According to newspaper reports, the government is weighing its options to get $12.53 billion loans, especially from the World Bank and the Asian Development Bank during the next one and half year. At least $6.63 billion would be sought during the current fiscal year and $5.89 billion during next year, showing an unfortunate fact that the government has deliberately adopted a mismanagement strategy.The exports of the country have been falling since the present government took over three years ago and loans are piling up to maintain the foreign currency reserves at an acceptable level. But how long the strategy of loans will go on is a point to ponder but no one wants to think over it. As the exports are falling and trade deficit are on the rise, the country is facing increasing imbalance in debt servicing and is struggling to maintain the rate of inflation at certain levels. Apart from taking $2.85 billion from the World Bank, $500 million from the Asian Development Bank and $350 million from other donor agencies, the government expects $1 billion from Safe China Deposit, $500 million from Euro Bonds, and $1.13 billion from the Islamic Development Bank. The government is also planning to take $300 million from the commercial banks during the current fiscal year.
The loans are increasing, but planning is absent.If exports are falling, the foreign direct investment is also drying up, posing a big question mark on the ability of the government to deal with fiscal difficulties. Pakistan with its huge human and natural resources has the potential to become Asian tiger in a few years, but the country needs structural reforms in every field of the economy. The government has so far failed to study any developed economy to adopt it as a model. The poorest countries of East Asia, including Vietnam, Thailand, Malaysia and Cambodia, have placed their economies on the road of progress. Pakistan has miserably failed to tap its potentials. The government will have to check anomalies within the official machinery and will have to devise prudent economic policies and implement its writ for the cause of the nation. Instead of producing industrial surplus, the government is fully relying on foreign loans and it is the dangerous trend. The nation is unprepared to face the issue of debt servicing in coming years.
The under performance of Pakistan is visible in the list of global competitiveness index published by the World Economic Forum. In the index, Singapore ranks second, India 39th, Sri Lanka 79th and Pakistan is at the bottom 122nd with lower per capita income. The nation is not destined to be poor and this is the time to act.