Malice Towards None & All: Pakistan & The Curse Of “Debtocracy”

Pakistan is locked in a debt prison, and none of the political parties, or their selectors, have any coherent strategy to free the nation from its chronic indebtedness.

Malice Towards None & All: Pakistan & The Curse Of “Debtocracy”

In order to establish a resilient and self-reliant economy, Pakistan needs to avert the necessity for seeking IMF programs in the future which has posed substantial challenges to the nation’s economic stability—Chief of Army Staff, Qlink News  

In an alarming development, the Pakistan Democratic Movement (PDM) government added Rs18.5 trillion to the public debt in just 15 months, which was more than the debt accumulated by its arch-rival Pakistan Tehreek-e-Insaf in its three-and-a-half-year tenure, reveals a central bank statementDebt soars Rs18.5tr during PDM govt, The Express Tribune

A poor country [Pakistan] struggling to meet the basic needs of its people, under the pressure of the pandemic its creditors are now being forced into a financial arrangement that will erode any semblance of democratic control over the country’s economy—Ammar Ali Jan, The IMF is Using Debt Crisis to Hollow out Pakistan Sovereignty.

“…debt should be not be viewed as simply a technical issue, but a class project in which ordinary people become the guarantors for the risks taken by the elites. All around the world, the question of debt repayments has become a central part of political discourse, with a resurgent Left resisting the imposition of debt obligations on the working class. In Pakistan, there is a dire need for a political force to demonstrate the will to hold the government accountable for its (mis)use of loans acquired in the name of its citizens— Ammar Ali Jan, The global debtocracy, May 24, 2017

All indicators show that our successive governments, due to imprudent economic and tax policies, have pushed Pakistan into chronic, unremitting, unceasing debt-enslavement. Debtocracy, a term used by Ammar Ali Jan in international context, is yet to be part of public discourse in Pakistan vis-à-vis sovereignty of states and future of democracy. Ammar Ali Jan highlighted this back in May 2017. However, after six years, while the nation is facing one of the worst crises of its existence on multiple fronts, no one in discussing it in corridors of powers, TV talk shows or even at social media. 

Our rulers in the past had been engaged in clichés about independence of Kashmir and Palestine ignoring that USA and its Western allies, made it a point to subjugate a nuclear state—economically toothless having no say in international political arena due to debt-enslavement. The news of receiving 440 tonnes (19,032 bags) of rice under Saudi Arabia’s ‘Zakat al Fitr project’ during 2018 visit of then Prime Minister (now in jail) exposed a party that came into power with the promise of “breaking the begging bowl”. It also exposed all those who shunned Ammar Ali Jan as communist maligning the country. By now, all tend to agree that debtocracy is not a mere economic issue.

Once a nation becomes part of ‘debt prison’, its natural consequence is political subjugation. The exploitative neocolonial powers through lenders like International Monetary Fund (IMF) and others, force the enslaved to follow their anti-people agenda by imposing regressive taxes and cost of living. Pakistan is a classic study of being victim of debtocracy. This modern-day slavery has devastating repercussions for the poor nations. The so-called “autonomy” of State Bank through the Amendment Act of 2021 confirms a compromise on our sovereignty, as highlighted by Ammar Ali Jan, Arshad Zaman and many others.

 Economists mention debt/liabilities only in numbers e.g. Pakistan’s public debt in 2021 touched the dangerous level of 94 percent of GDP. Of course, numbers are important, but more vital are political issues linked with debtocracy. The agenda of IMF and its lackeys inside Pakistan needs to be exposed and countered. The fundamental questions need to be debated are: why in the name of the people have our elites been recklessly borrowing money and paying huge amounts in debt servicing. In fiscal year 2023, the amount paid in debt servicing was Rs. 5831 billion, more than three and a half times the defence expenditure of Rs. 1585.5 billion.

History of subjugation, resistance and liberation in various parts of the world presents vital lessons for humanity to break debt shackles. This cannot be done without waging mass resistance against elites and the oppressors acting as cronies of neocolonial exploiters. India under the British Raj was ruthlessly plundered by colonial masters, as explained in ‘Class Structure of Pakistan’ by Dr. Taimur Rahman, Associate Professor in Political Science of Lahore School of Management Sciences (LUMS), spokesperson for the band Laal and a grassroots political activist, like President of Haqooq-e-Khalq party, Ammar Ali Jan. In the post-independence era, this phenomenon is continuing unabated in Pakistan and many other countries, which Zulfikar Ali Bhutto exposed brilliantly in his book, Myth of Independence. The path for which he sacrificed his life to attain real independence needs public debate and mass resistance against the elements he pointed out. 

The fundamental questions need to be debated are: why in the name of the people have our elites been recklessly borrowing money and paying huge amounts in debt servicing. In fiscal year 2023, the amount paid in debt servicing was Rs. 5,831 billion, which was more than three and a half times the defence expenditure of Rs. 1,585.5 billion. 

One also needs to recall ‘Salt March’, also called Dandi March or Salt Satyagraha, the historic nonviolent protest led by Mahatma Gandhi in March–April 1930. The march was the first act in an even-larger campaign of liberation. Among others, Martin Luther King, Jr. cited the Salt March as a crucial influence on his own philosophy of civil disobedience. Gandhi, he said, had sent a simple message by grasping a handful of salt on the beach at Dandi, and millions answered his call.

There is a need for global campaign against debtocracy imposed in countries like Pakistan through IMF [Senator Raza Rabbani of Pakistan Peoples Party, who is also a noted lawyer and calls the IMF the New East India Company]. The prescriptions by IMF of oppressive taxes, even on items of daily use by the poorest of poor, need to be countered by taxing the rich and mighty.  The role of IMF as New East India Company is explained in detail elsewhere.

The worst part of ‘debtocratic subjugation’ is “learned helplessness”. The people in Pakistan even after monstrous food inflation and astronomical rise in utility bills are showing endurance/submission. There is no organised mass movement as was witnessed in the past in many countries like Arab Spring 

The political parties, in power or opposition, are the culprit of accumulating debt. They have been defending it, and still do so brazenly, in TV talk shows, making every effort to justify it as “help” by lenders, donors and friendly countries! Who will mobilise the masses for countering this narrative? Do we need costly loans for debt servicing or soft long-term for development projects? 

During its tenure from August 2018 to April 2022, Pakistan Tehreek-e-Insaf, like its predecessors, was also engaged in patchwork here and there that could never cure the menace of the debt-trap. The 16-month rule of Pakistan Democratic Alliance (PDM) was no different as it accumulated more debt than PTI. Now the caretakers, following their footsteps, according to a news report, approved on September 7, 2023 an expensive loan of US$ 300 millionfor improving tax compliance, an objective that does not need any money but a strong will and an efficient tax department.”

The outrageous debt burden and huge fiscal deficits are symptoms of illness. These symptoms will keep on recurring unless the causes for illness are cured. The removal of causes of illness (elitist economic structure, heavy unproductive expenses, non-tapping of natural and human resources and ending crony capitalism) needs political will as well as concrete implementation strategies. These are not available with any political parties or caretakers or their selectors as their actions clearly testify. The way to emerge out of this is given in detail was given by this scribe in other pieces.

The writer, Advocate Supreme Court, is Adjunct Faculty at Lahore University of Management Sciences (LUMS), member Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE)