Written by 11:11 am Pakistan • 2 Comments

Terror-Hub Pakistan’s Economic Doom

Pakistan

Pakistan is doomed as a nation.  Not because someone is after it – although someone or the other is after EVERY nation, so that is no excuse whatsoever – but because Pakistan is what I call a “Narrative Nation”.  Its self image and the view of the world is not based on reality or action or honesty or integrity – but on the singular belief that everything can be settled by the right “Narrative”.

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From stalwarts like Moeed Pirzada to Ejaz Haider, from forever shouting Tariq Peerzada to Zafar Halali; and every small and dramatic anchor in between – there is just one argument from countless shows which try to “investigate” the eternal question “Why is Pakistan where it is and how it can improve”.  The spectacular answer – “correct the narrative to the world”.

Pakistan as Terror Hub

In last almost 18 years now, almost every terror attack around the world has had some links to Pakistan or direct Pakistani hand.  Is that a coincidence?  For example – Spain (2004 Madrid train bombing – Amer Azizi), Denmark (2007 and 2010 Copenhagen terror plot – orders from Pakistan), UK (2004 London Fertilizer bomb plot, 2005 London train bombings), US (9/11 attacks in 2001, 2001 Shoe bomber, 2006 Seattle Jewish Federation shooting, 2015 San Bernardino attack, 2016 New York Bombing), France (2012 Toulouse and Montauban shootings), Indonesia (2002 Bali bombings, 2003 Marriott Hotel bombing), China (several 2011 Xinjiang attacks), Saudi Arabia (2016 Madina, Jeddah and Qatif bombings).

And, we have not yet discussed countless ones in India and Afghanistan, including the 26/11 Mumbai attacks and Parliament attack.

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Please read: Pakistan on the Brink of Bankruptcy and Economic Ruin

Pakistan’s Economy

Pakistani economy is at staring at bankruptcy.  Here are the main figures as of August 2018:

Exports – $24.772 bn (source)

Imports – $55.846 bn (source)

Revenues – 15.2% of GDP(source)

Expenses – 21.8% of GDP (source)

Forex reserves – Central Bank ($9.885 bn) and Commercial banks ($6.484 billion) – Sept 6, 2018

The external debt of Pakistan is now $95 bn (source).  It was $33.172 bn in 2004.  It is expected to rise to $103 bn by June 2019.

Pak foreign debt

 

In terms of its loan repayments, Pakistan is staring at a bill of $28 bn and even if it scraps every relationship and begs every friend that it still has, it cannot get more than $20 bn.  If lucky.

Analysts and global financial institutions believe that Pakistan will require around $28 billion to meet its financing needs and the new government could potentially raise approximately $20 billion through multiple sources including a $12 billion bailout from the International Monetary Fund (IMF), $2 billion from China and $6-7 billion from Saudi Arabia and the Asian Development Bank.

As the US Dollar appreciates making it harder for Pakistan to repay its loans, US has warned Pakistan that it cannot use the IMF funds to repay the Chinese lenders.  This puts Pakistan in a bind and in a situation where even that $20 bn aid with the collective of IMF and China being a non-starter!

Meanwhile, the new Prime Minister Imran Khan has come in as the leader of the country and he made his address to the nation which laid out his plan to tackle the debt situation and the biggest issue of Water in the country.  His “innovative idea” – non-resident Pakistanis should send in the money!  Those in Middle-East can send whatever they can and those in Europe, US and Canada should plan to send $1000 each.

As is obvious to any serious observer, this is no solution for the economy which is losing $20 bn on its trade deficit every year with exports dwindling to almost nothing.  Even Bangladesh has exports of $37 bn!

Its not about narrative, silly

The problem with those steeped in evangelizing belief systems is that they think the world runs on narratives.  If my narrative is more convincing than yours, even my god is better than yours.   That may work with something that no one has seen or cares to see but profit from, but when it comes to hard cash and hard trade, no amount of hallucinating logic can work.

In Pakistan’s case – a country which has links to almost all major terror attacks in the world in the last 50 years – more than a rhetorical narrative is needed.  Actual economy is needed to save it.  And that is something it does not have.

Pakistan’s crisis of business and trade are manifold and impacted by many things including power shortage and crisis.  This article written in 2013 explains the situation and its impact very well.  Only the whole situation has worsened.

Pakistan is in the midst of one of the worst energy crises in its history. This is both slowing the pace of economic activity and causing public unrest with prolonged outages of electricity and gas. Capacity utilization in some key industries has fallen to nearly 50 percent. Worst affected is the fertilizer industry, which faces interruptions to its gas supply and forced closures. Pakistan has the capacity to produce more than one million tons in exportable surplus urea, yet in 2011-12 it imported more than 1.1 million tons. This eroded the country’s foreign exchange reserves and effectively entailed the payment of millions of dollars in subsidies, being the difference between the cost of locally produced and imported urea. Pakistan urgently needs to make some strategic decisions and change the national energy mix.

The shortfall in power in Pakistan has reached a massive 9000 megawatts!   This adds to a major impact on the businesses.

With the Moody’s rating at B3 negative and impact on local businesses raising money that much more difficult from outside as the foreign debt soars and forex dips to unprecedented levels.  All this in a country with terrorists as the natural allies and terrorism the major export.  We are looking at a situation where simply narrative cannot improve the economy.  Even if all the economic indicators were straightened out magically, Foreign Direct Investment will be almost impossible to come by.

Unfortunately for Pakistan, in this kind of crisis – it has a Prime Minister who is beholden to the extremists and the terrorists.  And is seen as a puppet of the establishment and Army.  Recently, he axed a renowned economist from Economic Advisory Council of the country simply because he belonged to the Ahmadi community, which the country’s Muslims consider as blasphemous cult and so its members liable to be killed.

This extremist way of thinking was first introduced by another darling of the world media – ZA Bhutto.  Here he is inciting hatred and violence against Ahmadis.

To support the axing of Atif Mian, two other major economists also resigned from the council – Asim Khwaja and Imran Rasul.

There has been a major backlash from the editorials but ultimately when there was the real battle between Economy and Terrorism – in Imran Khan’s leadership, Terrorism won the day.

And, in that lies the REAL issue with Pakistan today.  Its leaders, despite their lip service, consider terrorists to be morally and religiously correct and as major allies.  They cannot leave them no matter what rhetoric they use.

There was a time when the world was fooled by this rhetoric and the many excuses from the leadership and the “narrative builders”.  But even the world realizes now that Pakistanis are pathological liars.

When you are a pathological liar, Terroro-maniac (a la Kleptomaniac) and you have nothing major to sell to the world except proliferating arms (remember Nuke Bazaar of AQ Khan) and terror, then no matter what “Narrative” you dish out, it adds to your image of a scheming outcaste.

That is what Pakistan is now.   The Financial Action Task Force (FATF) placed Pakistan on grey list – yet again – due to euphemistically worded “‘strategic deficiencies’ in its anti-money laundering and terrorism financing regime”.

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