By Dr. Ghulam M. Haniff
No one should have been surprised when the World Bank placed Pakistan in the same category as Congo and Ethiopia as the world’s most severely indebted low-income countries. The road to this sad state of affairs was at least ten years in the making by the two democratically elected Prime Ministers.
It is difficult to say who was the worst culprit, Benazir Bhutto or Nawaz Sharif, in sending Pakistan into an economic tailspin. It is widely alleged that the two were extraordinarily clever crooks, each one siphoning-off in excess of a billion dollars from the country. Papers released by the British courts recently show that Benazir “the Daughter of the East” was quite deft in acquiring assets valued beyond the billion-dollar mark.
These two high profile thieves not only robbed the country blind but they saddled the nation with such a heavy debt that it is facing bankruptcy. When Nawaz Sharif was kicked out by the military the country’s economy was in ruins. If he had remained in power any longer a financial disaster surely would have engulfed the country.
According to the Global Development Finance report, issued by the World Bank last month, Pakistan is one of the three countries whose debt burden has deteriorated severely. The other two are Benin and Kyrgyz Republic, among the poorest in the world.
The $30 billion debt burden of Pakistan in 1997 increased to $34.4 billion two years later in 1999. That’s an increment of $2 billion per year, a backbreaking sum for an impoverished country like Pakistan.
Meanwhile, the gross national product (GNP) fell from $63.5 billion in 1997 to $58.8 in 1999. As the debt went up the production went down. The per capita income actually fell from $480 in 1997 to $450 in 1999. The average person had less money and the standard of living, bad as it was, further deteriorated.
The decline in the GNP would have been a major cause of alarm in most countries. But in Pakistan Nawaz Sharif continued with business as usual. His only interest was in keeping the reins of power in his own hands while ensuring similar control by his brother of the largest province of the nation. Ruling the country became a family business as the national treasury was plundered.
Most countries devote enormous resources to ensure a steady rise in GNP year after year. Some want a positive increase on a quarterly basis. But in Pakistan this thinking apparently did not enter the minds of its leaders. When the leadership at every level is politically immature, intellectually barren, opportunistic and dishonest the country is likely to suffer stagnation and instability.
No wonder, then, the direct foreign investment (DFI) that peaked in 1996 at $922 million declined to $370 million in 1999. Either amount, in fact, is a pittance given the size and economic potential of the nation. The failure to attract foreign investment when capital abroad is readily available reflects on the incompetence of the top leaders.
Being classified in the lowest-income category makes Pakistan eligible for international charity. However, such classification is an impediment for seeking loans in the capital markets of the world. It is a dilemma that Pakistan needs to resolve. A bad situation was made worse when the two Prime Ministers imposed a $35 billion debt burden during the “lost decade” of the 1990s, characterized by political instability, poor policies and corruption.
In the fifties, China used to be worse off than Pakistan but it surged out of the lowest income category by pursuing farsighted policies. The enlightened and committed leadership of China invested heavily in the social sector, strongly emphasizing the pursuit of education and eradication of illiteracy.
By now that country has a large pool of highly trained technical professionals and managers. The idea for the development of such a workforce has only recently been discussed in Pakistan. There is also greater openness and entrepreneurial spirit in the Chinese economy than in the Pakistani one. China also has an entrenched business culture that Pakistan, as a feudal society, lacks.
A committed leadership, by its choice of right policies, can guide a nation towards advancement even as cultural values play an important role in contributing to economic progress. The present leadership of the country will determine whether Pakistan can avert an impending economic disaster. To this point the Chief Executive seem to be reversing the economic trend though stronger actions are needed.
It is ironic that China, on the verge of economic collapse in the forties, has now become Pakistan’s benefactor. Meaningful policy decisions and committed leadership has made that country into one that gives economic assistance to the Islamic Republic and is its mentor in technological fields.
Pakistan ought to derive a lesson from the experience of China. It cannot forever stand in line with a begging bowl hoping for a handout. It has to learn to stand on its own two feet.
The writer can be reached at: haniff@stcloudstate.edu