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Rocky Road to Recovery

The economic managers seem to be totally ignorant of the mechanics of tax evasion, controlling inflation, POL pricing and legal aberrations involved in it.

By M. Abbas Raza | April 2023

Pakistan today stands at a crossroads and is faced with socio-economic and political challenges. One wonders how to prioritize the causes of instability and deterioration. Turkey separated religion from the state to set herself on the road to modernization and development through secularism and the Muslims of India started their struggle for the establishment of Pakistan to enable them to protect their religion, cultural, economic, political, administrative and other rights. What was undone in Turkey was symbolically re-established in the creation of Pakistan. In the process Pakistan could neither become a developed modern state nor could it assume the status of a true Muslim welfare state lurking between the two. Resultantly, most of its population could either not reap the benefits of development nor the process of welfare could come to their rescue.

The overall debt on the country acquired in the guise of economic development and reforms, with stringent economic conditions, has now accumulated to more than USD 130 B. Such colossal amount could have changed the fate of the nation, whereas inappropriate utilization and the conditions attached to such debts and their implications have torn the fabric of the society. The nation is unaware of the head of accounts where these funds were incurred and the economic developments achieved through them if any.

One wonders whether the utilization of these loans was ever put to any detailed audit. During the periods of political regimes in the country the opposition benches in the parliament and the Public Accounts Committees did not question the government on the increase of debt and its utilization. However, the nation is unaware of any such exercise, nor were the economic managers of the country held responsible for not generating the required amount through domestic resource / revenue mobilization instead of acquiring domestic and foreign debts. All we see is felicitations to the nation on even meagre amounts of even a billion USD from friendly countries and some roll over facilities. This is certainly not how the countries in the world manage their financial requirements.

The international monetary arrangement hammered at the Bretton Woods in 1944 for international monetary cooperation to aid international trade along with the establishment of GATT 1947 (now called GATT 1994) has come under a severe strain. The exchange rates with developing countries are no longer stable, nor the foreign exchange they earn from their exports are insufficient even to pay back instalments and the service charges of the foreign loans acquired by them.

The objectives of GATT 1994, now subsumed into World Trade Organization (WTO) under the Marrakesh Agreement establishing the WTO, enunciate that trade and economy should be conducted with a view to (i) raising standards of living, (ii) ensuring full employment and a large and steadily growing volume of real income and effective demand, and (iii) expanding the production of and trade in goods and services. Whereas the IMF’s recent harsh and stringent conditions on account of additional indirect taxation, increase in energy tariffs are in contradiction to GATT objectives.

It has been alleged that Pakistan’s looted national wealth to the tune of about USD 500 B is stored in foreign safe heavens, banks, real estate and invested in stocks. Just to crave the kind indulgence of the readers, on the assassination of Benazir Bhutto the stock markets around the world fell, revealing the stakes and the level of investment by Pakistanis in the stocks listed on them. Both the Bretton Wood organizations and the Financial Action Task Force (FATF) never pursued the banks in Europe, USA and other safe heavens to share the details of ill-gotten and looted money and its return to the government of Pakistan, which was even required under FATF. Whereas the emphasis of the lenders has been to give more loans to her with stringent conditions, now proving detrimental for its economy and the large section of the society.

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