Download 81. Foreign Loans and Common Man

Emporium Current Essays
367
J
Pakistan is under foreign debt of over 30 billion US dollars. The debt figure stood at 12.8
billion dollars have been added during" the so-called democratic rule of the past eight
years. The Prime Minister and her husband proudly claim that this year the government
has returned loan of one billion US dollars. On the other hand, over two billion dollars
(project aid worth 42.1 billion and non-project aid for 60.8 billion Pak rupees, totalling
103.8 billion) have been proposed to the obtained as loan from external sources in the
budget for 1996-97? The practical significance of return of foreign loan, can thus, be
seen.
The burden of debt servicing on the public exchequer is mounting year by year and out of
a gross (projected) revenue of Rs.
413.2 billion during the year 1996-97, Rs. 186.1 billion (45.06 per cent of the revenue)
have been reserve for payment of interest, laving 55 per cent revenue for other purposes
and to make up the deficiency Rs. 103.1$ billion are proposed to be borrowed from
external sources and Rs 20 billion from banks.
Two years ago, it was announced by the present government (after completion of one
year in office) that because of foreign investment, Pakistan would be flooded by dollars
(of course flood of rains has come without dollars). The Prime Minister uses every
occasion to proclaim that foreign investment is coming to Pakistan in large quantities. It
was announced that the US investment during last year was over one billion dollars,
while British investment was
570 million US dollars and others were following. It it is true, the common man wonders
as to why is the Pak rupee under constant strain from the US dollar. It has been devalued
over seven times in one year and overall devaluation is about 22 per cent according to
market rate. This is a contradiction in terms. It needs to be mentioned that foreign
investment though multinationals alone, without joint ventures with locals, amounts to
making the country hostage to their machinations, as has been in the case of
Pharmaceuticals in Pakistan. Malaysia one of the 'Asian Tigers' has particularly benefited from joint venture. 368
Emporium Current Essays
Foreign aid is a post World War-II phenomenon >vhen the Marshall Plan for Western
Europe and Colombo Pan for nonEuropean countries, were started. Western Europe was
completely reconstructed. Development of non-European countries except Japan >vas not
significant. However, two economic giants Germany and Japan, appeared on the world
scene as a result thereof. Poor East European countries, with Soviet assistance were also
partially industrialised. As a result of foreign aid, Asian Tigers, South Korea and Taiwan
an Singapore have appeared. In the sixties, Pakistan was number 4 among low income
countries. Its position has now .receded to 22nd. Countries which gained independence
later, were much poorer than Pakistan and started on the road to development much later
like Malaysia (which has now become the fifth Asian tiger). Thailand, Indonesia, the
Philippines and Sri Lanka have gone much ahead, leaving Pakistan trailing behind.
According to UN reports, even India has left us behind by 40 years.
With the advent of foreign aid (loan) Pakistani rupee started depreciating reducing
purchasing power of the common man. Soon after Independence, US dollar was
equivalent to Rs. 2.5. It was five rupees to a dollar in the fifties and with some props to
exports it retained the same position in the sixties. With a massive
56 per cent devaluation in 1972, it went up to about 10 rupees. The depreciation has
continued unabated and it is now touching 40 rupees to a dollar. If this trend continues, it
is apprehended that not too far off in the future a dollar will be sold for 100 rupees.
The depreciation of Pak rupee (along with some other factors) has led to rising prices and
misery for the common man. The people face a new rate of inflation of around 20 per
cent every year. Calculation of inflation rate with reference to a base year has since been
discarded. The US, the main donor of foreign aid, has a constant rate of 2 per cent
inflation. A few days ago, the Press carried a report that in the UK, the race of inflation
last year was
2.2 per cent and this year it has risen to 2.4 per cent, a rise of 2 per cent in one year. The
Pakistan Governor claims that it has reduced budget deficit (through a juggler of figures)
from 8 per cent to 5 per cent of GDP. How does this reduction help the common man is
not understandable to iiin, when he faces rising prices. There are protests all around by
different sections of the public. What development is there when we have not been able
to give even a small increase in salary to clerks who have been protesting for over two
years now. Besides, the claimed reduction of deficit would assume a ghostly shape, if
foreign loajis are withheld, as is . threatened by the IMF.
