Qarz Mubarak!

There is jubilation all around in government circles, The IMF has agreed on a $ 7 billion loan package at 5% per annum interest rate.

This is the 25th programme with the Shylock of our times, as about 26% of this amount will be used to pay accrued interest, thereby increasing the debt burden. It is a hole from which recovery is almost impossible. Ultimately, nations must take a plunge to break the cycle of unbearable sufferings.

In New York, the Prime Minister (PM) and his Ministers are saying that the burden will not be passed on to the already burdened common man while they continue to increase indirect taxes and utility bills which are bound to hit people. Their hotel bill alone will be outrageous.

In his second stint in power, Nawaz Sharif came up with a novel idea called; “Qarz Utaro Mulk Sanwaro” (Erase debt for orderly growth). No one knows what happened to the money collected.

There is a lot of criticism about the ‘ Dam Fund ‘ created by a former Chief Justice of Pakistan (CJP). Results have been very positive of this initiative, three large dams are currently under construction (Bhasha, Mohmand, Dasu) the collected amount has been transferred to the treasury unlike the ‘Mulk Sanwaro’ defunct scheme. Even the IMF has pointed out the need for major reforms in the power and energy sector.

As the first-born free generation of Pakistan, we have witnessed the rise and fall of our own freedom. Today 51.8% of the annual budget is utilized for debt servicing. After covering defence and administrative expenses hardly anything is left for development. This approach has been unsuccessfully tried for 24 times before resulting in more debt and interest burden.

The Islamic Republic of Pakistan has become economically un-sustainable and insolvent mainly because of debt and un-necessary imports. Borrowed money comes in after making a stop in Dubai, finally to return through imports or laundering leaving the debris behind for the common man to clear.

It was the Mirza-Ayub nexus that put Pakistan on this track of borrowed money. Coming from a business family that considers interest an evil, the approach did not sit well. My father’s uncle (Khalu) Dr Anwar Iqbal Qureshi (AIQ) the first Indian PhD in Economics had retired from IMF in early sixties. He was invited by the dictator to be his economic adviser.

As Dr Sahib was not aware of the local ground realities, he decided to stop over in Lahore to meet my father on his way to Rawalpindi. There was an after-dinner discussion about the new economic plan. It was IMF that had offered a fast-track debt based economic model. My father Nazir Ahmed Malik the upright businessman understood the local mentality well.

He tried to convince Dr Sahib that easy money would be disastrous as there would be massive defaults and misuse. Over the years he has been proven right. After retirement Dr Sahib wrote a book on ‘Interest Free Economy’ but by that time the damage had been done. Now the Beggars have been forced to seek the 25th tranche or dole out. There is hardly any visible light at the end of the tunnel.

The Islamic Republic of Iran had accrued foreign debt of about $ 20 billion due to the Iran-Iraq war of the eighties. After the hostilities ceased, the leadership decided on strict austerity measures to pay off the debt.

Not a single dollar was wasted. Ministers travelled on Iran Air, stayed in their Embassy office with no TA/DA (Travel Allowance, Daily Allowance). Foreign consultants were paid in local currency. Instead of imports, a policy of self-reliance was introduced. In about a decade, the Islamic Republic was able to overcome the burden of debt together with growth in all vital areas.

There is nothing to celebrate for the Islamic Republic of Pakistan. Debt leads to death if mis-spent or squandered as has been the case unfortunately. Debt moratorium is the only viable option to come out of the hole. Imports and expenses must be contained with focus on self-reliance.

China went into isolation to emerge as a super-power. India also relied on local resources and know-how. Japanese automakers were subject to strict deletion programmes. Instead of assembly they were required to manufacture while in the land of the pure we have been taken for a ride. For the same model of cars, the price differences are mind boggling.

The CPEC infra-structure development should have been investments not loans. Frivolous kick-back projects like the Orange Train of Lahore should have been avoided. The cost of Railway track in the ML-I project is around $2 billion. The local foundries should be tasked to develop the tracks otherwise the entire loan amount of $6 billion will go back to China.

Energy sector requires major reforms as indicated by the lender. The current import bill of $ 26 billion is unsustainable. Even coal is being imported while our own massive deposit at Thar (175 billion tons) remains under- utilized.

In Punjabi there is an ultimate expression of flamboyant wastage; ‘Note nal Cha Pakana’ (Brewing tea by burning currency notes), that is what has been happening in the land of the pure. While properties owned by Pakistanis in Dubail are visible, the borrowed money spent within the country remains invisible probably burnt to ashes. Unless visibility is achieved this gluttonous black hole will continue to swallow what IMF will send for the 25th time around. May Allah protect our flesh from Shylocks.

Copyright Business Recorder, 2024