Saturday March 02, 2024

Unsustainable borrowing

December 05, 2023

LAHORE: People might feel relieved by World Bank's Martin Raiser's statement that Pakistan's debt is sustainable, but no debt can ever be sustainable if it is taken for consumption rather than resource creation, as it adds to liabilities.

Pakistan is taking loans to repay its past loans, it is consuming loans to plug its fiscal deficit, and it is taking loans to finance the losses incurred by loss-making state-run enterprises. 

Unfortunately, we are not creating any resources to lessen the need to take loans. We take loans to provide a luxurious lifestyle to the ruling elite and high officials. Every year, our need to take loans increases.

A money trader counts US dollars for a customer at a currency exchange office in Karachi on July 19, 2022. — Online
A money trader counts US dollars for a customer at a currency exchange office in Karachi on July 19, 2022. — Online

The system in Pakistan is so rotten that despite a massive increase in power tariffs and a campaign, the monthly increase in our circular debt has not subsided. In fact, each tariff increase is a boon for the corrupt staff as it enriches them correspondingly. The campaign against power theft has not reduced the line losses, which remain stubbornly high. Even this campaign has almost lost its vigor. Corruption cannot be eradicated through such efforts.

The authorities must find out the reasons and avenues of corruption and plug them forthwith. The entire economy is held hostage by vested interests. We have failed to stop the pilferage of irrigation water by big landlords, which deprives the poor farmers at the tail end of obtaining their due water share.

Pakistan is perhaps an exception where technology has failed to streamline the system. The use of telemetry has not ensured fair distribution of water among farmers and among the provinces.

Technology works properly in the private sector but fails in the public sector because the operators have no stake. The technology is in fact their enemy as its proper use deprives them of the rent that is distributed among the rank and file under a non-transparent system.

Every loan that we take under the rotten system will go down the drain. We need to wake up and make an effort to reduce our losses every year and reduce our dependence on loans. Moreover, the powers that be must muster the courage to ensure that all luxurious expenses are stopped.

This includes perks and privileges enjoyed by bureaucrats and the past or present ruling elite. A government servant has to serve for a period of 20-25 years to become entitled to a pension.

A caretaker Prime Minister after the usual three-month stint at the office is entitled to all privileges offered to an elected Prime Minister after completion of his five-year term. Even a PM after five years in office should not be entitled to any pension or facilitations.

It is regrettable that while the country is starved of resources, we allocate huge amounts for the posh, luxury residences of high government officals. Then we have entitled holders of some high posts elites to duty-free bulletproof cars.

Why should the government sacrifice billions in taxes and duties to benefit them? Is this facility available to ordinary citizens or petty officers in the govrnment? We have to take loans for all these non-development expenses. We earn nothing from these facilitations, but we have to pay interest on the money unnecessarily spent on luxury and wastage. If this continues, we will end up begging for alms to pay even the salaries of government employees.