As a country, we always seem to be heading in the right direction – even if not much is going right. At least, that is what our delusional leaders and those running the affairs of this country want us to believe.
Due to his technocrat and nonpolitical background, one expects a better balance between ‘reality and rhetoric’ from Finance Minister Muhammad Aurangzeb, instead of more of the oft-repeated, off-putting proclamations that have almost lost their meaning for a greater part of the Pakistani populace. And yet, the finance minister contended last Tuesday that the ‘economy is moving in the right direction’, despite the country being hooked onto the not so normal ‘norm’ of securing more rollovers and loans, often to payoff previous debts, and its repeated recourse to heavy external borrowing to avert default on foreign payments.
The statement was made by the finance minister amid further delays in the approval of the $7 billion IMF deal, following our failure to fulfil its preconditions, that include securing a collective debt rollover of $12 billion from Saudi Arabia, China and the UAE. A $4 billion commercial loan from Middle Eastern banks is also being sought to meet the external financing gap, before IMF finalises the $7 billion programme.
We have so normalised taking loans and staying in debt all the time that for us, as a nation, ‘moving in the right direction’ is about qualifying for more loans and seeing those loans momentarily improve our macroeconomic indicators, which, however, is a natural and recurring outcome of receiving IMF’s fiscal shots. Someone once said that Pakistan is a country that celebrates when its next IMF loan is approved, instead of feeling ashamed at being the fourth biggest debtor to the IMF, besides being one of the top countries going to IMF for funds most frequently.
It is high-time we also started to realise how we repeatedly put what we call our friend countries in an awkward position, by having made a habit out of asking for fiscal favours
Our governments and the whole finance machinery laud their own efforts and give themselves multiple pats on the back at having secured yet another deal with the multilateral donors, without ever experiencing ignominy or qualms. The resultant temporary improvement in country’s macroeconomic indicators is then proudly and persistently proclaimed as if it were the fruit of our own labour. A dire course correction which would have actually put the country onto ‘moving in the right direction’, the direction of structural reforms and self-sufficiency, is, sadly, nowhere to be ever seen in this whole process of so-called journey towards economic escalation.
What we do witness instead is more rhetoric, self-praise and miscalculated banter from our leaders. The finance minister, during the same address, also made claims “to make this IMF programme successful and the last one for Pakistan.”
Seriously?
“For this, we need to stand on our feet and deliver on structural reforms,” observed the finance minister. Without even as much as dropping a hint as to how that would be achieved and how we will stand on our feet, his words evoke nothing more than idle introspection.
Earlier, while speaking at a federal cabinet meeting PM Shahbaz Sharif had also hoped that it would be the country’s last IMF programme, adding that once IMF conditionalities are fulfilled, “God willing, there will be a new journey.”
But new journeys are never undertaken and the need to deliver on structural reforms is never fulfilled, as all we ever hear from those in power are pledges and expressed intentions to bring about reformative changes that may one day narrow the multiple glaring gaps between haves and have-nots in the country. The stinging reality is that even after 77 years of existence we are like a newborn who has yet to learn to stand on its feet, so hoping that this would be the last time we turn to IMF is wishful thinking par excellence.
Under the short-lived gratification of ‘borrowed’ economic stability propped up by donor money, we have become conditioned to compromising what might be long-term, consistent gains for the country. That is so because no government in Pakistan wants to look beyond its five-year-tenure, if it is lucky (cooperative) enough to complete one in the first place. Long-term policies, stability and policy consistency are concepts unheeded by those in power, as they whitewash their foul-ups and facades with funds off the begging bowl, compromising the country’s extended progress at the altar of realpolitik. Successive governments in Pakistan only focus on short-term policies that help them get through their respective tenures, as they create mirages of progress, deemed sufficient for them to survive their terms and to pave way for subsequent re-election.
In this recorded address broadcast on national television, the Federal Minister Aurangzeb also spent a better part talking about positive economic developments in the country: lowering inflation, closing current account gap, stable exchange rate and improving reserves, achieved over the past six months, most of them as the result of IMF's Standby Agreement last year, while hardly explaining the reasons behind current delays in confirmation of debt rollovers from Saudi Arabia, China and UAE. These were reprofiling deals that the government was quite confident of securing smoothly and swiftly.
For how long will this debt distress, the cycle of borrowing anew to pay off old debts or to prop ourselves up to be deemed eligible for more loans, continue though? Even Imran Khan who made tall claims of never to hold out the begging bowl to the IMF before coming to power couldn’t resist the tempting tug of this type of ‘easy money.’
While technocrats have been a part of governments in the past including that of the PTI regime, the nation expects more ‘technically progressive solutions’ and realistic statements defining the country’s dilemmas from the former. But, perhaps, they lack the space to work independently or to address the multiple challenges facing the economy more effectively, resulting in things only developing into more of the same.
It is high-time we also started to realise how we repeatedly put what we call our friend countries in an awkward position, by having made a habit out of asking for fiscal favours. These countries that have been Samaritans to us so far, can’t be our saviours too, especially when we don’t appear much inclined to save our own selves.
The Sindh government recently approved the purchase of 138 luxurious double-cabin vehicles for assistant commissioners and more cars for deputy commissioners are expected, on the pretext that the purchases will allow officials to visit flood-hit, disaster-prone areas more easily, making disaster management in remote areas more effective. Though the Sindh High Court on Friday barred the provincial government from purchasing these vehicles following a petition filed by Jamaat-e-Islami MPA Muhammad Farooq, we have yet to see what the final verdict on the attainment of the vehicles, which would cost a parched exchequer Rs 2 billion, would be. In Punjab too, luxury cars were purchased for the speaker, deputy speaker and officials of the Punjab Assembly earlier this month, regarding which Punjab government officials have not come to the fore with an explanation.
Are such types of over-and-above expenditures justified for a nation surviving on standby arrangements, bailouts and rollovers? How will these ‘friendly countries’, our bilateral creditors, whom we have requested repeated debt rollovers and external financing inflows, respond to the news of such extravagances, is a question we should be putting to ourselves. Only so much for the hype around government’s efforts to cut administrative costs, which is, perhaps, just another eyewash.
Austerity is a tough measure to adapt to for the power elites, so used to their long-held, lavish lifestyles, mostly maintained by the national kitty. Their lifestyles, unless curtailed, will only hasten Pakistan’s economic meltdown.
Even though as a belt-tightening initiative the federal government has recently imposed a ban on specific expenditures at state expense, an unconditional enforcement of the ban is mandatory; otherwise, despite bailouts and debt rollovers, a fiscal turnaround will remain a pipe dream for Pakistan. We must turn around and begin to help ourselves before turning to seek help from others.