It is not surprising that Pakistan is facing yet another financial crisis. As has been pointed out before, the Pakistani state financial establishment has mismanaged the country’s assets for as long as one can remember.
Pakistan, being a textbook example of a failed state, is riddled with political and economical landmines which force the country to seek bailout from international institutions within very short intervals. The Islamic Republic, in 2013, received their 14th bailout package from the IMF since 1984. With its reserve bank increasing interest rates, and state officials and political patronage ravaging Pakistan’s economy, it is no wonder that the nation keeps seeing a financial crisis.
China, possessing an exploitative foreign policy and a neo-colonial approach to foreign aid, will continue to undermine the US dollar by bypassing it with their own currency in trades conducted within its sphere of influence. The recent shift or rather submission of Pakistan to the Chinese sealed their financial fate. Pakistan is now trapped in a vicious debt cycle stipulated by Chinese investments into their country.
Thus, though their GDP has reached a new high in recent years, the reality is actually very grim. A debt-driven economy where most of the investment comes directly from a foreign state, coupled with the lack of productivity in Pakistan’s domestic market will surely hamper, if not paralyze their import abilities as their foreign reserves will deplete in an irreversible rate. Thus, it is no surprise that the government has announced that it will approach it’s diaspora abroad to buy government bonds to boost their foreign reserve stocks which have dwindled to its lowest in three years.
A Pakistani spokesperson stated that these bonds will give higher returns to expats than what they are getting in their home markets. Their target is to raise $1 billion with the first installment target of $500 million. This form of crowd funding is unprecedented in any developing economy. Other countries have issued such bonds in times of financial crisis but this attempt of private profit at the cost of public risk is not new in Pakistan.
The image of Pakistan approaching their citizens to ‘give what they can’ reminds one of the time when Pakistan approached it’s citizens to give jewelry and cash to aid their war effort against India at the time of Kargil.
Edited by- Rohan Sachdeva