Pakistan’s economy is in shambles, but Islamabad clearly has access to other, ‘shady money’

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IT is shocking on one level, while completely surprising on another. More recently, the former head of the Federal Board of Revenue of Pakistan said Clearly that the country had gone bankrupt and was “not a concern”. It is more than unusual for a country that is not at war, either with itself or with someone else, to drive itself to the ground. Afghanistan yes, but Pakistan? This is strange, especially since he has ‘won’ an entire country after two decades of covert operations and backing a Taliban army of Taliban. 60,000, That’s an expensive job. and that protection continues, according to the new “Country Report of Terrorism”Despite Pakistan’s apparent economic collapse. This is all rather surprising. On the one hand, this is the king, and on the other, a beggar.

The economy is busted, but Islamabad seems to have access to other sources of funding.

definitely bankrupt

Despite State Bank of Pakistan (SBP) figures telling themselves ‘sunny side up’ Arrive. Pakistan’s total debts and liabilities has exceeded PKR 50.5 trillion, marking an increase of some PKR 20 trillion under the current Imran Khan government. sbp statistics This shows that the current account deficit has widened to 4.7 per cent of GDP, much higher than the 2021 target of 2-3 per cent. state Bank From crisis to crisis, somewhat stable after the recent loan from Saudi Arabia$3 billion, part of a total of $4.3 billion in aid. This was expected to improve the currency rate of Pakistan. it did not. Rupee fell further and reached 179 Reflects weak economic fundamentals against the dollar.

state Bank The pressure on fiscal resources was attributed to high debt repayments as well as imports of food, including wheat, sugar and vegetables. High imports of cotton have also depleted foreign exchange reserves to sustain Pakistan’s textile industry. Earlier, due to pressure from traders, Pakistan had agreed to Import All these from India, but the move failed due to political pressure. Former FBR chairman Syed Shabbar Zaidi categorically stated that the debt figures are at a level that Pakistan can never pay. a broad. In Thread On Twitter he argued that ‘bankruptcy’ is a situation when a loan cannot be paid estimated earnings, This is a logical position that can hardly be argued with. But for argument’s sake, there is enough evidence of Pakistan’s sinking creditworthiness. case Saudi loan. The new loan carries a higher interest rate, where Pakistan will pay $120 million in interest on the loan – up to $24 million relative to the same facility in 2018. Other currents are even more stringent. The loan must be returned within 72 hours of a written request by Saudi Arabia at any time. Any delay in interest payments or public debt repayments would be considered a default on the agreement, as would a withdrawal from the International Monetary Fund (IMF).

Meanwhile, there is news of Pakistan making payments to China. PKR 26 billion Originally intended to boost trade, $4.5 billion in interest for a loan facility, but to repay the Saudis, among others. To pay China, Pakistan asks IMF to get out of debt three times more more than what has been borrowed. In other words, a classic debt trap it created of its own, is only getting worse over the years as Islamabad smoothly skips from one loan to the next. It is beyond bankruptcy. This is a state of collapse.

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The Secret of Growing Remittances

Then there is one source on which the State Bank depends to keep its foreign exchange stable and run the economy, and that is labor remittances. Under instigation from the Financial Action Task Force (FATF) and the IMF, Pakistan has taken a number of measures to encourage the use of formal channels for remittances instead of the usual hawala channels. While this certainly explains the increase in remittances to an extent, it cannot explain the year-on-year increase. 26.9 percent In FY2011, at a time when Covid-19 has decimated most economies, resulting in a global decline in remittances. The largest amount is estimated to be from Saudi Arabia, but the Kingdom had closed its borders. Pakistan Last year, an issue that was discussed on priority with the first Saudi official visit July After the political breakdown last year.

Foreign Minister Shah Mehmood Qureshi Specified Around 400,000 stranded at home due to travel restrictions by Riyadh. it makes 28.2 The percentage increase in Saudi remittances is even more puzzling, and certainly needs a closer look. In addition, Pakistan’s own figures Bureau of Immigration and Foreign Employment It shows that manpower exports have come down from the figure of 625,876 in 2019 to 223,156 persons abroad at present. It is worth noting that remittances have long been used by organized crime cartels to launder money. Mexico There is another country that has shown record remittances to the US, which is almost on par with Pakistan. a FATF Report It details how remittances are used by organized crime to launder money, including drug cartels.

Read also: Heroin and human trafficking are the only two sectors of Afghanistan’s economy that are still thriving

drug trade

Speaking of drugs, UN drug report 2020 There has been a 37 percent increase in drug cultivation in Afghanistan compared to the previous year. This is considered the third biggest jump in farming since 1994. The South-Western region remains Afghanistan’s major opium-producing region, accounting for 71 per cent of the total production, including major regions bordering Pakistan such as Helmand and Kandahar. Curiously, this increase is taking place at a time when dry opium prices in the market are at record lows, leading to a lack of business sense.

Meanwhile, drugs are flowing outward by sea and land routes, evident in seizure after seizure. right now recentlyThe Sri Lankan Navy intercepted a boat carrying 250 kg of narcotics, part of a series of other recent seizures that included a local fishing vessel caught with 290 kg in August and 336 kg and 170 kg in September Two more kilograms of heroin are involved. Maldives has seen another such influx of heroin, coming from Afghanistan through Pakistan’s Faisalabad and Lahore, and then exit from Balochistan. That’s the only way. Gujarat Not only with Pakistanis being arrested, but with 2,988 kg has turned into a major landing point heroin Just getting caught in a big way. All of them involve local mafia, including Sri Lankan don. also includes Angoda Lucca was mysteriously killed in Coimbatore last year, and afghan youth in Delhi. It is now an issue of national security for India. Yet curiously, nowhere is the kind of data available on drug cartels operating from Pakistan that was once available in the 1990s, for example, a Central Intelligence Agency report.sow air‘ brought out important details of narco-political cartels in Pakistan. The silence today is astonishing.

Clearly, there is a slew of criminal networks going on within and outside Pakistan with many other activities which include human traffickingMost desperate Afghans are fleeing the war. As hunger continues to rise, Pakistan is trying to engage the international community in tackling an emerging refugee crisis. But the damage has been done. Even as the ISI strikes a pose in Afghanistan after its ‘victory’, Pakistan has become one of the most addicted to heroin Estimated in the states of the world 6.7 million Drug users, most of them in border areas.

Hence its slipping economy is only a part of the cost paid by Pakistan for its ‘Afghan adventure’. There is much more, including institutional decay and rising fundamentalism, fueled by a Taliban victory. A bankrupt state with a demonic ego that sees itself as a ‘territorial power’ is bad enough. Worse yet, it is spreading to the rest of South Asia, with some intention, sometimes not. Anyhow, it’s time to stop. And perhaps Islamabad needs to reconsider the question of trade with India. After all, a loss of face is better than the loss of a country.

The author is a Distinguished Fellow at the Institute of Peace and Conflict Studies, New Delhi. She tweets @kartha_tara. Thoughts are personal.

(Edited by Neera Mazumdar)

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