Pakistan, IMF & “debtocracy”

Dr Ikramul Haq

A poor country [Pakistan] struggling to meet the basic needs of its people, under the pressure of the pandemic its creditors are now being forced into a financial arrangement that will erode any semblance of democratic control over the country’s economy—Ammar Ali Jan, The IMF is Using Debt Crisis to Hollow out Pakistan Sovereignty.

“…debt should be not be viewed as simply a technical issue, but a class project in which ordinary people become the guarantors for the risks taken by the elites. All around the world, the question of debt repayments has become a central part of political discourse, with a resurgent Left resisting the imposition of debt obligations on the working class. In Pakistan, there is a dire need for a political force to demonstrate the will to hold the government accountable for its (mis)use of loans acquired in the name of its citizens— Ammar Ali Jan, The global debtocracy, The News, May 24, 2017

Public debt as percentage of GDP was recorded at 84.8 percent at end June 2019 compared with 72.1 percent at end June 2018. This increase was primarily due to the build-up of liquidity buffers and higher exchange rate depreciation—Debt Policy Statement 2019-20, Debt Policy Coordination Office, Ministry of Finance.

All indicators show that our successive governments, including the incumbent one, due to imprudent economic and tax policies, have pushed Pakistan into chronic, unremitting, unceasing debt-enslavement. Debtocracy, a term used by Ammar Ali Jan in international context, is yet to be part of public discourse in Pakistan vis-à-vis sovereignty of states and future of democracy. This was highlighted way back in May 2017 by Ammar. However, after four years, while the nation is suffering massively on health and economic fronts, in the aftermath of deadly third wave of Covis-19 endemic, no one in discussing it in corridors of powers, TV talk shows or even at social media.

Our rulers are engaged in clichés about independence of Kashmir and Palestine ignoring that USA, its Western allies and their cronies have made a nuclear state economically toothless having no say in international political arena due to debt-enslavement. The news of receiving 440 tonnes (19,032 bags) of rice under Saudi Arabia’s “Zakat al Fitr project” during recent visit of our Premier exposed a party that came into power in 2018 with the promise of breaking the begging bowl. It has exposed those as well who shun Ammar Ali Jan as communist maligning the country. By now, it is well-established that debtocracy is not a mere economic issue.

Once a nation is trapped in the ‘debt prison’, its natural consequence is political subjugation. The exploitative Neo-Colonial powers through lenders like International Monetary Fund (IMF) and others, force the enslaved to follow their anti-people agenda by imposing regressive taxes and cost of living. Pakistan is a classic study of being victim of debtocracy. This modern-day slavery has devastating repercussions for the poor nations. If proposed Bill of “autonomy” (sic) of State Bank is passed, it will confirm a compromise on our sovereignty, as highlighted by Ammar Ali Jan and many others.

Economists mention debt/liabilities only in numbers e.g. Pakistan’s public debt has touched the dangerous level of 94 percent of GDP [read details in Averting fiscal disaster, Daily Times, May 9, 2021]. Of course, numbers are important, but more vital are political issues linked with debtocracy. The agenda of IMF needs to be exposed and countered. The fundamental questions need to be debated are: why in the name of people, our elites have been recklessly borrowing money and paying huge amounts in debt servicing (three time of defence budget now) and how to get rid of it.

History of subjugation, resistance and liberation in various parts of the world presents vital lessons for humanity to break debt shackles. This cannot be done without waging mass resistance against elites and the oppressors acting as cronies of Neo-Colonial exploiters. India under the British Raj was ruthlessly plundered by Colonial masters—see details in ‘Class Structure of Pakistan’ by Dr. Taimur Rahman, Associate Professor in Political Science of Lahore School of Management Sciences (LUMS), spokesperson for the band Laaland a grassroots political activist, like Ammar Ali Jan. In the post-independence era, this phenomenon is continuing unabated in Pakistan and many other countries which Zulfikar Ali Bhutto exposed brilliantly in his booked titled ‘Myth of Independence’. The path for which he sacrificed his life to attain real independence needs public debate and mass resistance against the elements he pointed out.

One also needs to recall ‘Salt March’, also called Dandi March or Salt Satyagraha, the historic nonviolent protest led by Mahatma Gandhi in March–April 1930. The march was the first act in an even-larger campaign of liberation. Among others, Martin Luther King, Jr. cited the Salt March as a crucial influence on his own philosophy of civil disobedience. Gandhi, he said, had sent a simple message by grasping a handful of salt on the beach at Dandi, and millions answered his call.

There is a need for global campaign against debtocracy imposed through IMF [Senator Raza Rabbani of Pakistan Peoples Party, who is also a noted lawyer and writer call it New East India Company]. The prescriptions by IMF of oppressive taxes, even on items of daily use by the poorest of poor, need to be countered.  The role of IMF as New East India Company is explained in detail in a book coauthored with Huzaima Bukhari, Tax Reforms in Pakistan: Historic & Critical View, published by Pakistan Institute of Development Economic (PIDE) in September 2020. It can be downloaded free at: https://www.pide.org.pk/pdf/Books/Tax-Reforms-in-Pakistan-Historic-and-Critical-View.pdf   

The worst part of ‘debtocratic subjugation’ is “learned helplessness”. The people even after monstrous food inflation are showing endurance/submission. There are no mass protests as witnessed in the past in many countries like Arab Spring.

The ruling party and those in opposition being culprit of accumulating debt defend it brazenly in TV talk shows and make every effort to justify it as “help” by lenders, donors and friendly countries. Who will mobilise the masses for countering this narrative? Do we need costly loans for debt servicing or soft long-term for development projects?

Like its predecessors, the PTI also believes in patchwork here and there that will never cure the menace of debt-trap. The outrageous debt burden and huge fiscal deficits are symptoms of illness. These symptoms will keep on recurring unless the causes for illness are cured. The removal of causes of illness (elitist economic structure, heavy unproductive expenses, non-tapping of natural and human resources and ending crony capitalism) needs will as well as concrete agenda. These are not available with the PTI or any other party as their actions clearly testify to it. The way to come out is given in detail in Digging deeper into debt trap, Daily Times, October 25, 2020. 

________________________________________________________________

The writer, Advocate Supreme Court, is Adjunct Faculty of Lahore University of Management Sciences (LUMS), member Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE).