At the end of the eight-year long Iran-Iraq War (1980-88) when Iran’s spiritual leader and architect of its Islamic revolution, Imam Khomeini, was forced to sue for peace under a relentless barrage of Scud
missiles from Iraq, he said, for history to record, that it was like drinking from a poisoned chalice.
To Pakistan’s charismatic new leader, Imran Khan, victory has come after a titanic struggle of 22 long and taxing years. However, winning the electoral battle may well be for him the easier part of the equation when compared to governing Pakistan. Like Khomeini, Imran too may rue that governance of his new fief is like drinking from a poisoned chalice.
The founder of Pakistan,M A Jinnah, had famously quipped—when reminded of a physically anomalous Pakistan of two-parts with India in between—that he was well aware the departing colonial rulers had handed him down a “moth-eaten Pakistan.”
Likewise, Imran, architect of his ‘New Pakistan’, would be entitled to say that what he has inherited from the outgoing government of Nawaz Sharif is a moth-eaten economy with more holes of deficit in it than Swiss cheese.
The cricketer-turned-politician has won the people of Pakistan’s political mandate after they had continually laboured under successive governments of two of Pakistan’s most notorious thieves: Asif Ali Zardari and Nawaz Sharif. Both were known for corruption and amply justified their sobriquet of robber barons in the 10 years that they ruled and looted Pakistan.
Citing just one statistic would suffice to highlight the filching governance by the two. Pakistan’s external debt in 2008, when Zardari came to power, was less than $30 billion. It had mushroomed to $95 billion by the middle of this year when the Nawaz regime was booted out at the polls.
In 10 years of power that they shared, alternating between them, Zardari and Nawaz borrowed more than twice as much as all previous Pakistani governments had borrowed from the world in 60 years. And they have precious little to show, by way of economic development or social progress, as to where all this staggering amount of $65 billion was utilised. Much of it seems to have ended in beefing up the personal coffers of Zardari and Nawaz, and of their salivating cronies and minions.It is depressing to any well-wisher of Imran to read the pathetic details of an ailing, haemorrhaging economy he seems to have inherited from his predecessors. It looks like a can of worms bequeathed to him.
And on top of the crushing burden of foreign debt, there is a whopping current account deficit of $16 billion. Pakistan’s total hard currency reserves even plummeted to a pitiful $10 billion, or even less; this is barely enough to pay for two months of imports. The Pakistani rupee has come under severe strain in the past three months and shed more than 25 per cent in its par value vis-a-vis the American dollar. It is currently hovering around 133 rupees to a dollar.
The system of distribution of spoils and patronage of cronies, honed by past corrupt regimes, has led to state-owned corporations wallowing in huge debts induced by wholesale plunder of their assets.
The Pakistan Steel Mills, a white elephant, is burdened with a debt of 187 billion rupees; the state-owned PIA, once the pride of Pakistan as a profitable airline, has a cumulative debt of 360 billion rupees; the natural gas sector has run up a debt of 157 billion rupees. Add to this the government’s circular debt of 1,200 billion rupees.
This bleak economic scenario has, understandably, accelerated Imran’s truck with reality—a difficult learning curve for him. The haemorrhaging economic condition may force him to go to the IMF—much against his volition—and seek an immediate bailout package so Pakistan may not default on its sovereign debt payment. This must rudely bruise Imran’s Himalayan ego. He had campaigned on a slogan to break Pakistan’s perpetual begging bowl. But a check with reality has forced him to eat his own words.
Aware of the IMF’s stereotypical conditionalities built into every bailout package, Imran has tried to avoid that route. He tried to get help from ‘brotherly’ Saudi Arabia to bail Pakistan out of its tight corner. And indeed, the Saudis, have now responded positively to Imran’s cries for succour to stanch the bleeding in Pakistan’s haemorrhaging economy.
“We got an excellent package from Saudi Arabia and because of that we expect that even if we get a loan from IMF it won’t be such a big burden on us. By the will of Allah, I will give you more good news in the coming days. We are also talking to two more countries and by the will of Allah we expect a similar package from them,” the Pakistani PM said. The stock market, which was plummeting—worsening the situation—has now climbed by over four per cent after the Saudi pledge.
Yet, Imran, who will visit China soon, has also said his government would seek a bailout from the IMF despite the $6 billion from Saudi Arabia. To further worsen the situation, the government has been forced—as a precondition to hoped-for relief from the IMF—to withdraw subsidies from natural gas and electricity, jacking up their rates for the very people—the poor and the middle class—Imran counts upon for his mass approval. It’s a Catch-22 in its most damning shape for him.
One could only hope that teething pains don’t hurt Imran’s faith in himself and his leadership beyond repair. He and Pakistan need each other.
Karamatullah K Ghori
Former Pakistani diplomat
Email: K_K_ghori@hotmail.com