Is Pakistan truly a sovereign state when its economic decisions are influenced by external entities?

[FearlessRoar]

Pakistan's financial situation is tough, with only $8 billion in foreign reserves, enough for just two months of essential imports. While this is better than a year ago when reserves were at $3.1 billion, the country faces a $1 billion bond payment soon. Luckily, there's some relief with a $700 million IMF injection expected.

Though only 8% of its external debt and 3.4% of total public debt are bonded, Pakistan owes a significant chunk, nearly 13%, to China for various projects. This highlights the importance of Pakistan's economic relationship with China.

Adding to the financial strain are tax and gas tariff hikes, along with a sharp drop in the value of the rupee, leading to inflation nearing 30% year-on-year. While economists predict a gradual decrease, inflation is expected to remain high compared to the central bank's target.

Pakistan's debt-to-GDP ratio is over 70%, and interest payments could eat up 50-60% of government revenues this year, making it one of the worst ratios globally among sizable economies.

Given these tough circumstances, the question arises, can Pakistan still be seen as a sovereign nation when its economic decisions are heavily influenced by its debts to entities?

 

[FearlessRoar]

Polls added

 

[Cricket Warrior]

This is the method of the West.. first make a country dependent by giving them credit and then they start capturing their resources.

That is what the East India Company did to capture hindustan.

 

[ElRaja]

This is the method of the West.. first make a country dependent by giving them credit and then they start capturing their resources.

That is what the East India Company did to capture hindustan.

yes, the evil west which ensured south Korea stayed as one of the poorest nations in the world like it was in the 60s, the same evil west that ensured japan, taiwan, china, Botswana are plagued by a lack of growth and economic stasis.

or might it just be because Pakistan suffers from chronic mismanagement of the economy, because it has one of the worst brain drain problems in the world, because the people have low levels of scientific or critical thought, because investment in infrastructure has been virtually non-existant, because the concept of private enterprise has been destroyed, because its one of the few countries in the world where malnutrition is leading to stunted physical growth and people are getting shorter? no, it must be the evil west.

and even if we entertain this spurious hypothesis, what resources of Pakistan does the west exactly want to capture anyway, theres no material resources of any significant amount that the west cant just buy anyway.

 

[Champ_Pal]

You cannot make your own decisions when the money is not yours. External money comes with lot of conditions and clauses.

 

[FearlessRoar]

You cannot make your own decisions when the money is not yours. External money comes with lot of conditions and clauses.

Yes, that's what concerns me. If we can't make our economic decisions ourselves, is it really sovereignty?

 

[FearlessRoar]

yes, the evil west which ensured south Korea stayed as one of the poorest nations in the world like it was in the 60s, the same evil west that ensured japan, taiwan, china, Botswana are plagued by a lack of growth and economic stasis.

or might it just be because Pakistan suffers from chronic mismanagement of the economy, because it has one of the worst brain drain problems in the world, because the people have low levels of scientific or critical thought, because investment in infrastructure has been virtually non-existant, because the concept of private enterprise has been destroyed, because its one of the few countries in the world where malnutrition is leading to stunted physical growth and people are getting shorter? no, it must be the evil west.

and even if we entertain this spurious hypothesis, what resources of Pakistan does the west exactly want to capture anyway, theres no material resources of any significant amount that the west cant just buy anyway.

It's not only due to mismanagement; the main issue is corruption, and it's at a very high level.

 

[ElRaja]

It's not only due to mismanagement; the main issue is corruption, and it's at a very high level.

no its not, corruption exists every where, Pakistan is not some exception to this rule, the problem is their is so little endogenous growth that the corruption proportionally becomes significant.

the corruption perception index is not perfect, but aims to standardise corruption to compare countries, and russia, Bangladesh are below Pakistan, Kenya, Mexico and turkey are a similar level.

corruption related issues are a symptom of the disease, the causes ive listed above.

 

[FearlessRoar]

no its not, corruption exists every where, Pakistan is not some exception to this rule, the problem is their is so little endogenous growth that the corruption proportionally becomes significant.

the corruption perception index is not perfect, but aims to standardise corruption to compare countries, and russia, Bangladesh are below Pakistan, Kenya, Mexico and turkey are a similar level.

corruption related issues are a symptom of the disease, the causes ive listed above.

