The International Monetary Fund (IMF) has released some rather eye-catching statistics: each Pakistani, man, woman and child, would owe over Rs 34,000 on foreign debts incurred by the government by 2016. The Fund reports that our foreign debt will increase by about 13 percent, or 6.4 billion dollars to 57.1 billion dollars, by the end of the current fiscal year and would increase further by 7 billion dollars or 12.3 percent by 2010/2011.
This presupposes two conditions. First, that population will grow to 180 million, by 2016, which given its present rate of growth is highly likely; and, second, the country would remain heavily dependent on foreign assistance to make ends meet. In lieu of the failure of the pledges made by the Friends of Democratic Pakistan (FoDP), in April 2009 in Tokyo, to be disbursed one must add a corollary: in the event that Pakistan is able to procure foreign loans - pledged in the past or in the future.
There is little doubt that critics of the present government would raise the issue of repeated claims by senior members of the present government that they are embarked on an indigenous home-grown plan - a list which includes such stalwarts as President Asif Ali Zardari, Prime Minister Gilani, as well as several members of the Cabinet, including Finance Minister Shaukat Tarin.
A look at the who's who of our home-grown economists, who were requested to formulate the indigenous plan, reveals that several of them worked for international financial institutions and their recommendations were in conformity with standard normal aid conditionalities that have been challenged the world over by economists as benefiting the developed countries more, rather than the developing countries.
Critics might well also challenge the claim that a home-grown plan can be heavily reliant on foreign assistance. This is not to state that the government would be well-advised to shift its dependence on domestic borrowing, instead of foreign, as the former is highly inflationary, yet it is to emphasise that the government needs to revisit some of its policy decisions taken during the past one year and three quarters.
Today, the Pakistan economy is at a crossroads and the reasons are mainly attributable to domestic policy decisions. Loadshedding remains one of the major elements that is causing massive losses to our productive capacity which, in turn, is hampering not only our exports but also increasing unemployment levels.
Twenty-one months after the present government took over power, loadshedding has worsened. To add insult to injury, consumers, domestic and industrial, are paying higher bills for lower supply. Why has the government not taken up this issue on a war-footing and stopped all other sectoral development activities in favour of increasing energy generation, improving the distribution network by minimising line losses, and eliminating the inter-circular debt? Granted that generation may take time, however the other two factors have not been dealt with in a timely and appropriate manner.
Equally importantly, the government needs to strengthen the hands of the Competition Commission of Pakistan to enable it to take corrective timely actions with respect to artificial shortages due to hoarding or smuggling, instead of the courts taking these decisions. And finally the government needs to ban all imports, except essentials. India started off its economic development by following a very stringent import regime - let us follow suit.
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