In its early years of independence, Pakistan survived three years without foreign loans. However, a loan deal signed with World Bank gave a new look to the nascent economy and Pakistan started falling into the loan-traps in the later years. The total loan amount has now reached $70 billion and a foreign agency predicts Pakistan risks default as around $50 billion foreign debt is due this year. Given the statements of the finance minister and other government officials, the country has stable economy and the foreign exchange reserves have reached over $24 billion. Experts believe the government used the three-year extended facility programme of the International Monetary Fund, which has now come to an end, to bolster foreign exchange and ensure macroeconomic stability but the end result is nothing but a zero sum game. The idea to undertake wide-ranging structural reforms is also a far cry. So far, the government has managed the loan which was due in the first quarter of the current fiscal year and experts believe the country’s high level of public debt could lead to complex situation in the near future.
Independent economists also believe that the loan programmes better serve the interests of the donor agencies rather than the borrowers. The economy of the country is still in search of a direction.The donors not only offer waivers, but also praisesto the government for achieving ‘invisible’ macroeconomic stability. The tax collections last year crossed the assigned targets, but missed most of them in the first quarter of the current fiscal year. The situation of the economy is not stable as writ of the government is weak and it is also not able to make serious policies and efforts to put the economy on the right direction. When the writ of the government is weak, it generates black money, but the government steps are allowing the black money to fly to other countries. What the government needs to do is to introduce basic reforms in the basic structure of the economy. There is no harm in using black money for good purposes and instead of launching tax amnesty schemes, the government should launch investment schemes to utilize the money within the country. The foreign loans are burden on the national economy where gross domestic product rate is not up to the mark. No foreign lending agency will refuse to issue loans as they are made to make profit by lending loans to developing countries. It is Pakistan which has to minimize dependence on foreign loans.
If Pakistan can survive without loans in its early years of independence, why it cannot in the current situation. The prime minister had announced the government motto as business, business and business after taking oath to his office and someone should remind him his own words.