Ok if it's not only corruption, then in my opinion weak leadership and unstable politics have made things worse. Investors don't trust the country, and that leads to corruption and unfair politics, which mess up the country's money situation. Plus, Pakistan relies a lot on imports, especially for energy, so when oil and gas prices go up worldwide, it hits us hard.

 

[FearlessRoar]

@Cpt. Rishwat @Major @Rana @Mamoon @PakEngFan @shaz619 @mominsaigol @Bewal Express @Kianig89 @Savak @YousafTheBeast @Pakpak @Sher Khan @IMMY69 @Stewie

What is your take on it?

 

[mominsaigol]

@Cpt. Rishwat @Major @Rana @Mamoon @PakEngFan @shaz619 @mominsaigol @Bewal Express @Kianig89 @Savak @YousafTheBeast @Pakpak @Sher Khan @IMMY69 @Stewie

What is your take on it?

Uhh mate, I think you already answered your question in the OP lol.

Given the numbers the answer should be clear.

 

[rpant_gabba]

@Cpt. Rishwat @Major @Rana @Mamoon @PakEngFan @shaz619 @mominsaigol @Bewal Express @Kianig89 @Savak @YousafTheBeast @Pakpak @Sher Khan @IMMY69 @Stewie

What is your take on it?

The question is , has pakistan ever been sovereign? I mean they were selling themselves to the Yanks as yearly as 1948 about how they are they are wall against communism.

The stone was cast from the very beginning. So IMO, Pak was always willing trade it sovereignty for the right price from its inception.

 

[Red-Indian]

Yes, that's what concerns me. If we can't make our economic decisions ourselves, is it really sovereignty?

Without wanting to give offence, I think it's better for Pakistan that your rulers - primarily the Establishment not be allowed to make economic decisions themselves. You've had a series of figureheads like the Sharifs and Imran who also tend to contribute to short-sighted, populist, ineffective economic direction.

I don't deny that the IMF mandated economic program has it's flaws but at the least, it's logical and based on consensus macroeconomic theory. Not seat of the pants, whichever constituent is making the most noise stuff.

As far as sovereignty is concerned, Pakistan has plenty in other areas including military, police etc. and even in economic affairs, will have some wriggle room to make allocation decisions under the overall program.

 

[BouncerGuy]

No, Pakistan is not a sovereign state. Politics in Pakistan should be among one of the worst ones out there and this the one of the reasons this country is lagging behind. Economic decisions here were always influenced by external entities such as international financial institutions like IMF, or trade partners, and global market trends. Establishment is also one of the factors that has hurt the sovereignty of this country.

 

[Kianig89]

Çhina is getting irritated with us, we cannot cooperate with Iran, India tries to bully us , AfG is also downplaying us, Bangladesh does not care what we think, U.S. takes us like a tissue paper , we have gone down in pecking order in KSA & UAE list surely all of them cannot be wronged

 

[JattMaula]

A beggar still remains his own person. Pakistan is in dire condition but still in control of itself.

 

[IMMY69]

Çhina is getting irritated with us, we cannot cooperate with Iran, India tries to bully us , AfG is also downplaying us, Bangladesh does not care what we think, U.S. takes us like a tissue paper , we have gone down in pecking order in KSA & UAE list surely all of them cannot be wronged

Just one mistake...
Replace tissue paper with toilet paper

 

[The Bald Eagle]

To be honest, we aren't a soverign nation in true sense yet as we care a lot about other states opinion even before taking some basic rudimentary decisions.

 

[UP]

All institutes have been destroyed by the mafia establishment. mafia establishment is the real enemy of Pakistan. Till they go back to barracks, it will remain a failed country.

 

[FearlessRoar]

If Pakistan fails to pay its debts to the IMF, it may result in sanctions, but if it fails to pay debts to China, the consequences could be more severe. China could impose financial penalties or legal consequences for defaulting on its debts, further exacerbating Pakistan's financial difficulties. In extreme cases, China may seek to recover its debts by seizing or acquiring assets owned by Pakistan, including infrastructure projects, natural resources, or other strategic assets. That's why I'm considering how Pakistan will safeguard its sovereignty.

