EDITORIAL: It’s telling, though not entirely surprising, that Pakistan’s position on the UN Human Development Index (HDI) has dropped from 161, where it stood since 2021, to 164 out of 193 countries. And it’s even more telling that of all the countries in the region – Nepal (146), India (134), Bangladesh (129), Sri Lanka (78) – only Afghanistan (182) is placed lower than Pakistan.
The HDI report quantifies country-by-country progress based on economic and non-economic factors, especially education and income indexes, so it’s very concerning that even a country like Sri Lanka, which defaulted in 2022, is ahead of Pakistan. Yet our slide, though particularly poor, is also somewhat symptomatic of third world performance since the pandemic. For, as the report points out, the world has broadly returned to pre-Covid levels of development, but the recovery “masks a widening gap between rich and poor countries”.
This is being termed a failure of collective action, quite rightly, as widening of the rich country-poor country gap undoes decades of very hard work in front of everyone’s eyes. Yet if the global south continues to shrink, as the north leaps ahead, the inevitable imbalance will not only plunge the former into political and social strife but also compromise vital commercial markets for the latter. And that is bad for everybody.
Pakistan, once again, provides the perfect example of the political paralysis and social breakdown that are never far behind a cruel financial squeeze. And now, as the country’s small taxpaying segment is further squeezed to meet IMF conditions – to stay on the program and keep our loans rolling over – the rich-poor disparity will stretch even further, within and outside the country.
It’s also a very cruel fact that the government cannot allocate nearly enough funds for human development, given its miniscule reserves and large payments. That, precisely, is why rich countries, which have been growing richer since the post-pandemic rebound, must step in and help countries like Pakistan weather this storm, just as the UN report urges.
That does not mean suffering country governments are absolved of their responsibilities, of course, just that letting them fall, especially when the global economy is still fragile, is sure to unleash not just capital market contagion and strain on global trade, but also widespread social discontent and unrest with its own consequences and repercussions.
Sadly, it does not seem as if rich nations are in any mood to give such concerns much thought anytime soon. The best bet is for struggling countries to obtain enough life support from the IMF and other IFIs to stay solvent. But since all such support now comes with very painful structural reforms, which mandate tight fiscal and monetary policies, small economies will continue to get smaller and the gap between big and small countries will keep growing.
The UN can do no more than raise alarms here and there. And of late its warnings about climate problems, terrible damage from superpower and superpower-supported wars, and global financial imbalances are going unheeded. It’s as if the world is sleepwalking into a disaster and its most advanced countries are leading it there.
Copyright Business Recorder, 2024