Pakistan, caught in a deadly debt trap, is struggling hard to rid itself of external loans of over $30 billion and cumulative domestic debt of Rs 1.94 trillion as on 31st January 2004.
There is little hope to come out of this crisis or to stop looking towards the IMF, World Bank, Paris Club, London Club and ADB in the near future.
There are no positive signs yet, for overcoming the ever-increasing fiscal deficit, the worsening balance of payments and unfavourable trade imbalances.
The latest figures of internal debt pose an alarming situation. According to data released by the State Bank of Pakistan (SBP) the domestic debt has expanded to Rs 1.941 trillion in the first seven months of the current fiscal year from Rs 1.853 trillion on June 30, 2003.
In July 2003 to January 2004, the outstanding domestic debt of the country shows an increase of Rs 88 billion, or 4.74 percent. The SBP has reported an increase of Rs 57.70 billion in the permanent debt, placing it at Rs 485.607 billion from Rs 427.907 billion as of June 2003.
In the category of permanent debt, the SBP has reported an increase of Rs 56.023 billion in debt raised through the auction of Pakistan Investment Bonds (PIBs). PIBs debt amounted to Rs 284.688 billion so far in this fiscal year, whereas, it stood at Rs 228.665 billion on June 30, 2003.
The SBP has also indicated Rs 13.761 billion growth in the prize bonds debt portfolio, as it increased to Rs 143.731 billion in this period, from Rs 129.97 billion.
Meanwhile, floating debt also showed an expansion of Rs 35.237 billion to Rs 551.505 billion, from Rs 516.268 billion on June 30, 2003.
The SBP, however, reported a decline of Rs 5.448 billion in the volume of un-funded debt, which has dropped to Rs 904.051 billion from Rs 909.499 billion on June 30, 2003.
In un-funded debt, the SBP has reported a decrease of Rs 29.853 billion in the Regular Income Certificates (RICs) and Special Saving Certificates (SSCs), as investors withdrew deposits on maturity of the scheme because of low rates of return.
Successive governments in Pakistan heavily relied on domestic and foreign lending and never tried to live within means.
The present monstrous debt burden is a logical outcome of the wrongdoings of the last many decades. General Pervez Musharraf on seizing power in 1998 constituted Debt Reduction and Management Committee (DRMC) to evolve a strategy to come out of the debt trap. Where is the strategy? Has Pakistan managed to come out of debt enslavement? The answers are disappointingly in the negative.
There are many ifs and buts to determine the viability of any strategy to come out of debt enslavement considering the very difficult debt position in which Pakistan is caught. The dilemma is obvious; the deadly debt trap has multifarious dimensions.
The debt trap is a multifaceted phenomenon having economic, political and social dimensions. The international donors, on the instructions of the proponents of New World (dis)Order, started tightening their noose around Pakistan's neck after its nuclear explosions.
The negative effects of conditionalities imposed by them are now becoming more and more visible. In the frenzy of collecting more and more taxes through oppressive means and corrupt-CBR apparatus, the rulers of Pakistan are making the lives of common people miserable.
The traders and industrialists are not directly hit by such harsh tax measures as they can easily pass on the burden of these taxes to consumers but they are certainly feeling insecure as general chaotic conditions and lack of law and order have a visible dampening effect on their businesses.
Today's Pakistan represents a State where a trio of corrupt civil-military bureaucrats, incompetent politicians and profit-hungry businessmen is very affluent, but the government is poor and incurring more and more debts to pay salary and other expenses of its employees.
This state of affairs is the direct outcome of the State's policies that allowed a free hand to forces of loot, corruption and terrorism. No other State in the world has undergone such a horrible experience. A number of studies conducted by independent researchers reveal that narco-money and debt-enslavement has made Pakistan a State subservient to international donors and forces of terrorism.
Pakistan's transition from a 'Kingdom of Heroin' to an "Enslaved Economy" shows how certain forces managed to push this nuclear state to a position of extreme helplessness.
There has been a lot of hue and cry about foreign debt burden but the official economists do not utter a single word about mounting internal debts that has reached an alarming figure of Rs 1.941 trillion by 31st January 2004.
The long-term internal and external debt scenario has never been planned in Pakistan and the result is the current debt mess.
Pakistan needs to evolve a short-term, medium-term and long-term strategy for debt retirement.
The key to debt retirement is not privatisation of profit-making public-owned assets but to raise tax revenues, especially from the wealthy classes. The real tax potential of undeclared income/wealth in Pakistan is between Rs 800-1000 billion, according to very conservative estimates. Pakistan can easily collect tax revenue of Rs 800-1000 billion in the coming three financial years provided Central Board of Revenue is converted into a corruption-free and efficient state structure.
The collection of taxes to this level can eliminate budget deficits. Resultantly Pakistan can concentrate positively to retire debts in the shortest possible time.
The successive governments have utterly failed to convince the Pakistani people for paying taxes due from them.
The common argument against paying taxes is that money so collected is spent for wasteful purposes and on unprecedented benefits enjoyed by high-placed civil-military bureaucrats and corrupt politicians.
The State must earmark revenues for specific purposes and place the same in funds created for debt retirement, creation of employment zones and provisions for social services like education, health, housing etc. This will inspire the people to contribute towards the national exchequer. This is the only way that revenues can be generated through voluntary compliance and at the lowest possible cost.
The present policy of imposing irrational taxes, eg taxing even that portion of citizens' income that they spend on educational and medical needs, can never produce any positive results. These are bound to create more inequalities in the society leading to social unrest and lawlessness.
The best way to accelerate economic growth is to attract investment from domestic and foreign sources. It is unfortunate to note that Foreign Direct Investment (FDI) has declined from $600 million in the first seven months of the financial year 2002-2003 to $360 million in the corresponding period of the financial year 2003-2004.
The State is so indifferent towards the law and order situation and high charges of power and gas that no foreign investor is inclined to venture into Pakistan despite tall claims to the contrary by the financial managers. If the Government is really interested to improve the situation it must remove Rs 40 million worth of petroleum surcharge which will substantially reduce petroleum prices that affect all sections of the society.
Our rulers in fact do not want to come out of debt enslavement as it will end their perpetual control over the State through the help of their foreign masters. Pakistan served as an experimental ground in the hands of foreign donors to see how effective their strategy can be in enslaving the Third World countries.
Their experiment has produced positive results and now they are applying the same tactics in India. Pakistan was first made a victim of narco-money destroying its social and economic fabric. Once that was achieved there was no difficulty in forcing it to easily succumb to the objectives of the New World (dis)Order.
A nuclear State was purposefully trapped into a deadly debt trap. The debt trap, in fact, is a symptomatic expression of economic enslavement.
The economic enslavement leads to political subjugation and it is therefore not surprising that today, Pakistan is unilaterally declared by the United States as the most important 'Non-Nato ally', which in fact means the most obedient 'Non-resisting Satellite State'.
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