In La-La Land, dollars are mangoes

There is no national sovereignty without economic sovereignty, and economic sovereignty is a series of decisions about purchases, and whether they build the country’s earning power, or cause its destruction.

The IPPs were the biggest daylight robbery in Pakistan’s history. Trillions of rupees were extracted by conmen in the cloak of businessmen, in connivance with bureaucrats and politicians in the garb of statesmen. The mechanism was simple: obligations in dollars, earnings in rupees. Every devaluation raised the debt, every rise in debt raised the tariff, and the poor paid.

The same playbook is being repeated with the import of CBU/CKD vehicles. Pakistan spent USD 2.496 billion importing cars and car-assembly kits in FY2025–26, up from USD 1.38 billion the year before, an 81 per cent increase, USD 1.116 billion more committed in a single year.

What measurable national return justifies this massive allocation of scarce foreign exchange? All this happened while the country sat inside a USD 7 billion IMF Extended Fund Facility. Drawing roughly USD 4.6 billion of it tranche by tranche on unfavorable conditions has affected every electricity bill and salary slip in the country. Pakistan is borrowing a billion dollars a review and spending two and a half billion a year on cars.

Not on exports, not on development and neither on machinery for building industry.

And look at the assembly lines. The very sponsors of IPPs are funding the assemblers. Same sponsors, same machination. A concession written by the state, imports priced in dollars, profits booked in rupees, and the foreign-exchange gap left for the country to borrow.

Consider the financing burden. This month Pakistan raised USD 3 billion through a two-tranche Eurobond at up to 7.9 percent – money raised to repay a three-month Saudi loan taken in April to repay the UAE. That is the price of Pakistan’s marginal dollar. Financing an equivalent USD 2.5 billion at 7.9 per cent costs USD 197.5 million a year in interest alone, before fees and before a dollar of principal.

At Rs280 to the dollar, that is Rs55.3 billion, just over the salaried class’s average monthly income-tax payment based on provisional FBR figures of Rs633 billion for the year.

This is a benchmark of scale; it does not trace individual imports to sovereign loans. But reserves are borrowed at the margin, and every dollar that leaves for a car widens the gap the state fills at that price.

And the fuel-saving argument carries little weight in real terms. Suppose 100,000 imported vehicles each run 15,000 km a year and save five litres per 100 km against what they replace, at USD 0.933 a litre. That is about USD 70 million a year, 0.4 per cent of a USD 16.863 billion petroleum import bill, and barely 35 per cent of the illustrative interest bill, before repaying a rupee of principal. And that scenario assumes the whole fleet is efficient and ignores the imported fuel burned to charge it.

Depreciation makes things worse. Government revenue is collected in rupees; dollar debt is serviced in dollars. Move the rupee from 280 to 308 and the same USD 197.5 million costs Rs60.8 billion, with not a dollar of principal added. Customs duty, sales tax and excise on these imports – the usual defence – are in rupees. Rupees do not service dollar debt.

Policymakers must therefore demonstrate the remaining benefits: genuine local value addition, productive employment, exports and affordable mobility. Publish the stats and let people know what the concessions are buying.

A villager would understand the problem immediately. A man struggling to survive borrows Rs50,000 and buys a Rs25,000 phone with it the next morning. A Rs8,000 phone would have served his needs, leaving Rs42,000 for a cart, tools or a sewing machine – all productive assets that could help repay the loan. But the wants have consumed what was required for tending to needs.

But this is Lala Land, and dollars are mangoes. They arrive in season, everyone eats his fill, and nobody plants the seed.