We drank wine on credit knowing that our drunkenness would bear bitter fruit one day
The subheading above is Ghalib’s couplet: Qarz key peetay thay mein aur kehtay thay keh haan, rung lavay gey hamari faqa masti aik din.
This is a very important article. Don’t get frightened after reading it; instead start thinking. Time to break idols again. The idols are your leaders political and non-political whom you mindlessly follow, tolerate and bring to office. Time to shed alien systems and adopt native ones that protect you and your progeny. Think about your future and your children’s future. Don’t run away cowardly with your tail between your legs. Keep faith in God and remember that Pakistan is yours and mine, not of our self-aggrandising elite. Without us the people, especially the best amongst us, we don’t stand a chance if we leave Pakistan to rapacious morons. Time to stand up and be counted.
I ended last week’s article with the Muslim and Judaic salutation: ‘Peace Be Upon You’. There was both an element of warning and of sarcasm there. The warning is that we have dug ourselves into a hole so deep on the peak of our mountain of debt so high. I was being sarcastic about our inability to break free of our mental colonisation. As to peace, I hope we achieve peace of mind and soul on earth, but more likely we are heading for the peace of the grave. The fault lies with us, not our stars, because we elect governments that have been persistently digging our debt hole deeper and with the earth we throw out creating a huge un-returnable debt mountain from which it is well nigh impossible to climb down without a miracle, provided we have the vision to see a miracle when and if it comes. We have crossed the ‘event horizon’ of an economic black hole from which there is no known way of getting out except by invoking the odious debt law, which we rightly can on grounds that lenders knowingly gave loans to corrupt governments that grabbed power by rigging the ballot. They were aware that the loans could never even be serviced, forget repaid. Look at Greece and some other EU countries.
The following should give you a clearer idea:
- According to the official State Bank website, by June 15, 2015, Pakistan had accumulated a total external and domestic debt equivalent to US$195.647 billion. Of this $76 billion is external debt and rest is rupee debt. By now external debt is over a billion more. Our total debt stands at about 72.7 per cent of official GDP, Rs27,383.7 billion or US$269.02 billion whereas it shouldn’t be above 60 per cent under the Fiscal Responsibility Law passed during Musharraf’s time. Where is parliament?
- Now yet another illiterate, callous and perfidious government is asking us to celebrate the IMF agreeing to release another tranche of $502 million from its ongoing programme that will end next year.
- Add to this the questionable recent Eurobond issue of $500 million on which we will pay annual interest of 8.25 per cent for 10 years.
- Add too the money regularly owed by government to pensioners, domestic bonds and securities and suchlike, and the picture gets worse.
- So pathetic has our condition become that the IMF loans we now take are used primarily to pay interest on previous loans, making our debt mountain higher than the Himalayas and our hole deeper than the oceans.
- Assuming a population of 190 million every Pakistani carries a debt burden of about Rs104,000 on his emaciated shoulders – probably more. Who is going to service it? Who is ever going to repay it? How, considering revenue collection is static at best or falling, overseas ‘Remittances-Plus’ from Pakistanis working in the Middle East that helped cover a large chunk of our trade deficit are declining due to the oil price dropping drastically and the steep decline in the reserves of Saudi Arabia and Gulf oil-producing countries. I call it ‘remittances-plus’ because the plus refers to black money transferred overseas by corrupt Pakistanis and then ‘remitted’ back home to ‘whiten’ it. Now the ‘plus’ too is declining due to the army’s accountability drive and the economy grinding to a halt.
- Saudi Arabia has worked up a fiscal deficit for the first time and at this rate its reserves will deplete in five years. So too the Gulf countries. Unless they drastically reduce expenditures they will soon go belly up.
- Expenditure reduction means shelving projects and workers being thrown out of jobs. The first will be Pakistanis so expect a huge influx home with its concomitant pressures and a huge reduction in remittances.
- Exports are declining and the trade gap is increasing. Remittances used to cover the trade deficit. What now, considering there is no new productive export-led direct investment, not least due to declining gas, electricity, water availability and other infrastructure.
Assuming a population of 190 million every Pakistani carries a debt burden of about Rs104,000 on his emaciated shoulders – probably more
You may well ask how we managed to build up such a huge debt mountain? Well, our genius finance minister did say soon after taking over that we will take loans to reduce our debt stock, whatever that gibberish means.
- When our external debt was $65 billion, $42 billion was accumulated during the two periods of sham democracy, the first in the Nineties when Benazir Bhutto and Nawaz Sharif ruled in turns and the second now since 2008 in which Benazir’s husband Asif Zardari ruled the first five years and now Nawaz Sharif has done in two-and-a-half years and counting. Compared to this, we re-profiled our debt and bade goodbye to the IMF in the Musharraf-Shaukat era. Who then, I ask, should be tried for treason? Zardari’s previous government (2008-2013) returned us into IMF clutches after one of its finance ministers had grandly proclaimed that he’ll go to the IMF “over my dead body”. Now our debt is so high that there’s no getting out. Three cheers for sham democracy. Our demented politicians and equally demented media tell us that this irrelevant election or that strengthens ‘democracy’, not knowing what democracy is, that this is not it, it is ‘Lootocracy’ which has brought us to the precipice.
