IPA Newspack
  • Home
  • now
  • politics
  • business
  • markets

IPA /

IPA Special

IPA Special

Dealing With Debt Crisis Is The Foremost Task Of New Pakistan Government

By Anjan Roy

While a new prime minister has been elected by a rainbow coalition of opposition parties in Pakistan, it does not bode well for political stability in the country.

Shehbaz Sharif, younger brother of former Pakistan prime minister, Nawaz Sharief, is an experienced political hand. But he would be hobbled by the same disabilities as his predecessor, Imran Khan of Pakistan Tehrik e Insaf —better known as PTI party.

The Sharif family is one of the leading political-industrial houses of the country and has wide global nexus spreading from Dubai, Abu Dhabi, Riyadh to London. The elder brother of the prime minster-elect, Shehbaz, namely, Nawaz Sharif, is said to be talking of a return home from England shortly.

While the Sharif family has power and huge financial muscles, it is also hobbled by allegations of money laundering and of handling slush funds. Nawaz Sharif was apparently mentioned in the globally infamous Panama papers. He was facing court trials on money laundering charges.

During its time, Imran Khan government had lodged a number of complaints against the family and cases have been fought on allegations of money laundering for a long time now. In fact Nawaz Sharif himself was involved in such cases, before he left the country on grounds of medical treatment while serving some sentences on a corruption cases.

To drive home the allegations of widespread corruption among the newly elevated elites, Imran Khan has resigned from the Pakistani parliament, stating that he refuses to sit with thieves and money launderers.

While pursuing corruption cases and bringing serious charges against other leading politicians, unfortunately, the downfall of the Imran Khan government in such maligned circumstances was his own making. Not having prior experience of politics, Imran Khan proved to be incompetent in managing the affairs of state.

The other reason for Imran Khan downfall was that as an untested person coming from outside of established political cliches, there were expectations that he will take care of the basic needs of the people. Imran Khan had raised huge expectations of a change in the state of affairs of the country. Ironically enough, the inflated expectations were belied by the achievements of his government. This led to a situation in which the popular support base eroded and led to his downfall. People could no longer place their trust in the government.

The first of these expectations from Imran Khan’s government was economic rehabilitation of Pakistan. The economy of the country had slid and people suffered as a consequence. Inflation had jumped to unsustainable levels and employment situation took a turn for the worse, as some of the experts of the country pointed out at a Brookings Institution discussion last week.

One measure of the weakness of the economy was the exchange rate of the Pakistani rupee to the US dollar. The rate is a benchmark, which is often cited as a measure of the performance of the economy. The Pakistani elites take this as a single most important benchmark for the economy.

Today, the US dollar sells for 200 Pakistani rupees, which is an unprecedented level for the country and its elites. Dollar-rupee exchange rate speaks for the state of the economy.

 

The new government of Shehbaz Sharif would have to reckon with this grim reality of economic mess. The country has little cushion left by way of a foreign exchange reserve to pay for essential imports. Once again, this is of the politicians making and sheer misjudgment.

The humongous infrastructure projects undertaken with loans from China have depleted all foreign exchanges and yet the country has to look for more resources even for servicing its debts to China. Pakistan is already negotiating with the IMF some  credit line to afford some essential imports.

Pakistan’s economic mess bears striking resemblance to that of another south Asian neighbour, Sri Lanka. Under the tutelage of its pro-Beijing politician, Gotabaya Rajapaksha, Sri Lanka had borrowed and borrowed and built infrastructure projects which had virtually no use. Under the weight of its debt burden to China, Sri Lanka is a bankrupt nation having defaulted on its entire foreign debts Pakistan is also heading towards such a precarious situation if the Sharif Government does not take precipitate action to correct the course.

The problem with Pakistan is not very different. It is a classic case of debt trap. Pakistan needs exchange resources to repay and service its debts to China, which are far in excess of its exchange earning capacity. Unless the latter extends a liberal moratorium and resettles the outstanding debts, it would be impossible for Pakistan to meet its loan repayments and launch some meaningful reforms programmes.

However, in its negotiations, the IMF has insisted that loans to be taken from the international institution cannot be utilised to service debts from China. But, some reports indicated that China is expecting on-time servicing of its loans.

Against the background, the opposition parties which have come to power, have so far revealed none of the programmes  by way of a concrete action plan for rehabilitation of Pakistan economy.

The opposition has come to power only on the platform of pulling down the Imran Khan government. It has precious little by way of an immediate action plan. IMF loan conditionalities do not provide much room for manoeuvres either.

It may be expected that the new government would undertake some negotiations with China for postponing payments and obtain a loan moratorium. China has not done such a favour to another of the south Asian creditor, Sri Lanka.

On the other hand, former prime minister Imran Khan’s presence in Moscow on the eve of Russian launch of war in Ukraine and subsequent pronouncements of the government has created an impression that Pakistan was now deeply anchored with Russia.

