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EDITORIAL: Yet another Pakistani prime minister hit the nail on the head – caretaker PM Kakar this time – as he called on the world to find a “durable solution” to debt problems of dozens of countries. Former PM Imran Khan made a similar suggestion when Covid shut down the global economy and ravaged smaller and weaker states. In fact, he went a step further and demanded complete or partial debt write-off for the worst affected countries; something the G20 considered for a while before offering only a one-year moratorium on debt repayment.

The caretaker PM made a lot of sense, speaking at the Leaders’ Dialogue on Sustainable Development Goals (SDGs) at the UN, by reminding world leaders that implementation of the global development agenda will not be possible when close to 60 countries are in deep debt distress. Pakistan provides the perfect example. The 5th largest population in the world, ranked among the top-10 poor countries as well, which is simply unable to provide any relief to its people, much less implement any sort of development agenda, because its debt problems require it to stick to an IMF bailout program with very harsh conditions.

Now, just meeting the debt, which has become the country’s number-one priority in order to avoid sovereign default, the quality of ordinary people’s lives is becoming incrementally worse. Yet it’s also understandable that not many lender countries are willing to lend much of an ear to such concerns. They know only too well that the rapacious elite of most of these heavily indebted countries is responsible for their state of affairs. And simply writing off their debt, other things remaining the same, only amounts to bailing out all the “looters and plunders”, as they are referred to in our social and political circles.

Yet the fact remains that those people get to enjoy their spoils regardless, and it is the majority of citizens in those countries that bear the brunt of the debt. Needless to say, of course, that the old debt requires new debt to meet payments on interest and principal, and the vicious circle compounds till it eventually implodes. That is bad news for everybody, especially in today’s connected markets, because such events then reverberate through large and sensitive commercial and banking channels across the globe.

Everybody knows that much of the third world debt will never be paid back. It’s only a matter of deciding how much fiscal pain will be inflicted on the most indebted countries before creditors will agree to some form of compromise. Mentioning China’s help when it comes to erecting infrastructure and employing locals to boost production and purchasing power might not have been politically correct in today’s America, but the caretaker PM did give much food for thought to everybody present.

For, instead of trying to squeeze debt payments out of economies ready to go under, it’s much wiser to engage them in productive enterprises that enable them to raise funds, on a slower time scale, to pay back in chunks. Both sides have valid points and, one way or the other, they will have to come to some sort of agreement about managing this debt, which runs into trillions of dollars. PM Kakar and his colleagues from the global South can at best raise the alarm while there is still time. It’s for those with their finger on the trigger to decide how much further to push the present arrangement, which is already dragging the entire global economy down.

Copyright Business Recorder, 2023

Comments

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TidBit Sep 24, 2023 03:40am
Common editorial team, what kind of nail on the head is this? It is a nail in my head as an American tax payer. You guys borrow money, waste it, and i have to pay to write off your debts. Where do you think the money to write off comes from . The money you borrowed from multinational banks which is funded by people like me. What do I owe you. And you guys hate America anyway but I have to write your debts off?
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AZ Sep 24, 2023 07:32am
Too small for the suit he is wearing! A puppet will be a puppet no matter where he stands!
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KU Sep 24, 2023 11:11am
Applauds and fairy tale ovation for PM accepted, let’s just focus on putting our own house in order first and then beg with various excuses, some certainly genuine but most of these excuses for loan write-offs will not benefit the common people. The current drive against electricity theft, hoarding of various commodities, dollar-fixing crimes, and smuggling is very much like peeling an onion, the more you peel the more comes forth, and with tears. Among the many million-dollar questions (but sensitized as boring), one pertinent question is, how can ECP and judiciary allow accused and under-trial suspects to contest the election? Is this the euphemist beauty of democracy or democracy is the best revenge?
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HashBrown® Sep 24, 2023 01:19pm
@TidBit, "And you guys hate America anyway but I have to write your debts off?" Is it safe to assume that you haven't offered the same fiery sermon to your own american overlords, who in the past 50 years have spent more than $20 trillion of your beloved "taxpayer's money" on overseas invasions and regime changes? Are you aware that countries like Iraq, Syria and Venezuela have been pushed into crippling debt more through the policies of your great white saviour Uncle Sam than any other reason? (And then you're astounded by how much we hate your country...) I don't have a problem with immigrants identifying with their host country, but when people like you try to boost your credentials by posting nonsense about your country of origin you really do need to be called out for your cowardice.
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HashBrown® Sep 24, 2023 01:19pm
@TidBit, "And you guys hate America anyway but I have to write your debts off?" Is it safe to assume that you haven't offered the same fiery sermon to your own american overlords, who in the past 50 years have spent more than $20 trillion of your beloved "taxpayer's money" on overseas invasions and regime changes? Are you aware that countries like Iraq, Syria and Venezuela have been pushed into crippling debt more through the policies of your great white saviour Uncle Sam than any other reason? (And then you're astounded by how much we hate your country...) I don't have a problem with immigrants identifying with their host country, but when people like you try to boost your credentials by posting nonsense about your country of origin you really do need to be called out for your cowardice.
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IMTIAZ CASSUM AGBOATWALA Sep 24, 2023 04:10pm
Nobody wants to listen to Pakistan, least of all to caretaker Prime Minister.
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HashBrown® Sep 24, 2023 08:05pm
Free my (illegitimate) father Imran .
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Amir Sep 24, 2023 09:01pm
Our 'acting' PM could afford to stay in a hotel in NY paying US$ 2500/night!! I wonder how much the rooms of the other members of his delegation cost! It was said on a talk show out of NY a few days ago that our 'leaders' who go abroad to 'beg' for help wear Canali suits and wear Patek Philippe watches! Pakistan is drowning in debt!! Really?
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TidBit Sep 25, 2023 06:30am
@HashBrown®, I left Pakistan not because I wanted to, but I had to for the safety and welfare of my family. I had enough. Regardless of my immigration status, it is my money, I vote, and I am not writing off Pakistan's debt even though it is my country of origin.
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TidBit Sep 25, 2023 08:17am
@HashBrown®, You have not answered the question: What responsibility do I have to write off your debts when your army and politicians have already plundered all the aid we sent them? And now you want more. You are free to hate us, but not free to ask us to forgive your debts. Sit down.
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Dr Habib Sep 25, 2023 12:55pm
Pakistani puppet establishment/s must stop borrowing and begging.. We Pakistani nation do not own these debts, lended by American establishment to corrupt Pakistani establishment..
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HashBrown® Sep 25, 2023 07:49pm
@TidBit, "What responsibility do I have to write off your debts when your army and politicians have already plundered all the aid we sent them? And now you want more. You are free to hate us, but not free to ask us to forgive your debts. Sit down." Actually I answered your question pretty comprehensively. With the aid that your country sent also came a level of political interference that has contributed towards the turmoil that exists in Pakistan today. Every single army chief who seized power over the years received support from Washington. If you're so aggravated by Pakistan's financial mismanagement you should try sending the same strongly worded messages to your host country, asking why Americans have played such a willing role in supporting the very same elites with whom the money went missing in the first place. Although something tells me you're far too terrified to do a thing like that in case your green card is revoked.
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HashBrown® Sep 25, 2023 07:52pm
@TidBit, "You are free to hate us, but not free to ask us to forgive your debts. Sit down." Thank you, you're free to hate us too. In fact next time there's a Trump rally, who don't you show all those lovely right wing militias how patriotic you are by standing with them and waving your little American flag? Let me know how that works out for you.
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