From Daura-e-khas to Daura-e-Karz: Pakistan's inhumane negligence and the world's Altruism.

Not long ago, Pakistan's one of the most distinct economists stated that Pakistan has deep-seated, unresolved structural issues exacerbated by poor management and governance. Macroeconomic instability, high inflation, inadequate public services, poverty, and a worsening debt profile are all apparent results.

It still resonates aggressively two decades after it was first published. For many decades, Pakistan's military and civilian governments followed policies that made Pakistan's structural problems worse and kept them there. Consequently, their foreign policy and economic management intersected to increase reliance on external financial assistance, aid and borrowing rather than finding a viable development path by relying on their resources and maintaining economic sovereignty.

Overstretching oneself overseas while neglecting one's backyard is a recurring trend. Government officials and even sections of the media now celebrate securing funds/loans from friendly countries and international financial institutions as major policy successes. Living off the money of other people is not a great accomplishment for a country, but these claims don't take that into account. Even though the ruling class is given a false sense of security, the country's economic problems still need to be fixed.

The repeated economic crises in the country are caused by governments spending more than they can afford, not being able to raise money from within the country, and spending without limits. Inflation, macroeconomic instability, and balance-of-payments crises have all been linked to the fiscal deficit. Dysfunctional economic policies have managed the twin deficits of the budget and balance of payments over the years. A significant contribution to this was made by the country's external alignments.

A Cold War alliance between Pakistan and the West provided policymakers with the means to finance deficits through soft loans in earlier decades. By avoiding reforms, raising sufficient revenue, or taxing themselves or their support base, successive governments were able to avert reforms dominated by rural and urban elites. The availability of concessional assistance as a result of the country's foreign alignments both encouraged and enabled the dependence on external resources to finance development and consumption. The close alliance between Pakistan and the US during the Cold War was accompanied by military pacts that cemented the alliance. Pakistan received Western aid as a strategic reward for its crucial role in resisting and rolling back the Soviet occupation of Afghanistan during the 1980s. Following 9/11, Pakistan became a front-line state once again, and its strategic importance increased for Washington, which mobilized international resources to provide financial resources and IMF financing for budgetary support and debt restructuring to ease the economic difficulties of Islamabad.

This led to an illusion of economic progress during the period of Gen Ziaul Haq's and Pervez Musharraf's governments. As a result of 'borrowed growth,' Pakistan could have avoided such deleterious consequences if it had used its fiscal space to implement reforms to address its structural problems. In order to sustain an economic growth rate greater than the population growth rate, widening the tax base, documenting the economy, diversifying exports, and increasing savings are necessary. Did not happen. 

The Pakistani economic leaders were able to put off reforms and stick to policies that did not work because Pakistan had access to money from outside the country and received significant amounts of money from Pakistanis living overseas. Also, concessional financing ran out, and expensive loans from abroad and within the country took its place. This "borrowed growth' resulted in the accumulation of an enormous amount of debt that was both unsustainable and unsustainable. 

During this time, the country took on too much debt at home and abroad, which has caused the economy to slow down to this day.

In recent years, reliance on the West has given way to dependence on close strategic allies China, Saudi Arabia, and Gulf states, which have provided financial assistance to bail the country out of economic and liquidity crises. Rollovers of debt and deposits in the central bank have been among the methods used to shore up reserves. The announcements made last week by the UAE and Saudi Arabia are the most recent example of this. It emphasizes the intersection of foreign alignments and financial assistance to overcome the economic crisis once more. It also shows how governments continue to look outside the country for help when the economy is on the verge of collapse. The fact that the current IMF program is Pakistan's 23rd is further proof of this.

The practice of seeking 'lifeline' funds from friendly countries has become so ingrained in the political culture of the country that few, if any, in positions of power or authority question the legitimacy of the country's continued reliance on foreign aid. In this way, the failure of economic governance is reflected as the country lurches from one crisis to another without being able to prevent the next one and relies on temporary solutions from abroad to address its ongoing financial difficulties. First and foremost, this method reduces the country to the pitiful position of a beggar whose economic survival is dependent on the generosity of others rather than its own efforts.