Securing a US backing at this point of time would be an uphill task for Pakistan. The country has become too deeply involved with the Russia-China axis in opposition to the US-Europe one that it could get ready accommodation from the rival formation, leading Pakistani experts believe.

Whatever it is, the new government is expected to have a short life term. As it is, the current parliament has just one year to go. An incumbent government will have major advantages in the elections as has been the case earlier. Even then, to win a clear verdict in a year could be a tough call unless some improvement  takes place in the economy in the next one year. (IPA Service)

IPA Special

Traders Behind Soaring Wheat Prices In India

May 23, 2022
IPA Special

Navjot Sidhu Sentence Speaks Poorly Of The Pace Of Judicial Process

May 23, 2022
IPA Special

Gyanvapi Masjid/Mandir Issue Is More Complex And Volatile Than Ayodhya

May 23, 2022
IPA Special

Europe Is At Crossroads Between Neoliberalism And Justice

May 23, 2022
Business

M’rashtra, Kerala, R’sthan cut fuel VAT after central cut

May 23, 2022
Happening Now

Saudi Arabia bans travel to India, other countries over covid

May 23, 2022
Happening Now

Assam academic held for criticising govt policies

May 23, 2022
Happening Now

KCR’s immediate agenda presidential poll; Cong left out

May 23, 2022
Happening Now

No decision for excavation at Qutub Minar, minister

May 23, 2022
IPA Special

Remembering Rammohan Roy On His 250th Birth Anniversary On May 22

May 22, 2022
IPA Special

Supreme Court Stress On Cooperative Federalism A Slap On Centre

May 21, 2022
IPA Special

Even After Udaipur Chintan Shivir, Congress Is Groping For Its Role

May 21, 2022
IPA Special

Learning Poverty In India To Induce Huge Loss Of Jobs And GDP

May 21, 2022
IPA Special

Winning The Hearts Of Foreigners Abroad Is Not Going To Help Rahul Gandhi

May 21, 2022
IPA Special

Rammohun Roy And Karl Marx: Resonating Together

May 21, 2022
IPA Special

Mexico Leads In Opposing The Cuba Blockade And U.S. Mischief

May 21, 2022
Business

RBI to pay Rs 30,307 crore dividend to govt for FY22

May 21, 2022
Politics

No senior Cong leader at Sidhu’s residence after jail verdict

May 21, 2022
Politics

Bommai in Delhi amid speculation about cabinet changes

May 21, 2022
Happening Now

Jet Airways to start flying again after 3 years

May 21, 2022

An appeal

The legacy of IPA, founded by Nikhil Chakravartty, the doyen of journalism in India, to keep the flag of independent media flying high, is facing the threat of extinction due to the effect of the Covid pandemic. Only an emergency funding can avert such an eventuality. We appeal to all those who believe in the freedom of expression to contribute to this noble cause.
Click here to learn more

Share

Reply

  • 0
More on IPA

Traders Behind Soaring Wheat Prices In India

May 23, 2022 3:47 pm | IPA Staff

By Nantoo Banerjee India’s domestic wheat market is on fire ever since the government said it was targeting record shipments this year after exports from...

IPA Special

Navjot Sidhu Sentence Speaks Poorly Of The Pace Of Judicial Process

May 23, 2022 3:28 pm | IPA Staff

By Arun Kumar Shrivastav Navjot Singh Sidhu has been sent to the Patiala Central Jail to serve a year-long sentence in a case of road...

IPA Special

Gyanvapi Masjid/Mandir Issue Is More Complex And Volatile Than Ayodhya

May 23, 2022 3:24 pm | IPA Staff

By Sushil Kutty The #MeToo movement was also about correcting the ‘wrongs of history’ in which powerful men got to get their comeuppance for bad...

IPA Special

Europe Is At Crossroads Between Neoliberalism And Justice

May 23, 2022 3:16 pm | IPA Staff

By Nora Garcia Nieves “Neither war that destroys us, nor peace that oppresses us.” This historic anti-war slogan of the Spanish feminist movement holds one...

IPA Special

Traders Behind Soaring Wheat Prices In India

in IPA Special
May 23, 2022   ·  

Navjot Sidhu Sentence Speaks Poorly Of The Pace Of Judicial Process

in IPA Special
May 23, 2022   ·  

Gyanvapi Masjid/Mandir Issue Is More Complex And Volatile Than Ayodhya

in IPA Special
May 23, 2022   ·  

Leave a Reply Cancel reply

You must be logged in to post a comment.

Follow us on
Up Next: Narendra Modi Has Started Exercises For Picking His Next Presidential Candidate
©2020 -2021 India Press Agency, All Rights Reserved
Newspack by India Press Agency
Posting....
logo
  • Home
  • now
  • politics
  • business
  • markets