PAKISTAN’s DEBT TRAP & IMF
Leave Politics aside we need to know that why and how our country has fallen in “Economic Trap”? In past Pakistan was never struck with major climate disaster. Earthquake and flood is common, but the impact was never that huge to cause years of sufferings.
Since Pakistan contributes tiny percentage of greenhouse gasses and is vulnerable to climate change. This makes the country suspect as rising temperature could lead to flooding and drought, which is likely to have larger impact on health, agriculture and certainly water problems, which is why there is urgency of building a DAM.
The government is required to address the real problem. First of all it is the past mindset of Colonial structure that needs to be removed. Boasting GDP per Capita of $ 1641 & Rank wise GDP Rank close to 20th position is a mere statistical number.
Our economic indicators is less convincing as it does not reflect true picture of economy and the problems, which is tailor made to meet our Donor’s demand. This why we are desperately in talks to obtain 21st IMF assistance. Let me remind our 1st borrowing from IMF was STANDBY ARRANGEMENT of SDR 37.500 in 1965-66. Then Pak Rupee was devalued from 4.65 to 7.5 per USD.
PM Imran Khan has on numerous occasions said that in 10-years, Debt has surged to Rs 30 Trillion from Rs 6 Trillion. Some saner person in National interest should tell him that nearly one-third is due to Devaluation and DOUBLE DIGIT Policy Rate. In 8-months, debt has roughly surged by another Rs 2.5 Trillion.
We have to understand that at some point Pakistan has to stand on its feet and rely on its own resources. And if there is a hint of sizable OIL and GAS find, then government should delay talks with IMF. Instead, wait to reverse the strategy and go a kill by strengthening Pak Rupee and opt for POLICY RATE CUT. Hawkish stance is the real cause of inflation that has brought misery to the nation, prices of almost every stuff has skyrocketed.
If the government is really keen to stimulate economy and wants faster expansion in private sector credit then the Fiscal and Monetary Managers need to think big or else I am ready to bet/guarantee that opting for IMF loan means FORWARD GUIDANCE for 22nd IMF Loan.