Pakistan has recently signed a $1billion economic package with World Bank, got over $500 million tranche from the International Monetary Fund and received $ 600 million from Asian Development Bank under a loan programme. The total amount received only from these three institutions is over $2 billion, but there is no detail of spending is available with the government or the opposition. The loans are piling up as the government has also received billions of dollars loans from other international agencies, including Asian Infrastructure Investment Bank. The politicians, financial institutions as well as the common man is not aware of the spending of the loan money and it is strongly believed a major chunk of the loans goes to the pockets of the corrupt elements of the ruling class. The loan money comes as windfall for many in the government machinery but every single penny is a burden on the national economy and the nation has to return it with heavy interest. But how the money will be returned is a point to ponder. What the government does is to increase the ratio of direct or indirect taxes, which come as blot from the blue for the common man and disappointment for the business community.
It is irony of the prevailing tax system that the government imposes taxes to meet the conditionalities of the international donor agencies. Tax system is in place everywhere in the world, but under a mechanism and objective and not under pressure from any foreign institutions. That is the reasons the foreign loans bring short relief and long term miseries for economic health of the country as compared to other economies of the world. The government is not tired of making tall claims that the economy is improving as foreign exchange reserves have crossed $23 billion marks the first time in the country. However, the officials will never tell you that industrial activities have been slowing down day by day, exports are falling and imprudent tax policies are keeping the foreign investors at bay. The electricity crisis are haunting the nation and have made the lives of domestic consumers miserable and pressured the industrialists to limit their production. The cost of electricity is one of the highest in the world which not only affects the quality of life, but also the cost of production.
The foreign loans are a burden on the nation with little utility and it will be necessary to devise a policy to put moratorium on getting more loans. If the loans are allowed with the current rate, the day is not far off when Pakistan will be the only country drenched in loans from head to toe without improvement in the economy.
