That the UAE has rolled over the remaining $2 billion of the $3 billion deposit with the State Bank of Pakistan, having rolled over $1 billion in January, seems one of the more positive results of Foreign Minister Shah Mehmood Qureshi’s visits there, but it hardly seems fair to expect him to visit Pakistan’s other major creditors, which include France, Germany and China in order to continue lending. There is still the conundrum of what is to be done about the international financial institutions (IFIs) which are the country’s biggest lenders. The PTI government has followed its predecessors in borrowing heavily, having borrowed $3.119 billion in the first nine months of the current fiscal year, from the commercial markets. Multilateral creditors, or IFIs, have disbursed $3.19 billion over the same period. Bilateral creditors have disbursed $358.25 million.
All have their disadvantages. Going to the money market means paying commercial interest rates. Bilateral creditors want borrowers to toe their diplomatic line. The UAE recently openly spoke about mediating between Pakistan and India. It would be unnatural if it did not use the deposit rollover to further its objectives, while speaking about the recent on-off trade reopening that Pakistan botched with India. Borrowing bilaterally means a corresponding abridgement of national sovereignty. IFIs not only impose a political agenda which corresponds to their largest contributor, but as our experience with both the IMF and World Bank have shown, they also impose a punitive economic agenda, forcing the government to take steps that will harm it politically.
The PTI’s claim that this was all the result of the misdeeds and corruption of its predecessors will seem a little thin now that it is past the halfway mark of its five-year term. There should have been some movement towards an improvement of government finances. Instead, it seems, they are only getting worse. The PTI, it seems, is not bringing about any improvement in the situation.