Debt-free Pakistan

Our gross external debt and liabilities have soared from $44 billion in 2008 to a staggering $132 billion. Every year, a back-breaking Rs10 trillion is consumed by debt servicing alone. Then comes the Rs7 trillion handed over to provinces under the 18th Amendment – and just like that, the federal government is left with nothing. Zero.

What happens next? The federal government borrows to survive. Over Rs2 trillion for defence? Borrowed. Rs1.8 trillion in grants? Borrowed. Rs1.7 trillion for development? Borrowed. Rs1.4 trillion in subsidies? Borrowed. More than Rs1 trillion in pensions? Borrowed. Even the Rs839 billion needed to run the civil government? You guessed it – borrowed. Ours is a debt-fueled existence.

We chase solutions in IMF loans. We pin our hopes on bilateral aid. We resort to austerity. And yet, nothing works. Let’s shift our monetary thinking. Bitcoin is a finite asset: only 21 million will ever exist. Bitcoin’s performance: 10-year Compound Annual Growth Rate (CAGR) is more than 70 per cent.

The US holds the largest national stash of Bitcoin at 198,000 coins, followed closely by China with 190,000. The UK holds 61,000, Ukraine 46,000, and North Korea 13,000. The UAE is buying Bitcoin. Even smaller nations are in the game: Bhutan holds 8,000 and El Salvador 6,000. Other countries like Venezuela, Finland, and Georgia also maintain Bitcoin reserves.

The government of Pakistan has two choices. Choice 1: do nothing. The cost of doing nothing: further debt, more IMF dependency. Choice 2: do something non-traditional: pay off the debt and reclaim economic sovereignty.

Here’s a historical what-if: Had Pakistan allocated just $500 million to Bitcoin in 2015, that investment could have grown to over $10 billion today – a 20x return, based on historical price movements.

The State Bank of Pakistan (SBP) doesn’t need to gamble; it needs to think long-term and outside-the-box. Consider this high-upside, strategic hedge: the SBP gradually allocates $5 billion into Bitcoin over the next two years, buying dips and spreading out entry points.

Then, let the cycles play out: First cycle (4-5 years): $5 billion grows 5x into $25 billion. Second cycle (another 4-5 years): $25 billion grows 5x into $125 billion. That’s 95 per cent of Pakistan’s external debt – potentially wiped out in 8-10 years, without borrowing another dollar.

How about Pakistan issuing 'Bitcoin Sovereign Bonds' – modeled on El Salvador’s 'Volcano Bonds' – to raise capital by tapping into global crypto wealth?

I propose a $1 billion sovereign bond issue, as a starting point. Market the bond to global crypto investors hungry for yield and upside. Highlight Pakistan’s strategic geography, talent pool, and investment potential.

Pakistan is in a debt trap with limited options. Bitcoin offers a non-traditional, high-upside hedge. Bitcoin’s market cycles reward patience, offering Pakistan a lifeline. Bitcoin’s risk is justified by its potential rewards. This isn’t speculation; it’s evidence of Bitcoin’s potential to transform Pakistan’s financial future if embraced strategically. With global adoption rising sharply, Bitcoin is a calculated risk worth taking for Pakistan’s economic salvation.

The writer is a columnist based in Islamabad. He tweets/posts @saleemfarrukh and can be reached at: farrukh15@hotmail.com