 

[Cpt. Rishwat]

You cannot make your own decisions when the money is not yours. External money comes with lot of conditions and clauses.

Agree with this. That said, however smart or dumb Pakistan might be as a population, it's not really fair to lay the blame there, as the decisions taken have never really been in their hands. If elected govts had been allowed to serve their terms consecutively, by now the public might have filtered out the really useless ones by trial and error. When the establishment steps in every time, then the establishment ultimately takes responsibility for success or failure.

 

[Nikhil_cric]

yes, the evil west which ensured south Korea stayed as one of the poorest nations in the world like it was in the 60s, the same evil west that ensured japan, taiwan, china, Botswana are plagued by a lack of growth and economic stasis.

or might it just be because Pakistan suffers from chronic mismanagement of the economy, because it has one of the worst brain drain problems in the world, because the people have low levels of scientific or critical thought, because investment in infrastructure has been virtually non-existant, because the concept of private enterprise has been destroyed, because its one of the few countries in the world where malnutrition is leading to stunted physical growth and people are getting shorter? no, it must be the evil west.

and even if we entertain this spurious hypothesis, what resources of Pakistan does the west exactly want to capture anyway, theres no material resources of any significant amount that the west cant just buy anyway.

IMF loan repayments. Those institutions have literally destroyed economies around the world. You don't need material resources when you can indirectly control sovereign nations by giving conditional aid and dictating where you can allocate capital etc.

 

[FearlessRoar]

PM sets targets for ministers to fulfil IMF conditions: Tarar​

Federal Minister for Information and Broadcasting Attaullah Tarar on Sunday stated that Prime Minister Shehbaz Sharif has given targets to ministers during the cabinet meeting to fulfil International Monetary Fund (IMF) conditions.

In a press conference at the Pakistan Muslim League-Nawaz’s (PML-N) Secretariat in Lahore, he said that the prime minister chaired a cabinet meeting yesterday where he set goals for all ministers for the next five years.

“Each ministry has been instructed on what short-term and long-term programmes should be, and it has been decided by the prime minister that the performance of every minister will be evaluated,” he added.

"The achievement of ministry targets will be monitored using the latest technology. Written instructions detailing the targets have been issued to all ministries."

Tarar stated that all ministries had been assigned targets aimed at addressing the challenges facing the country. He added, "The cabinet comprises experienced individuals, young talent, seasoned politicians, and technocrats."

He said that targets were established based on a realistic approach, such as reducing inflation and unemployment, increasing GDP growth, restructuring loans, and digitising the Federal Board of Revenue within the finance ministry.

Tarar highlighted that ministers showing exceptional performance would be commended. “A self-accountability system had also been developed, with modern IT interventions used to evaluate ministry performance,” he added.

The information minister elaborated on the targets set for various ministries. For instance, he said, the interior ministry was tasked with cracking down on illegal weapons, devising anti-terrorism measures, addressing illegal foreign residents, and combating smuggling.

Additionally, Tarar said that coordination between the federal and provincial levels, similar to the National Action Plan's implementation, would be ensured.

Regarding the law ministry, Tarar mentioned initiatives to enact laws safeguarding minorities and establish an e-portal for disseminating passed laws. A human rights report is scheduled for completion by September 2024, with a focus on law implementation, he added.

Tarar discussed targets for the Ministry of Industries, emphasising industrial development regulation and promoting the ship-breaking industry. He highlighted the potential of the minerals sector and set goals for mineral exploration and exportation.

He said that targets for the trade ministry included improving the ease of doing business and formulating trade agreements with friendly nations, adding that the education ministry was tasked with enrolling out-of-school children, increasing PhD scholarships, and devising strategies for skills development.

Tarar also addressed the privatisation of PIA and efforts to enhance the tax system. “Privatization of PIA would yield positive results on the country’s economy, adding that efforts were being made to overcome loopholes in the tax system,” he added.

