The drive against the bank loan defaulters and those accused of other forms of corruption which started on November 17 makes good one of the promises made by the Chief Executive soon after assumption of power. It goes a long way in restoring the badly shattered confidence of the people of Pakistan, both at home and abroad, in the credibility of the government.

It brings to mind the resistance of Nawaz Sharif’s government to even disclose the names of the major defaulters during several sessions of the Senate earlier this year. When pressed by the opposition, the then Finance Minister, Ishaq Dar, audaciously argued on April 21 that the disclosure of the defaulters’ names would breach the “honor” and “privilege” of loan-takers! Can one imagine a more evil sophistry to protect the sharks who had bled the state banking system sector dry?

One of Nawaz Sharif’s campaign promises was to go after the big bank defaulters. His exact words were: “Our country has been ruthlessly robbed. Enormous amounts of money were borrowed blindly and squandered on personal luxuries… I wonder where $30 billion, which have mortgaged the future of every Pakistani child, been spent…Our own rulers have plundered us in ways that even the enemy would not practice in occupied lands.”

For a year after assuming office the second time, he did not even once utter a word about the loan defaulters. His Ittefaq group was itself one of the biggest defaulters. According to one estimate, his family owed no less than Rs. 15 billion to banks. The others included his hatchet man, Saifur Rehman, and several parliamentarians belonging to his own party. No wonder Ishaq Dar was worried about the honor and privilege of the defaulters!

While charges against him in this respect are yet to be decided upon in a court of law, Benazir and her husband were found guilty in a corruption case and she has been absconding from law. Her husband is in jail and is undergoing the sentence.

With a shameless, brazen face she tried to contact Gen. Musharraf, the Chief Executive, to offer her services for the solution of the country’s problems. Some time earlier, she had even claimed to be “the only leader who can save Pakistan” from sinking further into the quicksand.

Nawaz Sharif had likewise commented to the visiting British MP, Chaudhry Sarwar, that his detention was beyond him as he was totally innocent.

The current crackdown on the loan defaulters has brought to the fore many such innocents. So far about two dozen bigwigs, whose names read like the Who’s Who of Pakistan’s elite, have been arrested from across the country. Those within the grip of the law include two former Prime ministers, an ex-naval chief, an ex-air marshal, and several luminaries among business barons. According to the Finance Minister, the country’s top 325 defaulters owe over Rs.72 billion out of total defaulted loans of Rs.146 billion. An amount of Rs.8 billion has been recovered. That represents 8% of the principal owed – Rs.99 billion- minus the accumulated interest.

The message that this operation sends is not to be viewed in the context of the amounts owed and recovered. What has been undertaken with such vigor and determination is the enforcement of the law and restoration of its respect. Over the past 10-15 years of elitist rule over the country, dominated by feudal aristocracy, any one who was someone in the society was ranked by how much he could defy the laws of the land in the typical feudal spirit. The ruling hierarchy considered the plunder of national wealth as its divine right. The people at large became so alienated from the self-centered rulers that they welcomed wholeheartedly the military take over. In the West, particularly in the US, there is a reservation about the dismissal of an elected government. The situation obtaining in Pakistan during the elected governments of both Benazir and Nawaz Sharif is not generally appreciated. It is therefore gratifying to see a press report that the US State Department appreciates the anti-corruption measures of the new regime.

The action against the defaulters exposes the nexus promoted for almost two decades among unprincipled businessmen, greedy politicians and bankers. This obnoxious gang has virtually caused a collapse of the banking system, eroding the confidence of depositors and scaring away potential investors. The frittering away of depositors’ foreign exchange of no less than 11 billion dollars was also caused by this combine.

It is the system that admitted of such pernicious loot. The system will have to change if a recurrence of such episodes is to be avoided. Indications are that the government is fully alive to this. A rot that took a couple of decades to set in cannot be corrected overnight.

Pakistan’s economy is no doubt in an extremely bad shape. It is teetering on the brink of bankruptcy. Even if all the defaulted loans were recovered, it would not make much of a dent in the economic malaise.

Some facts and figure will make this point clear. In the current (1999-2000) budget the total revenue receipts are estimated at Rs. 356 billion. Defense expenditure is Rs. 142 billion, debt servicing Rs. 287 billion bringing the total revenue expenditure to Rs.429 billion, i.e. 120% of tax revenue receipts. Revenue receipts are estimated at Rs. 581 billion against an expenditure of Rs.642 billion leaving a deficit of Rs. 6.1 billion. Such deficits were in the past met through borrowing, incrementing the debt burden.

Recovery of defaulted loans will be a small measure in pulling back the country from the economic brink. Several other measures in concert will have to be taken to rectify the situation. The nation cannot afford to continue living beyond means. The teams of economic and financial experts engaged by the government are working diligently to plan and execute schemes to that end.

The precedent of the resolute action against the defaulters augurs well for the shape of things to come in other sectors of the economy.