Emporium Current Essays
369
In terms of social indicators, Pakistan presents a dismal picture of comparative
development, according to figures reported in the UNICEF Annual Report for 1996
(covered in a recent issue of an English daily) In material mortality rate at child birth
(being 340 per one lakh live births) Pakistan lags behind all countries of AsiaPacific
region, including six Muslim Central Asian States, Muslim countries of the Middle East
and North Africa except Morocco, Sudan and Yemen. Nutritional level of children below
5 years is extremely poor. Forty per cent of the children arc malnourished. In child
nutrition Pakistan trails behind even countries like Mongolia, China, Malaysia (Burma)
and Sri Lanka. Fifty-five per cent girls of school-going age arc out of school in Pakistan,
In this region, only Bhutan is behind Pakistan which is also lagging behind all Muslim
countries in this respect. In 1985, M. K. Junejo, the then Prime Minister announced that
his government would achieve 50 per cent literacy in five years. In her Pakistan Day
speech on August 14,
1996, the Prime Minister declared that the literacy rate would be increased to 80 per cent
in ten years. Speeches may continued as they are, the rate of literacy has been almost
static over the last 10 years - around 35 per cent according to official figures.
A question arises as to what has happened to Pakistan as it is perhaps the only
underdeveloped country in the democratic world which has lagged behind in spite of
heavy foreign aid. Though our per capita income is said to have risen to US S440 per
annum, this figure is misleading so far as economic well-being of the common man is
concerned. Pakistan is suffering from unequal distribution of wealth. Some
knowledgeable people say that foreign aid and bank loans have been instrumental in
widening the gap between the rich and the poor as these have mainly benefited the
former, this is borne out by indirect evidence provided by fleets of Pajerocs, Land
Cruisers, Hondas, and big bungalows, within the country, as well as flats, villas and
bungalows purchased abroad by political leaders and others. Then there are foreign trips
lasting months by political figures, high bureaucrats and businessmen and their relatives
who have no ostensible means of direct foreign income. Some people contend that Pak
currency is taken out in boxes overnight to some Middle East and Gulf countries,
converted into hard currencies and deposited in foreign banks. The Pak currency notes
come back through hundi system for payment to the families of Pakistani expatriate
working abroad, thus adding fuel to the 'blazing inflationary fire. The number of super
rich families in the '60s was put at 22, it rose to 500 in the '70s, went up to 5000 in the
'80s and is now said to be arouftd 20,000. With his income being daHy depreciating, the
common man finds that foreign aid instead of370
Emporium Current Essays
improving his condition has worsened it. A new-born baby of a Common man, besides
his parents' poverty, inherits foreign debts of Rs 18,000. With fleets of Pajcrocs, Land
Cruisers and Hondas running on roads, a common man is forced to travel on bus tops on
some inter-city routes and even his female family members, after waiting, for hours on
wagon stops, or forced to get crouched in wagons in a city like Lahore. Government
pensioners, 95 per cent of whom are ordinary people, though legally entitled to free
medical treatment, are not provided medicines for lack of funds.
Daily depreciation of Pak rupee, rising prices of essential articles, increasing
unemployment of the youth and closure of some factories depict bankruptcy of our
economy for the common man, despite claims of the government to the contrary. Some
knowledgeable people say that America-sponsored foreign aid has eaten our economy
like the cotton crop eaten by the leaf-curl virus. The government has constituted a
commission to investigate into bank loans granted without adequate Securities. A similar
commission is rapidly depreciating against all major currencies and why it is only
Pakistan that has not developed in terms of benefits for the common man, even with
heavy foreign aid. Luxury cars of all those who have benefited from foreign aid through
commissions and other illegitimate means, at the expense of the nation, should go to the
public exchequer. If South Korea can award death sentence to an ex-President and 22
years imprisonment to another for corruption, why can't we do that much or national
survival, in this world of cut-throat competition?