In two and half years of the PML-N government, total public debt has officially increased by Rs4,200bn, recording an increase of nearly 29pc. In absolute terms, the addition to the net outstanding public debt in this period is by far the highest in Pakistan’s history.
The biggest vulnerability under CPEC is that whereas approximately $25bn of new foreign loans will be contracted, the earnings of the projects will mostly be in rupees. It is important to remember that the East Asian crisis in 1997-98 was not caused by sovereign defaults on external debt by Indonesia and Thailand, but by the unavailability of foreign exchange to private borrowers and investors to repatriate capital. The bottom line: future repayment of foreign loans depends critically on increasing Pakistan’s export earnings. And it is here that the government’s absence of a clear-cut and viable strategy is most apparent.
The unprecedented amount of external debt accumulation by this government, and its nonchalant and unprepared approach to the debt dynamic under CPEC, has raised concern amongst independent observers — and focused minds within the security establishment. Is Pakistan being subjected by economic hit men within the PML-N government to the template laid out in John Perkin’s book Confessions of an Economic Hit Man (whose new, revised version has just been released). In revelations by Mr Perkins, it is alleged that the US government through myriad agencies and multilateral institutions such as the IMF and World Bank, and a network of global consultants, contrives to make countries heavily indebted as part of a strategy to exert control and influence. Ahmad Jawad