Is Pakistan going to default on debt servicing like Sri Lanka?

The economic turmoil in Pakistan has reached alarmingly close to that of Sri Lanka, which had faced a similar situation prior to its default. Pakistan is now standing at the same juncture. Merely a few days or weeks at the most are left for the imminent disaster if some kind of a miracle does not happen.

The economic turmoil in Pakistan has reached alarmingly close to that of Sri Lanka, which had faced a similar situation prior to its default. Pakistan is now standing at the same juncture. Merely a few days or weeks at the most are left for an imminent disaster if some kind of a miracle does not happen. The much talked about hybrid system foundation of which had been laid down by Pakistan military establishment through the then Director General Inter-Services Intelligence (ISI) Shujaah Pasha around 2010 to decimate two main political irritants- Pakistan Muslim League Nawaz (PML N) and Pakistan People's Party (PPP) is responsible for Pakistan's current state of affairs.

Though the vast majority of Pakistani society including the establishment, political elite, observers, analysts and economists had realised in early 2021, that this experiment of hybrid system "project Imran" which was installed in Aug 2018 after utilizing all unlawful resources and means and billions of investment has ultimately failed. They were unaware that its intensity will be so much and its adverse impact will be felt on such a massive scale. Eminent Pakistani economist Khurram Hussain was of the view that Pakistan can pull itself out of the economic quagmire only by accepting the International Monetary Fund's exacting conditions. It will have to pay a huge political price. He reminded that Shehbaz Sharif before coming into power had held several meetings with Miftah Ismail and discussed the economic challenges confronting the country.

The latter had informed Shehbaz Sharif in clear terms that his government will have to increase prices to such an exorbitant level. However, when the government started implementing IMF conditions, party members started protesting against the price hike. Finding Sharif not succumbing to their pressure, they started contacting Nawaz Sharif in London. Present Finance Minister Ishaq Dar, who was then staying in London due to cases in Pakistan, told Nawaz Sharif that Miftah Ismail is unable to handle the situation. Nawaz Sharif convened a meeting in London attended by both Dar and Ismail in which all sides agreed on the change of finance minister.

Dar returned to Pakistan with his outdated ideas without understanding that the world has fully changed by now. Dar wasted the next four months and stalled the IMF program, further aggravating the economic situation, Khurram concluded. Economic expert Yousaf Nazar, who is highly critical of Dar's policies, said that Miftah Ismail's stance was correct before the IMF and his direction was right. Both the Sharifs were wrong to replace him with Dar. It is not too late. He should be brought back as the Finance Minister.

Other Pakistani economic experts said that though tough decisions will cause damage to PML (N), but the damage will not be so much that the party gets totally finished. Pakistan's economy has been destroyed due to wrong decisions. They fear that the political and economic situation in the country doesn't appear moving toward stability even in the current year. Even 2024 has not got much good news for Pakistanis. Pak policymakers are incapable to pull out the country from this economic mess. Pakistani rulers and institutions lied so much with Saudi Arabia, United Arab Emirates (UAE), China, and the United States that these countries as well as institutions like IMF aren't ready to trust Pakistan.

The deceitfulness of Pakistan's elite has been exposed to everybody. Pakistan should be grateful that even in such a situation, the governments of Saudi Arabia, UAE, and China allow Pakistan's ministers to visit their countries and receive their calls. Otherwise, there is an enormous trust deficit regarding Pakistan. A section of Pakistani observers said that Pakistan's government should avoid putting the entire burden of the conditionality of the IMF program on the people alone. Those people who led the economic situation to the brink of collapse should also share this burden. Analysts known for their proximity with Islamists fear that Pakistan is moving fast towards Sri Lanka like situations in which the country defaulted and people took to the streets and set ablaze palaces of the rulers.

When the IMF refused to help out Sri Lanka, it was forced to take drastic decisions under compulsion. These decisions included a reduction in the strength of the army. Sri Lanka's situation is an alarming bell for Pakistan. Pakistan like Sri Lanka is close to China and has differences from India. Pak army is like a thorn in the eyes of India. Pakistan will have to overcome its economic crisis and in case the situation aggravates, the IMF is very likely to place various kinds of demands including a reduction in the army, an ending of the nuclear program, and a conversion of Line of Control (LoC) into a permanent border with India.

Former Pakistan PM and chairman of Pakistan Tehreek-e-Insaf (PTI) Imran Khan in his interview with BBC on January 18 held the Shehbaz Sharif government for the ongoing storm of poverty, inflation and unemployment ignoring the facts that, it is he himself who for undying lust for power has been constantly pushing Pakistan towards political and economic collapse. At a time when the international community was pledging aid of USD 11 billion for Pakistan at the Climate Resilient Pakistan conference in Geneva, Khan was aggravating politics by making moves to the dissolution of Punjab province and Khyber Pakhtunkhwa (KP) assemblies.

Everyone knows that Khan's government did not carry out even an iota of development and welfare work during his almost 4-year tenure, Khan blatantly said that the economy during his tenure was moving in the right direction, but opposition parties with hands in gloves with General Bajwa toppled his government. Everybody knows how Usman Buzdar- Gogi- Pinki gang plundered the economy and ruined the credibility and performance of the institutions. It is still in people's memory that unemployment and inflation had increased to enormous proportions and the economy was deteriorating with every passing day.

If the present government is not succeeding in handling the economy, Khan should tell with which strategy he will save Pakistan's sinking economy. So far he couldn't tell what miracle his government will do if it returns to power again. In fact, he has nothing to offer, he just wants to play the second innings like a young cricketer. 

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)