By Senator Rehman Malik
In given scenario and uncertain situation in Pakistan, much has been said and being said about the possible change in set up. The word coup always brings the mind under pressure, because it is synonymous to force of action. The first internationally well recognised expression of a coup is the army takeover which was very common in the world in 50s when Africa suffered heavily and then Pakistan when Gen Zia-ul-Haq deposed the elected PM ZAB and then played his innings as Martial Law administrator with the support of USA.
Today I am not talking about any army coup but of another form of coup, which has brought us at the verge of bankruptcy. I will first discuss about this self-invited coup, which I would name as an “economic coup”. In fact, our past rulers laid the foundation of economic coup in 1952 by taking the first loan and thereafter successive governments got addicted of loans to run their affairs. These loans started as soft loans initially which subsequently turned into loans on heavy interests. The loans given to states are subject to sovereign guarantees by the Governments through State Bank.
The Soviet-Afghan war which was engineered and controlled by USA through Zia-ul-Haq got us further under heavy finical burden and our begging bowl started becoming bigger and bigger. Unfortunately, this bigger bowl failed to even meet the growing requirement of the country as it had got a big hole in the shape of heavy financial burden vis-à-vis millions of Afghan refugees in Pakistan. This war also brought with it limitless miseries in the form of gun running/flow of drug to Pakistan besides increasing our expenses on western boarders because of our growing conflicts with USA and Afghanistan. The country was suffering economically because of the unwise participation in Afghan -Soviet war, which had given birth to extremists and militants. USA left us high and dry and our economic situation worsened with the burden of Afghan refugees and emergence of Talban and Al Qaeda. It was unfortunate that the help extend to USA as friend crippled our growing economy and all economic sectors related to our growth because of the law and situation created by terrorists.
The Americans have always been interested in our strategic assets and database. We went wrong by not linking our support with-retiring of our foreign debts with the assistance in the war on terror to USA. I once proposed this suggestion in an international donor’s conference held in Sarena Hotel Islamabad in the presence of USA delegation and unfortunately our economic team did not endorse my proposal in this open meeting.
The handling of economy and internal security as per the constitution of Pakistan is the responsibility of the government. We say past is past and is to be forgotten but past does give nations the required guidelines as to where we went wrong.
We as nation are victim of self-invited terrorism coup and economic coup. These coups will not be averted unless we take practical step to retire our debts and bring a comprehensive action plans both for national security and foreign policy.
I am very sad to mention below about the worrying situation wherein we have mortgaged almost all our national assets rather we have mortgaged our national pride.
The government have now started putting national assets of extremely high value as guarantees (mortgage) in exchange for more loans or otherwise for Sukuk Bonds. The national assists like Jinnah international airport Karachi, Peshawar-Faisalabad motorway, Faisalabad-Pindi Bhattian motorway, Islamabad-Peshawar motorway, Islamabad-Lahore motorway, PTV, Radio Pakistan has been mortgaged and despite in Pakistan these assets are no more ours. There are many more and I expect the government to make it public as nation must know about this big achievement of the government. The position of loans stands as under
IMF Loan: $ 6.2 billion
World Bank and other multilateral banks: $ 9.7 billion
Bilateral countries: $3.6 billion
US aid: $33.4 billion
Saudi Arabia (Islamic Development Bank) $242 million
Paris club France: 625 million Euros
Japan: 192 Billion Yen
China: $162 Million
Euros bonds and Sukuk bonds: $ 2.5 billion
Budget deficit (2017): Rs. 1.863 trillion
Expected budget deficit this year: Rs. 1.9 Trillion
Growth rate of Pakistan: 5.8 %
Inflation rate: 3.80 %
Rate of one dollar in 2013: 100 PKR
Rate of dollar today: 110.76 PKR
We have bad effects of economy deficit on imports and exports. The current account deficit (CAD) had recorded at $12 billion during the fiscal year (FY2017). The CAD surged by 122 per cent to $5.013 billion in the first four months (July-October) of the current fiscal year as compared to $2.259 billion a year ago. The CAD is widening as higher imports growth offset the improvement in exports. The CAD is likely to touch $18 billion by the end of current fiscal year. The CAD is widening due to massive increase in trade deficit. Pakistan’s trade deficit widened by 36.32 per cent to highest ever level of $32.58 billion during fiscal year (FY17) because of the record increase in imports and decline in exports. Country’s imports were recorded at historic level of $53.02 billion during the FY17 as against $20.45 billion exports during previous financial year. Same trend continued in the current fiscal year. Pakistan’s trade deficit had swelled to $15 billion with exports of $9 billion and imports of $24.1 billion during first five months of the current financial year as against $19.9 billion of the same period last year.
Now according to an estimate, Pakistani currency is likely to come under further pressure due to the widening current account deficit, and any further depreciation weakens the country’s debt affordability besides stoking inflation. Pakistani Rupee is facing an on going depreciation pressures against the US dollar. The Government’s debt affordability would also likely to be weakening further. Moreover, Pakistan’s current account deficit will remain around current levels, ranging from 3% to 4% of GDP, due to the high import intensity of domestic-driven growth.
I had predicted in my previous article about the fall of Rupee against dollar and it stands at Rs 116 to a dollar today. If the PKR (Pak Rupee) depreciates markedly further, the country’s central bank will face the difficult challenge of anchoring inflation expectations at moderate levels. The Rupee is likely to loose more if the government does not take SOS drastic immediate steps to halt further fall of Rupee against Dollar.
I will write as to how I halted the fall of Rupee against the Dollar by taking administrative and punitive measures under the instruction of my government. The public record is the testimony of my actions. The economic coup has hit the Rupee hard which means public will suffer more in the form of increase in the prices of all commodities. I had proposed some immediate measure for debt retiring plan and will table a bill this connection. We must realise that these economic and terrorism coups have brought us to the verge of national debacle. I appeal to the CJP to take up this matter and take the commitment of time line for national debt retiring plan where the PM/ all CMs and Governor of State Bank be present. This will be the real service for Pakistan.
(The writer is a PPP Senator, former Interior Minister of Pakistan, and Chairman of think tank “Global Eye” and Senate Body on Interior and Narcotics.firstname.lastname@example.org @senrehmanmalik)
By Senator Rehman Malik