By Shahzada Ahsan Ashraf
PTI government has to pay back $37 billion in the next 5 years for the loans taken before June 2018. Yes you read it right. For the loans taken before June 2018. That is a whopping figure. That is more than we will earn. That is 8 times more than the net reserves of the State Bank Of Pakistan. That is almost twice the amount of the remittances we receive from overseas Pakistanis. That is 1.8 times the total amount of exports we have. That is 60% of the total value of our entire stock market.
The immediate solution that seems to be, is to borrow more to pay back the previous loans ad borrow more to pay back the ones you took to pay back the earlier ones. A Darnomics Theory.
Another popular narrative these days is, make Nawaz Shareef or Asif ali Zardari pay the money and retire the debts from those funds.
Before I move on, let me clarify something that I have been writing about for years, funds once sent overseas, deposited into trusts and offshore companies, layered with jurisdictional limitations, it is almost impossible to get the funds back unless the culprit himself offers to pay back. There are so many legal hurdles in the West when it comes to confiscation and return the funds that it will take decades, yes decades, to get the funds back.
Money sent from Pakistan in cash through Hawala into an account in Dubai is the first and the biggest hurdle. Because the funds stay in Dubai as a first point of transit. They are immediately sent to a trust, for example, in Belize. From Belize within a few days the funds would be sent to a Trust in Bahamas which is operated by a lawyer firm in England who takes instructions from a client under the Lawyer-Client Privilege (meaning the name can never be disclosed) sitting anywhere in the world.
Now let’s come to the recovery part. You start legal procedures and inform Dubai authorities to inquire about the destination of the funds from Dubai to Belize. Legally it would take you a procedure to go through the courts to find out. If by any chance in years you win the legal battle in Dubai, you will arrive in Belize courts. Belize courts will ask you to repeat the entire process again. If you win there then you will have to face the same in England and so on and so forth. In between somewhere you can jump with joy if you can recover a few million dollars through The United Nations Stolen Asset Recovery Initiative. But that mostly applies to drug related money or organized crimes.
To put it simply, it is not impossible but it is extremely costly and time consuming to recover these looted funds. Have countries recovered the funds in the past? Yes. How many? You can count on a few fingers. But mostly those funds were recovered because they were related to genocide, blood trade, terrorism or drugs.
Now, let’s get back to the financial mess of Pakistan. Can the PTI government handle it ?
If one thinks that taking more loans to pay back the previous ones is the solution, then that was exactly what Dar was doing. That is not the solution.
Our friends have helped us from declaring bankruptcy. Yes. Pakistan would have had to declare a financial emergency or an outright default on loans if Saudi Arabia, UAE or China had not helped. KSA and UAE alone gave us $6 billion in cash deposits which in actuality are a loan because they are federal governments’ obligation. European banks and a few Middle Eastern banks gave us over $500 million two months ago.
What China gave us is a bit tricky because it started giving to the previous governments’ fiscal year. Before PTI came into power. It gave $2 billion in July 2018 plus $2.5 billion in commercial loans.
I can go on and on with the loans taken but that is not the point of this article. The point is to find a solution. A solution without saying again and again what the previous government has done. We all know the damage Dar has done with his policies. Time to move on. A Surgeon does not continue to blame the culprit who shot his patient. He operates on him, saves him and goes on. The patients’ family (AWAAM=Patients’ Family, Pakistan=Patient) praises the doctor after he has saved their loved ones.
Increasing exports. Decreasing expenses. Prudent fiscal management. Lowering Current Account Deficit. Decreasing Budget Deficit. All these terms sound so good to the ear and 90% of the common people do not even understand what they mean or how they will contribute to the economy. All these can only work in the long run. They don’t pay our next quarters’ debts. They help us in the long run. We cannot increase our exports from $20 billion to $40 billion in 3 months. An impossibility. Current Account Deficit (CAD) does not reduce by $10 billion in 3 months either. Neither does anything else happen within the next few months.
So the only solution left in my view is to look towards Non-Tax Revenue. Meaning to generate income to pay back these loans without putting anymore burden on the tax payers. And the only solution is to privatize our national institutions. Before we have to put the same institutions as collateral to get more loans and take more loans to payback the previous ones, until we God-For-Bid end up losing these institutions to the lenders, let’s sell them. They are losing money anyway and adding to the burden every year. 180 or so State Owned Enterprises and hardly any making profits.
Pakistan Stock Exchange alone has in excess of $28 billion of listed assets of the government of Pakistan. What are we waiting for? Our egos to let institutions like PIA get closed down and not sell them because the name “Pakistan” is attached to it ? Better to save the name Pakistan by having it run by private investors and make it profitable.
We need immediate solutions. We need out of the box solutions. We need unpopular decisions. We need to bite the poisonous pill. We need to do everything that we have not done before, that is, leave politics aside and along with accountability, put Pakistani peoples’ interest above the interest of our parties. Pakistan comes first. These institutions come later. People come first. Leaders come later. Without people there is no leader and without money to run a country there is no country to run.
Writer is former federal minister and chairman PIA.