Once again, Pakistan has supplicated China’s financial aid in the amount of $1 billion loan to buffer the dwindling reserves, bringing Islamabad’s increasing dependence on Chinese bilateral loans to a voluminous amount of $5 billion in debt. In the wake of the latest precipitous currency devaluation that has left the economy staggered, it comes as no surprise that the establishment is breaking out the old begging bowl. Where the justification fastidiously accorded for the devaluation was that it was a necessary measure to stabilize the country’s fast plummeting foreign currency reserves, it seems that plunging the country headfirst into gaping inflation was but in vain. Where Beijing’s attempts to prop up Pakistan’s economy is -partly- a mutually beneficial enterprise in the interest of funding the desperately needed power and road infrastructure for CPEC, pivotal to Beijing’s Belt and Road initiative, the pitfalls of shackling the economy in copious foreign debt have to reckoned with.
It is a tragic farce where the establishment refuses to learn from history, as every passing government resorts to quick-fix economic crutches to resuscitate a flat lining economic regime. Pakistan’s economic policy has historically fettered itself to international patron politics, enlisting the help of seasonal allies and international financial institutions to bail it out. At this economic downturn coupled with devaluation, the country is not only facing escalated inflation, the value of the mounting foreign debt has swollen as the local currency has depreciated and the corresponding interest rates have also amplified.
With the growing speculation of appealing for yet another International Monetary Fund bailout, the country is ostensibly at the bidding of its lenders. While the increased borrowing has rendered the country financially shackled, the political implications of being beholden, be it to a world-body or an amenable ally are even more worrisome, for the fine-print of international borrowing comes with according the lending organization a peremptory space in formulating policies and overall economic management of the country. While with institutions like the IMF such stipulations are mandated, inter-country lending comes with less obvious, yet very similar interventionist prerogatives.
What is discernible is that successive establishments have dug the state into an economic pothole that it has no chance of escaping till it makes a concerted effort at becoming economically self-sufficient. The crux of the matter remains that the country has once again found itself at the feet of lending supremacies incurring further debt it has no foreseeable chance of repaying, placing the financial and political administration of the country at the whims of neo-imperialist powers.