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  • Writer's pictureSaleem Qamar Butt

Enslaved Again!

After the end of the physical colonial period in the backdrop of the end of WW-2 in 1945, the old masters did not waste much time to regain the politico-economic grip in the former colonies by forming up new security and economic architecture. The advent of NATO and Warsaw pact countries divided the world in to two distinct belligerent blocks but the Russians were outmatched by the creation of EU Block and subsequently by the International Financial Institutions (IFIs) like the World Bank, IMF, ADP, BRICS, WEF, WTO, APEC etc. Purportedly, they ought to play a major role in the social and economic development of countries with emerging economies; but in reality, most countries get their skins peeled off due to vicious trap of heavy debt servicing and other host of reasons. The most common types of financial institutions include banks, credit unions, insurance companies, and investment companies. This includes advising, funding, and assisting on development projects to: reduce global poverty and improve living conditions and standards. An international financial institution (IFI) is a financial institution that has been established (or chartered) by more than one country, and hence is subject to international law. The main difference between the International Monetary Fund (IMF) and the World Bank lies in their respective purposes and functions. The IMF oversees the stability of the world's monetary system, while the World Bank's goal is to reduce poverty by offering assistance to middle-income and low-income countries.

Countries like Pakistan soon after independence, instead of former East India Company, got trapped by foreign economic support and meaningless military aid that made her addicted to walk on crutches and consequently loss of focus on developments in all the fields as was achieved by other contemporary newly independent countries. The rampant corruption in the country as well as the successful execution of the “Economic Hit man” policies by the lending institutions/ countries has got Pakistan stuck in the quagmire of foreign and domestic loans. Which not only defeated the stated purposes of the IMF/ World Bank, but instead made the country drowned in abject poverty and loss of economic sovereignty with serious ramifications for the national security of Pakistan.

Pakistan External Debt reached 124.3 USD bn in Jun 2023, compared with 125.8 USD bn in the previous quarter. The data reached an all-time high of 130.6 USD bn in Dec 2021 and a record low of 37.2 USD bn in Jun 2006. The International Monetary Fund (IMF) said on July 12, 2023, that it has approved a $3 billion loan agreement for Pakistan. The Pakistan government confirmed that the International Monetary Fund had transferred $1.2 billion to its central bank as the first tranche of a $3 billion bailout program for the cash-starved nation. Out of the total 196 countries of the world, 189 countries are members of the International Monetary Fund or IMF. The countries that are not a part of the IMF are Cuba, North Korea, Monaco, Taiwan, Vatican City, and East Timor Liechtenstein. Countries such as Nepal, Sri Lanka, Uzbekistan, Armenia, the Kyrgyz Republic and Mongolia are far behind in terms of borrowings from the IMF. Other countries ahead of Pakistan in terms of top three biggest debtors are Argentina ($46 billion), Egypt ($18 billion) and Ukraine ($12.2 billion). Pakistan owes US$11.3 billion to Paris Club, US$33.1 billion to multilateral donors, US$7.4 billion to International Monetary Fund, and US$12 billion to international bonds such as Euro-bond, and Sukuk.

In 2024-25, Pakistan's debt servicing is likely to be around $24.6 billion, which includes $8.2 billion long-term debt repayments and another $14.5 billion short-term debt repayments; this includes major repayments to Chinese lenders of $3.8 billion. Apart from the IMF bailout and the Chinese loan, a $2 billion of financial support from Saudi Arabia and $1 billion from the UAE after the IMF pact has helped steady Pakistan's economy, the report said, quoting finance minister Ishaq Dar in mid-July 2023. IMF projections are revealing as per the August 2023 report. The current account/GDP ratio is projected to moderate to 1.7% by FY 25. This indicator has already displayed signs of improvement, which will ultimately impact the external debt-to-GDP ratio, stabilizing around 33.5% by FY 27. GDP grew marginally in FY 2023 (July 2022–June 2023). As for the year 2023, economic momentum was hit by floods, government austerity and a balance-of-payments crisis. Turning to FY 2024, the economy appears to be strengthening. The policy statement showed that the per person debt burden increased from Rs 179,100 in June 2021 to Rs 216, 708 by June 2022. There was an additional liability of Rs 37,608, or 21%, on every citizen in just one year. As for Government Internal Debt in Pakistan, it averaged 25147.25 PKR Billion from 2011 until 2023, reaching an all-time high of 60839.90 PKR Billion in June of 2023 and a record low of 9266.90 PKR Billion in January of 2011. So much for the suffocating facts and figures regarding addiction to foreign and domestic borrowing, which helps the ruling elite to keep the people of Pakistan on the anvil, while stashing the big share abroad thanks to corrupt practices by the gangs and mafia.

While the powerful elite remains busy in multiplying their wealth, writing off their criminal cases by unscrupulously passing self-serving laws by the lame duck parliament, wheeling and dealing sitting abroad in palatial palaces, the people of Pakistan are finding mere survival as the greatest challenge due to unprecedented energy prices dictated by the IMF causing unbearable inflation. The majority of people in Pakistan are finding it impossible to make the two ends meet; suffering from acute social, health and security issues without any ray of hope visible. The Government of Pakistan is totally helpless in the face of crippling IMF dictations on every monetary decision and the sovereign status of the state has a big question mark. A government that can neither ensure well-being nor security of life and provision of justice to the people, obviously symbolises an enslaved country, which looks worse than the physical colonial period. Most unfortunately, the old colonial masters with new ring leader has successfully thrown the only Muslim Nuclear Country in to a deadly vortex. The survival lies in immediate revival of true democracy in the country through free and fair elections, restoring national pride and confidence in the state institutions i.e. Legislature, Executives and Judiciary functioning in respective orbits, prior elimination of proven corrupt people from the governance by honest application of the law and justice by truly independent and apolitical courts, and top to bottom austerity by the state. The political oppression and repetition of old power corridor experiments must stop as that is prone to the same outcome i.e. one step forward and two steps backward with new monsters on the block. All patriot power brokers have to join heads and hands to bell the cat!

Pakistan Zindabad!

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