Contours of the economic policy of the newly elected Pakistani government are beginning to come into focus. After weighing various options, it appears Islamabad has decided to seek $12 billion or more in loans from the International Monetary Fund (IMF). Second, the government announced that it would implement measures to facilitate remittances from overseas Pakistanis to increase foreign ex-change reserves.
Finance Minister Asad Umar met the IMF chief Christine Lagarde in Indonesia last month where he made a formal request for a bailout package. It will be the 19th IMF handout in Pakistan’s history and will no doubt come with stiff conditions. A team from the Fund is expected in Islamabad on November 7 to review Pakistan’s economic situation and lay down the conditions. IMF loans do not come cheap; it is almost like handing key economic decisions to foreigners for the duration of the loan agreement.
Speaking to the media on October 13, Umar said the government will have to take difficult decisions. He admitted these would be painful for the people but insisted they are necessary under international commitments to get out of the current dire economic straits. In fairness to the new government, it has inherited the economic mess from its predecessors but it must now deal with it.
Prime Minister Imran Khan’s government has not ruled out seeking help from friendly countries but so far this has not resulted in any significant amounts coming in or being pledged. During his visit to Saudi Arabia — the second in four weeks — to attend the Future Investment Initiative (FII) conference in Riyadh (October 23–24), it was announced that Saudi Arabia would provide $3 billion in foreign currency support for a year to address Pakistan’s balance-of-payments crisis. The Kingdom also agreed to provide Islamabad a one-year deferred payment facility for import of oil, worth up to another $3 billion. This will remain in place for three years and will be reviewed thereafter.
Addressing the FII conference on the opening day (October 23), Khan outlined Pakistan’s potential. It has 100 million people under the age of 35, he said. The country’s enormous mineral wealth — estimated at some $10 trillion — has remained untapped because of the volatile security situation. This is the direct result of the US war of terror resulting in the destabilization of Pakistan and the resultant social problems.
The security situation has finally been brought under control, thanks to the sacrifices of Pakistan’s security forces. Khan also admitted that corruption has been a major impediment to overseas investment in the country. He stated that his government was tackling this problem as well.
The Saudi pledge of $3 billion would take care of only one-fourth of Pakistan’s immediate needs. Imran Khan may also seek more help from China that he plans to visit in the next few weeks after visiting Malaysia. He has repeatedly stressed that he would like to avoid an IMF bailout package, aware that it would come with stiff conditions, but whether he can do so is a different matter.
His other option, to appeal to overseas Pakistanis, has not yielded the amounts the new government had hoped for and in the needed time frame. There are several impediments in the way and the new government, if it wishes to tap into this potential, must address these.
On average, overseas Pakistanis remit between $20–23 billion annually through banks. An equal or larger amount is remitted through unofficial channels. Thus, there is enormous potential from this source.
Pakistan’s export earnings, by comparison amount to some $20 billion annually. The government recently announced several incentives to encourage export growth. This is sensible but the government has to address the concerns of overseas Pakistanis as well if it wants to reap full benefits from this source.
So far, overseas Pakistanis have been treated as cash cows. Whenever a calamity has struck Pakistan, appeals have been made for help. This emotional blackmail has repeatedly worked but it would be unwise to rely on it indefinitely. Instead, sound policies must be put in place in order to attract investment from overseas Pakistanis, just like any other foreign investors.
There are an estimated 10 million people of Pakistani origin that reside and work in different parts of the world. The vast majority — 60% — works in the Muslim East. This is also the group that is the most marginalized and mistreated. Largely poor unskilled laborers, their plight is terrible. They are grossly exploited by employers in the Muslim East and have few if any rights.
Those residing in Europe and North America — the US and Canada — are quite affluent, educated, and well established. These people not only have vast resources but also much-needed skills that Pakistan urgently needs. So what is preventing them from investing in Pakistan?
In September, Pakistan’s Chief Justice Saqib Nisar touched on this by saying that overseas Pakistanis are the victims of land and property mafias, often their own relatives. While he urged the government to address this issue, he did not spell out what needs to be done. Justice Nisar spoke a day after Lord Nazir Ahmed, a vocal member of the British House of Lords, had raised the same issue in his widely televised speech in Multan.
Here is what is urgently needed. The government must set up separate courts that would deal exclusively with land and property disputes affecting overseas Pakistanis. Clear instructions must be given to the courts to settle these matters within one year. The present court system, bequeathed by British colonialists, is outdated and so constipated that nothing is resolved for decades. Anyone who has visited these courts comes away thoroughly dejected. It is a nightmare to enter these chambers of horror.
If this issue is addressed in earnest, the Pakistani government would see that overseas Pakistanis would invest heavily in the country’s development. After all, overseas Chinese and Koreans did exactly that with spectacular results.
Emotional appeals or band-aid solutions would no longer work. It makes little sense for people to struggle and strive to earn a decent living and then see their hard earned income usurped by thieves and mafias, even if they are members of their own family.
Overseas Pakistanis are not asking for favors; they are only asking for fairness. Is that too much to ask?