Default by design

Default by Design

With the demise of Rs.320 million water fountain, built at the tax payers’ expense, an important chapter of corruption, mismanagement and irrelevance comes to an end. Its pumps and plumbing met the same end as does the remaining wealth of the country – they got stolen. What would Karachi look like without a water fountain? Perhaps we need to build another water fountain, on urgent basis, that could push the water to still greater heights. A disease that pushes Pakistan to ‘pretend’ prosperity instead, of spending its resources for the benefit of its ordinary citizens.

Europeans and Americans, Chinese and Arabs, banks and business houses have all refused to come to our aid. This to my mind is the best thing that has happened to Pakistan. We now have a brilliant opportunity – to default. We need to say good bye to our big time banker economists, who instead of bringing back their own foreign wealth keep us engaged in jargons like fiscal deficit, capital investment , circular loans, binomial CRR, liquidity injections and financial determinants. Experts often carefully refrain from using easily understood language. Hence our current location in a compost pit is rarely attributed to simple explanations. For decades our government has been spending far more than its earnings. For decades we have been importing almost twice the value of our exports. For decades we have been ceaselessly corrupt and inefficient. The three put together make a textbook recipe for disaster unlimited.
Pakistan must unambiguously opt for a default. It must choose to publicly acknowledge its true economic condition. It must confess that despite having already paid back $45 billion in the last 10 years, it still owes $45 billion, that are being used by lenders as a gun on our head. The experience of past sixty years tells us what exactly will happen to our new loans. They too will meet the same fate. The country will get a few more months on the heart-lung machine. There will be yet another rush for fancy water fountains, Acacia golf courses and Centaurus hotels. The poor would be driven yet further away from receiving the much needed basic services like health, education and justice.
To consider just a few examples of personal luxuries and public mismanagement. Pakistan imported mobile phones worth about 4 billion dollars in the last seven years. India on the other hand, not just saved its foreign exchange but also enhanced its own capacity by asking Nokia to set up a mobile phone plant at Chennai for a mere $150 million. With an average of sixty ministers (and their equivalents) in each of the five cabinets, each entitled to an obscene Parado or a land cruiser (often driven without number plates), we imported $131 million worth of glorified polluting machines. The Rs.34 billion Benazir card scheme, seen as a subtle political bribe by many, would be the last straw that will convert a dignified population into beggars. Instead it could be used for providing job opportunities and creating skill enhancement projects. As if foreign exchange is of no concern, our nine parliamentarians are all ready to spend the next many weeks in USA as ‘observers’ to the US elections. The PM and the President are too happy to remain engaged in seamless foreign visits. Our national airline posts Rs.38 billion loss in the first nine months of this year, and happily gets away with it. The sixty years of loans have only kept afloat our leaders and done absolutely nothing for the ordinary people. The loans have encouraged further mismanagement and pilferage. The poverty line has gone up and those not blessed with electric generators alternate between cave age and modernity every two hours. The change at the social level is abysmal. Our women continue to be buried alive or fed to hungry dogs, while we happily consume the inappropriately named ‘Access to Justice’, $350 million ADB loan.
The real crisis of Pakistan is not financial in nature. Pakistan is facing a trust deficit, the like of which has never been seen before. Rich Pakistanis have moved out an estimated $6-10 billion in the past few months. Just the top ten rich persons (that include the leaders of the two largest political parties) have enough property and money stashed in foreign lands – to save Pakistan from another shameful surrender to IMF. Let us plead and petition our leaders to bring back their wealth and make public their accounts and assets. The people of Pakistan will respond in an unprecedented manner by bringing back what ever each one has. Collectively it will be enough to pay back all our loans and still be left with enough reserves to make a new Pakistan. This trust can only be built if the leaders demonstrate by their own personal example and also provide constitutional safeguards. There is much less shame in defaulting and much more in pretending to be doing well on borrowed money. In the past, our foreign borrowings have been counter productive and utterly suffocating for the people of Pakistan. Repeating the same and expecting different results will be disastrous.

November 1, 2008