He said that for the first time, businessmen who were playing a significant role in strengthening the country’s economy and who were big taxpayers had been rewarded.

“The austerity committee would submit a report regarding how to reduce government expenses to PM Shehbaz in the coming few days and in the light of which the premier would announce the austerity policy,” he maintained.

He stated that things would gradually improve and the government's vision was clear in providing maximum relief to the people. In response to a question, he mentioned that the government would endeavour to open offices of all social media platforms in Pakistan, as this would be very helpful in creating jobs. Addressing another query, he emphasized the importance of documenting the black economy in the country.

He criticized the Pakistan Tehreek-e-Insaf for focusing solely on political revenge during its tenure, adding that had the party adopted steps similar to those of the PML-N, the country would have been in a much better condition. He also lamented how the PTI had allegedly mismanaged the China-Pakistan Economic Corridor.

In response to another question, he assured that the tax net would be expanded, and people would receive good news in the coming days. He remarked, "Prime Minister Shehbaz Sharif possesses full potential and knows how to execute plans to achieve desired results."

Addressing another query, he highlighted the PML-N government's belief in taking practical measures, citing the construction of 12 motorways, generation of 12,000 MW of electricity, initiation of laptop and Ashiana Housing schemes, and averting the country from default.

He further stressed the importance of producing quality films at the local level and mentioned the formulation of a policy to promote art films. Tarar affirmed that the government would support talented filmmakers and sponsor the upcoming film festival in Karachi.

PM sets targets for ministers to fulfil IMF conditions: Tarar | The Express Tribune

Info minister says all ministries assigned targets aimed at addressing challenges facing Pakistan

tribune.com.pk

 

[FearlessRoar]

That's good, ministers are also under the control of the IMF.

 

[ElRaja]

IMF loan repayments. Those institutions have literally destroyed economies around the world. You don't need material resources when you can indirectly control sovereign nations by giving conditional aid and dictating where you can allocate capital etc.

no country is forced into taking on IMF loans, they are usually a last resort to patch foreign currency liquidity of countries which have structural imbalances which there is not enough political will to rectify.

and if you take the money, there is no rule which states that you have to squander that money.

private enterprise invariably generates a ROI which covers the loan expense, but give borrowed money to politicians who are not in any way liable for any misspending and invariable public finances become massive black holes of lost money.

 

[Mockingbird]

IMF loan repayments. Those institutions have literally destroyed economies around the world. You don't need material resources when you can indirectly control sovereign nations by giving conditional aid and dictating where you can allocate capital etc.

Restrictive debt covenants are a standard part of any loan agreement - the lender will always look to secure his investment by dictating terms. In other words - upto the borrower to take it or leave it.

As ElRaja mentioned above, IMF is the lender of the last resort for nations - you will be going to them when you on the verge of bankruptcy due to mismanagement & when nobody else is willing to lend you money. The reason it seems unreasonable is because the population of the mismanaged country will demand that the money be spent money on itself via subsidies or welfare programs, while the aim of IMF is capital generative projects which will provide return to its member investors (contributing countries). Again nothing wrong in what the IMF is doing from its own perspective.

Instead of blaming IMF, Pakistan will be better served by questioning why it had to approach IMF 23 times.

 

[Cpt. Rishwat]

Restrictive debt covenants are a standard part of any loan agreement - the lender will always look to secure his investment by dictating terms. In other words - upto the borrower to take it or leave it.

As ElRaja mentioned above, IMF is the lender of the last resort for nations - you will be going to them when you on the verge of bankruptcy due to mismanagement & when nobody else is willing to lend you money. The reason it seems unreasonable is because the population of the mismanaged country will demand that the money be spent money on itself via subsidies or welfare programs, while the aim of IMF is capital generative projects which will provide return to its member investors (contributing countries). Again nothing wrong in what the IMF is doing from its own perspective.

Instead of blaming IMF, Pakistan will be better served by questioning why it had to approach IMF 23 times.

Why would Pakistan question any of it? The country has no history of a successful democratic process, so the establishment doesn't really have to explain itself to anyone. Maybe some figures who are part of it have done very well from the IMF loans.