The tunnel of Pakistani Economy is dark as on date, whereas light at the end is subject to meticulous planning, focussed efforts and prevalence of good senses.
The Pakistani diaspora, comprising about 9 million work-force spread in different nations of the world is a major source of foreign exchange remittances of the country. It is estimated that $ 19.3 billion were remitted by these persons: 60% of the remittances came from Saudi Arabia, the United Arab Emirates and other Gulf countries; 15% from the USA; and the balance 25% from other countries, particularly the UK and European nations. There is huge potential of increasing the quantum of such remittances many folds, and changing its nature from consumer to productive purposes by suitable planning and incentives. In fact, this export of human resources, particularly in the Middle East, had kick-started as a result second Islamic Summit Conference in February 1972, held in Lahore.
Pakistan has abundance of untapped natural resources. One may agree with the statements of the present Premier of the country about increasing revenue from tourism by developing vast mountain ranges as tourist attractions. However, tourists, other than journalists, do not visit disturbed areas. They need peace in the region, a thing that has yet to be achieved there. (Journalists may have appetite for disturbed and tense areas, but they are not a paying lot!)
PRESENT FIASCO
Waquar Masood Khan, former Federal Secretary, Finance, has described the problem of $1 billion bonds and Sukook that are falling due for payment in June 2019. Such bonds may be reimbursed by issuing fresh bonds. The problem lies in the credit rating of the country and the task is difficult in its present credit worthiness. Another related problem is the low foreign exchange reserve of $14 billion. Added to this is the public debt of Pakistan reaching the level of 70% of its GDP, and the external debt estimated to be around $100 billion.
Pakistan is trying to overcome its financial problems by getting investments and/or from foreign countries like aid from Saudi Arabia, the United Arab Emirates, besides China. With mixed success in this area Pakistan is forced to negotiate a bailout and rescue package from International Monetary Fund (IMF). This would be its 13th package. It is reported that 18 out of 30 earlier programmes against $30 billion received earlier from IMF are incomplete. Further, IMF financial accommodations come under sovereign guarantee and have to be covered by mortgaging national assets like motorways, airports, radio and TV stations.
IMF, it is understood, is hard in bargaining. Details of negotiations are not yet available in the public domain. Even the level of assistance sought for is not known. However, western media reports that the USA and IMF ae suspicious about the credentials of China-Pakistan-Economic-Corridor (CPEC) and they want to assure that the funds made available by them do not go for payment of debts to China. It is estimated that about 30% of foreign debts of Pakistan are owed to China.
CHINA-PAKISTAN-ECONOMIC-CORRIDOR (CPEK)
The infrastructure and communications programme being executed through China is, reportedly, worth $30 billion and it is widely understood to be a game changer that will bring in financial prosperity in the region. There is a big question mark regarding the Chinese practices in executing its projects. China has undertaken a number of projects in Africa and elsewhere. Their practices are now like open-secret. They simply do not let any ancillary industry develop in their catchment area because they bring in everything, including nails, from China. They do not believe in local partnership as they literally develop projects on turn-key basis. On the contrary, they arrange to get concessions for their mass consumption items and are successful in flooding the local market with their products. A number of countries, including Sri Lanka, Malaysia and the Maldives that dealt with China have become wary of such practices and have taken corrective actions.
Another fallout of Chinese assistance is that Pakistan has to keep its mouth shut about the Uyghur issue. Like, if you want help from the KSA, do not spell Khashoggi. So, if you are looking towards China, ignore the fate of Uyghurs. Talk about Palestine, Myanmar or Kashmir. But here it ends. Keep other things at bay! Take your stock, you are at the receiving end!!
ARMY IN ECONOMY
Another severe problem which Pakistan faces is the involvement and vested interest of its army in economic activity in the name of serving the financial interest of its retired personnel. The army in Pakistan is more like a maneater which has tasted blood. From usurping civilian rules to milking its economy, it has been disrobing itself. An army is meant to protect borders and, obviously, not to subjugate its own populace in areas of their democratic rights and economic independence. In the guise of ‘Fauji Foundation’ based on the corpus of pension funds for retired army personnel, military’s welfare funds run thousands of businesses worth billions of dollars. A report in Al-Jazeera reveals that the army owns lots of bakeries, banks, insurance companies, cement, fertiliser plants and universities, and has invested heavily in commercial ventures like oil and gas exploration, sugar mills and employment services.
Countries like Turkey and Egypt also have/had such indulging army. Turkey did the course-correction and sent back the army to the barracks, the place it belongs to. Egypt could not rope in the maneater and its democratic process was crushed like anything, bringing the “spring” down to “autumn.”
A course-correction, may be in a subtle manner, is required in Pakistan, too.