EDITORIAL: The Federation of Pakistan Chambers of Commerce and Industry’s Businessmen Panel (BMP) issued a timely reality- check the other day by implying that pledges of aid from friendly countries, though appreciated, will not suffice to save the economy or prevent sovereign default. And that the solution to the current economic impasse lies in implementing “structural reforms and consistent policies”.
Former FPCCI president and BMP Chairman Mian Anjum Nisar minced few words as he advised the government to start seriously thinking about debt restructuring, both foreign and domestic, because it is precisely the habit of going begging to the lender of last resort that has pushed the country so deep into debt that it will most certainly default as soon as it stops getting new loans to pay back old ones.
There can also be no denying that the government faces a choice between preserving what is left of its political capital, by delaying desperately needed reforms, and biting the bullet and accepting all the harsh upfront conditions of the IMF (International Monetary Fund) programme.
Yet, correct as this analysis is, there’s hardly anything in it that everybody doesn’t already know. Successive administrations have indeed put “improvements in (the) tax collection system, bureaucracy and ease of doing business” on the top of their manifestos, just like the BMP recommended, only to ultimately abandon all such things because reforms take a long time in delivering results and politicians need to go hunting for votes every five years. And so this cycle goes on and the debt burden keeps mounting.
Now, however, we’ve reached the point where the old way will not work any longer. IMF loans come with extremely strict conditions that must be implemented before the money starts flowing and even friendly countries that we rely on to rescue us have started tying their help with the continuation of the Fund’s bailout facility.
Therefore, whenever the government defies the donor to make people-friendly, vote-fetching decisions, the aid stops and so does the help from the usual friends.
BMP is spot on because even though markets always rejoice whenever the government announces another financial lifeline from a friendly country, the sentiment never lasts beyond a few days in the absence of something much more concrete.
With almost $25 billion in debt repayment due before this fiscal year runs out, which is in less than six months, and the IMF programme and all other aid still stalled, this is the closest the country has ever come to sovereign default.
Surely, there has never been a greater need to declare an economic emergency and get all stakeholders to agree on a roadmap that will ultimately increase production, taxes and exports, and decrease reliance on exogenous injections just to stay solvent. But for that the political elite will have to give up its childish, selfish fight for power and work for the greater good.
Their fight for the spoils is as much to blame as their limited vision and competence for the many needless problems that the common Pakistani has been grappling with for the good part of the last two decades, at least.
As things stand, even the threat of hyperinflation and default is not enough to jolt them out of their schoolboy politics and force them to look beyond the tip of their own noses.
Their foremost duty is to serve the state and its people, not find ways to endlessly enrich and empower themselves. And while their efforts in getting friendly countries to keep lending us easy money are always welcome, they need to be reminded that they fight to run the country not so they can take the begging bowl to any capital that will receive them, but rather to turn it around and make it prosperous once again. Mere pledges, therefore, will not get the job done.
Copyright Business Recorder, 2023