Pakistan getting out of the trap


Jan 27 - Feb 02, 2003 



Where there is a will there is a way. And that strong will of the present government to get rid of the foreign loans seems to have paved the way to achieve the formidable target to get out of the debt trap, which used to be a nightmare of the whole nation

If the human memory is not too short one may recall the days when the country had reached a situation where it was not in a position even to meet the liabilities of the debt servicing what to speak of the debt retirement. Despite the increasing light in the tunnel there is a coterie of the people who are still not mentally prepared to accept the ground realities. Despite strongly improved economic fundamentals i.e. internationally acknowledged sovereign credit rating of the country, improved home remittances which are showing tremendous confidence of the remitting overseas Pakistanis and unprecedented growth in foreign exchange reserves of the country, the habitual critics continued to express their doubts over capacity and intention of the policy makers of putting the national economy on the track.

Previously, the government collected peoples hard money out of the pockets by raising the touchy slogans like "Qarz Utaro Mulk Bachao" however, they disappeared from the scene by adding yet another burden of the domestic loan on the camel's back... Consequently, the national economy has to bear extra burden and to pay huge interest on the money collected in the name of national Debt Retirement Program launched previously.

Now when the huge foreign debt amount to $38 billion has been stopped to grow further, and there are signs that the mounting debt has started subsiding. Some quarters are still expressing their doubts about the debt retirement program of the present government. They must have their own parameters to weigh up things.

We, however, must recall the days when the governments in the past were always pursuing the international donors to get more and more loans to meet day to day expenses. Whenever they succeed in getting new loans they used to make head lines in the newspapers next morning.



The situation is obviously different now. Unlike the previous subdued attitude, we are loudly thinking of getting rid of the foreign loans. President Gen. Pervez Musharraf as well as the governor of the State Bank of Pakistan has said that Pakistan now in a position that it does not need IMF loan and hopefully it will get rid of the debt trap in next two-three years. "However, we will have to work more vigorously to pass on the benefit of the economic development to common people", the president said.

While outlining the economic performance of the military regime during past three years recently, he said that Pakistan had attained the level from where it could take off for a journey to a strong economy.

The will to get rid of the foreign debt must be the desire of every Pakistani for which we have to further strengthen country's ability to repay debt by improving the earning capacity.

It is for the first time that the Central Bank is thinking in terms of investing 10 per cent of its total foreign exchange reserves with an international investment bank. According to report the central bank is also looking for an international consultant to carry out its investment plan safely.

It is believed that the income out of this investment may be tied up with the debut retirement which will further provide a breathing space to the national economy.

For achieving this cherished goal not only we have to consolidate all our resources but have to develop a national consensus for achieving the most cherished goal of the economic independence for the people of this country. In overall terms, the total stock of Pakistan's external debt and liabilities should gradually decline. In this regard, the current account surplus posted during the last two years and the substantial gains from recent developments in the external sector i.e. higher remittances, forex reserves build up are very encouraging signs.




Country's foreign exchange reserves continue to grow handsomely reaching to the level of $9.452 billion in the last week of the first month of second half of the current financial year.

The State Bank of Pakistan improved it reserves by 74 million dollars to touch the record 8.015 billion dollars for the first time in the history. The holding of the foreign exchange reserves by the commercial bank was estimated at $1.437 billion in the last week of January, 2003.

Commenting on the improved financial conditions of the country, Dr. Ishrat Husain, Governor State Bank has said that Pakistan, having good reserves of foreign exchange can take its own decisions and can avoid conditionality attached by the donor agencies.

The tremendous increase in home remittances by overseas Pakistan through official banking channels was one of the important factor which not only helped stabilizing the national foreign exchange reserves but also indicate restoration of their confidence into the policIes of the government. Decision to freeze the foreign currency accounts in 1998, shattered the confidence of the overseas Pakistani who consequently started sending money through moneychangers.