Pakistan’s Sinking Economy: Who’s at Fault?

Pakistan during the past few months has witnessed the weakening of Pakistani Rupee as never before. The sharp decline in the value of Pakistani Rupee is indicating an alarming situation for the economy and now financial experts are lambasting the inadequate policies of the previous regime.  It is true that democracy is the best form of governance as it is believed that worst democracies are better than good dictatorships.  However, civilian regimes in Pakistan for the most part have been known to easily succumb to the temptation of getting rich from the national treasury.  As elections draw near it is high time to consider the history of Pakistan’s financial landscape in order to understand what has lead Pakistan to this current economic mess.

It may seem surprising to some that Pakistan at the time of its independence was debt free and remained mostly debt free till 1988. Pakistan experienced unprecedented economic success during the days of Ayub Khan however this short lived economic prosperity could not be sustained for long. Zulfiqar Ali Bhutto had a little reliance on foreign loans whereas his successor Zia ul Haq mostly relied on foreign assistance.  It is true that the word democracy in Pakistan is associated to two big political parties PPP and PLMN.  Unfortunately Pakistan today has accumulated billions of foreign debt owing to corrupt practices and weak policies adopted by our democratic regimes. In the view of some financial experts the Economic Reforms Act introduced in 1992 has been a contributing factor in gradually damaging Pakistan’s economy.  Experts believe that this Act facilitated bureaucrats in laundering money abroad. The Supreme Court of Pakistan has recently issued legal notices to 438 officials for either concealing their own or their spouse’s dual nationality.  There is no denying the fact that Pakistan’s bureaucracy has not been sincere for the most part as many senior bureaucrats have been involved in money laundering.

A report on the corrupt practices of 330 officials has been submitted in the Supreme Court of Pakistan. These 330 high ranked officials have allegedly not only been involved in corrupt practices but have also managed to transfer huge sums of money abroad.  According to a news report 57 custom officials are accused of laundering 17 billion dollars outside Pakistan. . Furthermore, a news report suggests that the director intelligence and a former customs official are currently investigated by National Accountability Bureau for laundering 85 crores on a daily basis.  According to NAB estimates some custom officials are accused of generating $ 4 billion daily from alcohol, drugs and smuggling.  Allegations further suggest that one half of this huge sum of money is the transferred abroad.  During the past 10 years these custom officials have managed to transfer $ 17 billion from Pakistan to other states.  Thomas Pogge a German philosopher and the director of Global justice in his research has suggested that Pakistan has been experiencing annual tax aversions worth $ 10 billion. However, surprisingly this tremendous annual tax aversion of $ 10 billion took place under the nose of our former finance minister Ishaq Dar.  Pakistan was facing a trade deficit of $ 20.44 billion when PLMN came to power in 2013 but unfortunately today the trade deficit has reached $ 32.58. According to economic experts the current sky high debt that Pakistan is faced with is due to the faulty decisions taken by the former Finance Minister Ishaq Dar. Financial experts now seem to fairly criticize Ishaq Dar for taking foreign loans without even consulting the Parliament and the cabinet.  According to a news report the former Finance Minister Dar had borrowed foreign loan worth $ 2 billion without even consulting the parliament.

It is said that bad is attached with good therefore CPEC despite being a game changer for Pakistan offering vast opportunities has also brought certain disadvantages to our economy.  According to experts Pakistan is facing a huge trade deficit owing to the surge in imports mainly because buying heavily machinery for CPEC projects.  Pakistani markets today are flooded with Chinese goods suggesting that China’s is taking hold in Pakistani market.  However, China is experiencing success in Pakistani markets at the expense of the damage faced by our local industry.  The invasion of Pakistani markets by foreign goods particularly Chinese has raised unemployment damaging the local industry. Today Pakistan has a higher rate of import than export.  Pakistan despite being an agricultural state and self – sufficient in dairy products has been importing food goods worth $ 55 billion during the past 15 years. According to statistics Pakistan has imported machinery worth $ 76 billion during the past 15 years. Successive regimes have imported mobiles worth$ 6.8 billion, $ 12 billion on power generating machinery whilst spending the least$ 1 billion on agricultural machinery.  None of the successive regimes during the past 15 years were interested in making agriculture their top priority therefore little was spent on importing agricultural machinery.

Pakistan People‘s Party despite claiming to be the pillar of democracy faced charges of embezzlement and corruption during the 90’s.  As elections draw near the news of Supreme Court’s decision to add the names of Asif Zardari and sister Talpur came as a heavy blow to the party leadership.  The new money laundering scandal linked to Husain Lawani a close friend of Mr. Asif Ali Zardari is said to be biggest case of money laundering in the history of Sindh. Mr. Lawani a prominent banker and the head of Pakistan Stock Exchange was detained by FIA at the Karachi airport.  Lawani has been accused of laundering Rs. 35 billion abroad by making transactions using fake bank accounts.  According to news sources the embezzlement began when Yasin Anwar and Ashraf Wathra were governors of the State Bank of Pakistan. Three small banks the Atlas, MY Bank and the Arif Habib Bank were merged into the Summit Bank when Pakistan people‘s party was in power.  According to FIA reports suspicious transactions were witnessed as soon as Summit Bank was launched which was initially noticed by SBP‘ s Financial Monitoring Unit.  However, the CJP later clarified that the Court had not ordered the names of Asif Ali Zardari and Faryal Talpur in ECL. Some analysts are of the view that this is the right time to unveil all charges of corruption against the two leading democratic parties as elections are drawing near.  However Mr. Zardari while defending himself said that “it is not the time to hold politicians accountable it’s election time.”  Former President also said that he was issued a notice of 1.5 billion rupees but it has been hyped up to 35 billion rupees.”

 It is believed that states do not fall overnight but the seeds of their destruction are sown deep within their political institutes.  Democracy is supposed to be people’s governments however Pakistani democratic regimes have proved inadequate for the most part. Some political experts are of the view that Pakistan’s democratic regimes are actually autocratic in nature besides being corrupt and therefore leave a vacuum for military rule. One cannot deny the fact that inefficiency and mismanagement of financial resources have contributed in the imposition of various martial laws during the past 70 years of independence.   Successive regimes, bureaucrats, government officials, and political leaders even the common man owing to his negligence has a fair share in damaging the economy of Pakistan.  The new government led by Imran Khan Claims to eradicate corruption in order to transform Pakistan. However one must realize that every individual has to perform his share in transforming Pakistan by saying no to corruption in his own capacity. Therefore we as a nation have to work hard with diligence and commitment in order to eradicate corruption in order to become a prosperous and an economically vibrant State.

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