The new IMF trance has been haltingly won.
Every new tranche runs into a marathon discussion over the inability of the Pakistani government to fulfil its previous commitments made before receiving a new tranche.
With every new trench, further holes are punched into the country’s financial belt to tighten its hold.
Pakistan is currently enjoying the 22nd IMF programme and owes billions of dollars to the fund in interest payments. A large chunk of every tranche is used to repay loans/interests to the domestic and international entities.
Pakistan has been turning incessantly to the IMF, Saudi Arabia and China for financial help to wiggle out of the current account deficit crisis and the ever-dipping foreign exchange reserves — meant to cater to our foreign financial obligations ranging from paying off our loan instalments to footing the huge import bill, including the most important oil purchases.
Why does Pakistan need external support to meet its financial obligations? The answer is simple: Pakistan’s expanses are way higher than its ability, capacity and wherewithal to generate money. Moreover, for any country to grow and progress, two things are indispensable: a stringent rule of law and a firm and uncompromised taxation system. Similarly, a developing country is characterised by a lack of potential for saving and investment.
Any country that fails on these four parameters gathers an unmanageable economic swamp. By this criteria Pakistan is standing on a swamp. The question is: can someone stand and survive on a swamp?
No. If not, how is Pakistan managing to keep afloat in the swamp?
The answer lies in Pakistan’s elites.
Elitism is an adjective used to explain a way of life and governance that excludes a large population segment from its equation of justice, fair play, and equal distribution of economic resources. The purpose is to build a class-based society divided into three layers: the 1%, the 15%, and the 84%.
The 15% is at the beck and call of the 1% who controls 90% of the country’s economy. The 15% who controls 8% of the economy, not only uses the 84% to keep the former’s house in order but also sees to it that this significantly large segment of the population remains illiterate, myopic, physically and mentally dwarfed because of the ill-equipped government health sector, and last but not the least ensuring that they could only get 2% share in the economic pie, for which corruption, hoarding, smuggling and state terrorism is made possible.
This is just the tip of the mala fide iceberg. Let’s take a reverse view of the situation.
Imagine if Balochistan and Sindh, two of the most important provinces of Pakistan, were not made police states and have been given a chance to prosper under fair and universally acclaimed corporate and societal laws, how advanced and structured would have been Pakistan’s economic system? Would we still be stretching out our hands for debt to repay debts and to mount an extra layer of debt?
Imagine, if political instability had not been created to short-circuit economic development, wouldn’t we be receiving dividends from building the China-Pakistan Economic Corridor?
Imagine, if stern actions were taken against corrupt leaderships and the law was given a free hand to follow its instinct and books of rule, would there be an unending circus of buying and selling political loyalties to shape the state machinery to one’s liking?
Imagine if we had given even 50% attention to the demands IMF has been asking us to fulfil to restructure our economic woes, would we still be struggling to survive financial default?
At this stage, one is tempted to ask: Does it mean that in a developing country, people do not save? Does it also mean that in a developing country, the law is non-existent, and nobody pays taxes?
Saving does happen but it is not invested in the home country. Most of Pakistan’s leaders have elaborate businesses in some of the advanced countries.
The rule of law and the tax system is also established, but they change meaning and form when elites and their protégés in the 15% segment are in question.
Imagine, if Nawaz Sharif and his children had opted to keep their money in Pakistan and the system had supported their passion and interest in financial development, would not Pakistan be getting high-tech manufacturing contracts from international market?
Imagine, if the late Rehman Malik had opened a food chain in Pakistan rather than in the UK, would not Pakistan be welcoming foreigners, taking tourism, one of the biggest source of foreign exchange to next level?
Imagine, if Asif Ali Zardari and many others in PPP had not stashed money in Swiss banks, would not our trade and manufacturing facilities be attracting world attention while creating hundreds and thousands of jobs every year for the bludgeoning youth population?
Today, every Pakistani is wondering whether Pakistan will survive. Yes, it will, until those living in the swamps, the 84%, are pulled out of the slumbers of ignorance.
The French Revolution happened not because those living in swamps woke up to the injustice of the kingdom. It happened because the middle class — a few in the 15% — started feeling the pain of the swamp dwellers. It happened when the swamp was reimagined and made a force to undo elitism.
Pakistan is on the road to this creative destruction. Better to listen to the IMF’s fair demand and become a nation that saves, invests, follows the rules, and legally pays taxes. Otherwise, remember what Mao said: A revolution is not a dinner party.
Published in The Express Tribune, January 26th, 2023.
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