- Government and private sector idiots have foisted the illusion in our minds that our salvation lies in the China-Pakistan Economic Corridor. How, when $11 billion for building the road is a government-to-government loan and $34 billion will be loans from private banks, probably Chinese, to private sector Chinese-Pakistani joint ventures mostly comprising coal-fired power projects that will add to pollution and climate change. Worse, we will import the coal from China. The Chinese partners will take all their profits, if any, to China while the cost of coal from China will be paid by Pakistan. Has anyone considered the quantum of the foreign exchange outflow and what it will do to our balance of payments? Methinks only the road will be built, which will be good, and the private sector projects will fall by the roadside, which will also be good.
As government increasingly fails to deliver and people get poorer, we have an economic meltdown brewing that could lead to explosion and then implosion that not all your nuclear weapons or huge military can stop, as witnessed the late Soviet Union with 28,000 nuclear warheads. The rupee is under pressure and declining, and with it purchasing power. Left alone the rupee could fall through the floor. People are getting poorer by the day in an economy that is now comatose. All the big talk of a decline in inflation and other balderdash comes to naught before our humungous debt mountain. That is what I meant when I said last week that “anger begets revolution, revolution begets salvation”. I should have qualified it with ‘hopefully’. It can also lead to disintegration. We are celebrating but are in for a shock, thinking of petty things like elections, marriages, divorces and other such claptrap. Wake up, friend. Look at the tournament, not just one small match. Look at things that really matter.
Is there a possibility that when this IMF programme expires a new one may not be forthcoming and we will be up shit creek without a paddle? After all, we have been missing even revised targets. Not a chance. The programme will be renewed because the idea is to keep us digging the hole we are in and making our debt mountain higher until we have mortgaged our soul to the IMF. Then they will demand their quid pro quo before they give us food, not unlike the Mughal King Aurangzeb who forced his brother Prince Murad and nephew Sulaiman Shikoh imprisoned in Gwalior Fort to first drink a glass of opium every morning before they were given food until they became blithering idiots.
What quid pro quo? This is just my conjecture, but I think that the quid pro quos are obvious:
- Castrate Pakistan’s nuclear programme and weapons, especially tactical, because they are a clear and present danger to the Indian army from making any ingress into Pakistan in a conventional war that will negate their ‘Cold Start’ doctrine. We can nuke it in the small area they have entered in Pakistan and claim that we nuked our own land, not someone else’s. If we agree to this the explosion could come even before the economic meltdown reaches our kitchens.
- Ease up on our friendship with China and budding relationship with Russia.
- Come into India’s orbit of influence and let them deal with Afghanistan, the Indian Ocean and the neighbourhood.
- And, of course, help America in Afghanistan. But America seems confused: it simultaneously tells us to kill the Afghan Taliban and at the same time to bring them to the negotiating table, a crass contradiction. Then they also say that the Afghan Taliban are their partners in peace. Most confusing. Make up your minds, friends. Know what you want. Do you?
So how can we stop digging and get out of our debt trap? No one except the people can do this and the only way they can do it is by rising
Fanciful? Such things always look fanciful before they happen. If I had told you on 8/11 that dastardly events were going to happen the next day on 9/11, terrorists ramming two commercial airliners into New York’s World Trade Towers and one into the Pentagon, you would have said that Humayun has finally gone loopy and the loony bin beckons. But, yes, fanciful, because many such designs have led to a blowback that damaged the designers at least as much as the designed. Who could have thought that NATO and the US-led coalitions would lose wars against puny Afghanistan and Iraq, become trapped there without a way out except to go in again and get trapped even more in the Middle East and make such a mess of western economies as a consequence. It’s a military, economic and geo-strategic trap no different than our debt trap. It’s a trap they laid for others and got caught in too. It’s a nightmare.
China? Sure it has a large enough reserve to pay off our entire debt, but why would it? Or America write it off? Perhaps, but only they take our soul and also take with it our freedom, independence and sovereignty with it as collateral. We could become another de facto province of China or America, or even colony if you like. For beginners, they would take all our Public Sector Enterprises and more. They would literally own us and our country. I you want it, good luck, but let me tell you that China might prove to be toughest owners. Take your pick. Whoever pays off our debt and takes our irons out of the hellfire with also buy us lock, stock and barrel. If you want that, go ahead. I only hope I am not alive on the day that happens.
So how can we stop digging and get out of our debt trap? No one except the people can do this and the only way they can do it is by rising. It could happen if things continue declining. The army certainly cannot. The generals will only take over again if they have no option but to save the country that they are sworn to protect, but they will find themselves standing on the peak of a huge debt mountain without an iota of an idea how to descend and be stuck there without oxygen. The other possibility is for the other organised force to take over, the terrorists under some brand name like TTP or ISIS. Take your pick.
I feel so sorry for our children with amazing potential that our misdeeds are not allowing to come to full fruition. I apologise to them for the mess our generation is leaving them with and ruining their future. I’m so sorry.