The politics of relying on someone else’s assistance has always been the central feature of economic management in Pakistan. This politics of borrowing from international lenders and friendly countries to cater to the balance of payments and budget deficits has permitted the country’s governing elite to avoid long-term structural reforms in the economy. However, focusing on quick fixes creates a momentary illusion of good governance. This has led to an exorbitant rise in external and internal debt, which translated into high-rocketing inflation and a storm of indirect tax.
Although, getting aid is not something unusual given the economic integration and cooperation between countries. However, the utilisation of aid is what matters. In Pakistan, every government, military or civil, prefers the politics of quick fixes and direct foreign aid towards short-term projects to keep their voters happy. They never utilise this amount in human development projects. Perhaps, they should consider enhancing the outcome of social indicators such as education, health, long-term investment, energy, etc. Moreover, a sharp increase in their consumption to revenue generations and unsustainable resource generation and management has exacerbated the economy. Simply put, if history is a guide, foreign aid and hence a borrowed growth has proved a curse for Pakistan’s economy. Instead of borrowing, the government should bring widespread reforms and broaden the tax net, diversify the export base, and take steps to document the underground economy. Otherwise, the country will remain trapped in a vicious cycle of borrowing, which will put a strain on the long-term growth and development of the country.
Shah Fahad Khan
Islamabad
