When the peasants were protesting for bread before the French Revolution, pressing the rulers in slumber to pay attention to food shortages, a one-liner – “Qu’ils mangent de la brioche” (Let them eat cake) – from Marie-Antoinette, the queen of France at the time, became an indelible part of history.
The subsequent French Revolution was ruthless and bloody which saw many of the aristocrats, including the king’s Austrian queen Antoinette, sent to the gallows. Rest is history.
Even though controversy still surrounds this historic attribution to Queen Antoinette, the words remain true to this day. Reason: a disconnect between the rulers and the ruled can change the course of history. Empty stomachs push the population to the brink and to extremes of human behavior.
A reflection of the French Revolution-era is visible in today’s Pakistan where the government of the day is delusional and in a state of extreme denial. The extremes in Pakistan’s economic policy are known to all and sundry, except the rulers (usually it matters less as to who is in power) who are (and have been) pursuing self-defeating economic policies. The “rented” ministers and “imported” Governor of the State Bank of Pakistan sound like clones of Marie-Antoinette. In fact, they may be a step ahead of the French Queen.
Pakistan’s economic policies under the watch of Prime Minister Imran Khan may have contributed to increased tax collection, and high growth in exports, but the costs are long-term and unbearable for the working class. Reason: the country is registering a growing current account deficit. Some interpret it as a good sign because the net effect of growth in exports is neutralized in a limited way by an increase in the current account deficit.
Economists may have their interpretations for such a trend but Pakistanis at the receiving end are no longer hiding their frustration. Not just that, reports have started appearing in media that the country may have to apply for yet another IMF bailout package because the current package is not enough to save its tanking economy.
“Pakistan’s gross financing requirements are estimated to go up to $30 billion in the next budget for 2022-23, leaving no other options for the government but to seek a fresh IMF loan after the expiry of the existing program in September 2022,” reported The News International, quoting unnamed government sources.
The IMF has assessed that Pakistan’s gross financing requirement will be standing at $28 billion in the next fiscal year 2022-23 but keeping in view the higher current account deficit projections, it is expected that the overall external financing requirement will cross $30 billion mark.
The external debt servicing requirement is projected to touch $13 to $13.5 billion in the next budget 2022-23 and the current account deficit may not go down from $12 to $14 billion. The current account deficit for the ongoing fiscal year 2021-22 is projected to remain around $15 to $16 billion, while the external debt repayments, including principal and mark-up, will be standing at $12.4 billion.
The current account deficit stood at $7.1 billion for the first five months (July-Nov) period of the current fiscal year and was all set to hover around $1.5 to $2 billion for December 2021, so it might go close to $9 billion for the first half (July-Dec) period of the ongoing fiscal year 2021-22.
Pakistan’s performance has been dismal in food productivity as well which is adding to its import bill. Last year it imported more than 7 billion dollars worth of food. “I am not an economist but don’t you think Pakistan will not need IMF bailouts if it becomes self sufficient in food production? Don’t you think it will save the country 7 billion dollars in foreign exchange whereas the current IMF program is for 6 billion dollars,” asks Azra Sultan, a student at New York University. Azra’s opinion may or may not be correct in many economists’ opinion but economic experts do see the country’s economy in the deep red.
“Pakistan’s economy is not in a good place – per capita income has not risen in 3 years (in fact down slightly). Even over the last 20 years, income per capita has grown at a paltry 1.9%,” says Atif Mian, a distinguished economist and professor of Economics, public policy and finance at the Princeton University.
“The bottom line I want to emphasize here is that Pakistan lacks a coherent macro growth strategy, and one that can be followed up by a competent institutional structure,” Atif wrote in a recent tweet. He added one reason for Pakistan’s failure to come out of its deficit and debt trap is appointment of incompetent people to key positions, Imran Khan’s government being no exception.
“The country needs a functioning nervous system,” he added. While Mian’s logical suggestion is very much doable, but it may be a far-fetched dream in a country where the governments are compromised and blackmailed by its supporters and sustainers inside and outside the parliament and where the government itself shows little belief in merit. In a nutshell, it will need a revolutionary government to reset Pakistan’s course. Until then, let Pakistanis eat cakes on borrowed money!