil and consequent price hike. Thousands of containers carrying imported items remain stuck at the ports in Karachi, leading to the shortage of essential commodities as well as medicines. The unavailability of major foreign currencies, particularly the US dollar, in the open market has led to the creation of a black market, which has caused a decline in the flow of remittances from banking channels as well as a considerable dip in exports. The worst: foreign exchange reserves held by the State Bank of Pakistan have fallen below $6 billion, much of which cannot be used and only has a showcase value.

The irony is that those who matter in the statecraft don’t seem serious in saving the country from disastrous implications of a financial default. The US as well as other international players and international financial institutions are understood to be closely monitoring the economic, political and security situation of Pakistan; and are perceived to offer, at an appropriate time, a solution to deal with the dangerous economic predicament. The threat of the banned TTP, coupled with the worsening security situation in Balochistan and Khyber-Pakhtunkhwa, may well serve as a justification for international players, in collaboration with the IAEA and the United Nations Security Council, to deprive Pakistan of its nuclear arsenal on safety grounds by offering a deal of several billion dollars.

Pakistan’s refusal to accept such a deal may result in a ‘Plan B’ taking shape i.e. a Sri Lanka-like economic meltdown. Once must never forget that a shortcut to overcome a default by selling Pakistan’s nuclear weapons would mean sacrificing the country’s sovereignty for the sake dollars — and would therefore be tantamount to treason. Such an approach, reflecting a typical mindset, has been adopted in the past as well — during the times of the Cold War, Afghan Jihad and the US- led war on terror — for getting economic benefits, which rather had a negative fallout as far as the people of Pakistan are concerned.

The only respectable way to save Pakistan from an impending economic disaster is adopting serious austerity measures by curtailing non-development expenditures; pursuing a policy of self-reliance; taking steps to augment exports; and discouraging corruption and nepotism. Sadly, those wielding power are ready to risk the country’s sovereignty, but unwilling to sacrifice their own comfort.

Pakistan’s nuclear programme, labeled as‘Islamic bomb’, was always an anathema to India, Israel and the West. The prevailing economic crisis in Pakistan serves as a lifetime opportunity for these powers to implement their nefarious age-old plan to deprive Pakistan of its nuclear arsenal in exchange for just a couple of billion dollars. The absence of will, determination and skills to manage crises has pushed Pakistan to the brink of disaster.

Even though the country is economically broke and politically fragmented, there is no indication that the culture of affluence, involving the elites, is on the decline. Palatial shopping malls and high-end restaurants are ever packed to capacity whereas there is rampant beggary on the roads, and gangs of criminals are involved in loot without any fear from those who are supposed to ensure law and order.

To conclude, no shortcut can provide a sustainable long-term solution to our economic ills. The only respectable option available to deal with the country’s economic and political malaise is by adhering to the policy of self-reliance, mitigating the VVIP culture, eradicating corruption and nepotism, focusing on maximising exports, ensuring accountability and rule of law and enforcing strict work ethics. Is there any one in Pakistan who can give any thought or attention to the aforementioned measures?