Will Pakistan be Bankrupt by 2020?

Pakistan is a growing economy and is the 25 largest economy in the world. Even though India and Pakistan became independent a few days apart from one another, Pakistan could never compete with India on the basis of the economy. Pakistan has been and is facing problems within its territory. Internal conflicts, attacks from harbored terrorism, the Army is trying to topple the elected Government ( Pakistan was under military rule during Pervez Musharraf's tenure). These are some of the problems halting Pakistan's growth. Having said that, Pakistan continues to strive. Although Pakistan's debt is relatively small, which is USD 380 per person. Pakistan has allocated 45 percent of its GDP for loan repayment. An internal crisis can lead to Pakistan using up this allocation, leading to a default. Agriculture is showing negative growth, and exports have taken a massive hit. The problem is that 50 billion USD are due for repayment . This loan repayment situation remains until the end of the coming year. So Pakistan's economy, if withstands this pressure, it is all good, but if it cannot, then a situation worse than the bankruptcy will loom large. The economic issues will attract more pressures on Pakistans nuclear program. Pakistan needs a Houdini act to get out of this problem. It will need to trade and get aid from China. I think they will pull it off...unless China looks away. The problem here is not about the debt. Pakistan is totally dependent on foreign aid, especially from the US, to pay interest on its foreign debt. While India actually does commerce to pay the debt. Given the dwindling US aid and dwindling foreign exchange from Arab countries as Arabs themselves are in economic turmoil, Pakistan is in a dire state. Pakistan has been begging from Paul to pay Peter's debt till now. Now Paul finds that Pakistan deceived him and made a big fat fool of him. They hosted Osama and continue to host the Haqqanis. So how will Pakistan pay to Peter now, even though the amount is small? As to what will happen? What happens when you don't pay your loan or your credit card bill? You start getting calls/house visits from the recovery guys, and finally, the bank seizes whatever you have to recover their money. In this case, China is the bank. If you think that this is a wrong assessment, please check with Sri Lanka, Kenya, Zimbabwe,Angola,Venezuela, Next in line is Pakistan. Welcome to The Atlantis Report. The GDP of Pakistan is the GDP of its army which owns and runs everything starting from the army to civil petrol pumps, hawala banks, export import firms etc. The divide between the wealthy army, it's stooges and their terrorists organisation on one side and the common populace is wide and deep. Economic development is based on donations from fundamentalists elsewhere. A country's economic development can never thrive on donations. Almost all financial indicators are seeing a downward trend. The growth rate fell by almost 50 percent, from 6.2 percent to 3.3 percent. It is expected to go down even further to 2.4 percent next year, which will be the country's lowest in the past ten years. The Pakistani rupee has lost a fifth of its value against the dollar since the beginning of this fiscal year. Inflation is expected to hover around 13 percent over the next 12 months, reaching a 10-year-high as well. Pakistan's debt is increasingly high, and it consumes almost a whopping 30% of Pakistan's annual earning. All of this is because of probably not so aligned priorities of Pakistan. Look at the disproportionate spend on defense as compared to India. If we talk about only economic bankruptcy in the purest sense, then the US, China, etc. have much more debt compared to Pakistan. But that does not reveal the whole picture. Right now, they have gone with 10 Billion $ bailout. Six months from now, they will require another 7 to 8 Billion $. I don't know who will be giving them this money. Only the US can do something if it wishes to. But at what terms! Will Pakistan this time make a complete sale of its governance to the US? In that case, China will be ousted. Will Chinese gulp down being thrown out? A war coming again inside Pakistan as the public will be angry facing massive inflation? You will know if the visa - passports of army officers, their kids, and bank accounts outside Pakistan become active , because they will be the first to in the case of a Bankruptcy. The biggest worry for Pakistan is to pay 100 billion dollars to China by 2025, which we already know not gonna happen. As of June , the forex reserve of Pakistan stood at 16 billion dollars, out of which only 6 billion dollars is owned by Pakistan's banks. Pakistan rupee is also at a historic low of 133 to 1 dollar, which really causes worry for them. On the bright side, it is suitable for export and useful for investors too, but Chinese debt may complicate things, and lack of business growth will worry investors further. If things go at the current rate then definitely yes, Pakistan is bancrupt.. Consider the following Official military spending of Pakistan is 7% of GDP but in reality it more than 10% . Almost 70% of Karachi stock exchange is military industrial complex . Military service is the only major source of good middle and high income jobs hence its an aspiration. For eg the amount of land officers get as they keep rising above the ranks is incredible. The separation of “Mullah” (or Taliban) even in the General ranks is non-existent now . Civilian and Judiciary can be overridden by Military . Pakistani military recruitment is extensive and covers all regions of Pakistan and is very good at training personnel according to its ideology. Nothing wrong it that’s the way of the world . Pakistani primary ideology involves competing/fighting with India. For example inspite of loss in all 4 wars (one of them resulted is formation of Bangladesh) it continues to fight as it considers not fighting as a loss. As long it fights it considers a win. Indian economy is growing and its defense spending is constant around 3% of GDP like other countries. As the India economy grows, so will defense spending in absolute terms. And Pakistan military establishment will be under pressure to increase. Since Pakistani military industrial complex gains to make more money it will succeed in increasing its budget. Pakistani state’s exists for the Army. The incentives are heavily skewed in favor of feeding the Army ideology and economy and will work till it won’t. There are very few external shocks that can rock Military apple cart. But eventually it will happen, and there are things that can be done to speed it up. Economically debt to GDP is 75% which is above the stipulated level . Hence if this continues further for some more years it is sure to become bankrupt like Greece has become. Pakistan is more dependent on the doles provided for servicing it's loans. It is waiting for when it is time for loan from IMF and China. No country is coming forward to invest in Pakistan and unemployment is raising to a huge proportion. Politically the country is not well assimilated. Pushtooisthan uprisings resulting in purging and killings by sending soldiers to Waziristhan is a case in point. As many as 50000 Pushtoons have fled Waziristhan to Afghanistan. The Baluchs who are in constant war with Pakistan, disgruntlement in Sindh, the Azad Kashmir defiance and Gilgit-baltisthan unrest shows Pakistan failed to unite it's own people. Their ethnic cleansing and extra Judiciary killings has made them disunited. Socially Pakistan which is a Sunni majority state do not recognize any other community including Shias. Their hatred to all other communities other than Sunnis has made the metabolism of accommodation difficult. The people do not show united posture. The loss of consistency in having either a Military dictatorship or democratically elected government is also costing Pakistan dearly. The foreign diplomats visiting Pakistan first makes it a policy to visit the army chief before meeting the president. There is a doubt who wields power in Pakistan. All this clearly indicates that Pakistan may become irrelevant in the near future or even bankrupt unless they take necessary measures immediately. The Solution; A bailout from IMF and few good treaties with USA (also starts fund from the USA too). A bailout from the IMF is ten times better than china because the IMF will never demand the land of Pakistan for lease or force them to follow their foreign policy. Furthermore, western countries (especially the US, UK, and Germany) will do business with any country backed by the IMF but certainly not China. Why IMF refuse to bail out Pakistan? The simple reason is that most of that money will be paid to china since they owe a considerable debt to Pakistan, and IMF is backed by the USA, so they will never allow funneling their money back to China. A Chinese bailout will make the entire west take a step back. The terrorism issue is secondary to the west. Many countries have recovered from the position in which Pakistan currently is, so it is not exactly a point of no return. Few right decisions can resolve all issues, but they are in dire need of a fix. Pakistan may not become thoroughly bankrupt by 2020, but there is a possibility by 2030 or 2040 if they do not get their act right now. As per the current situation, they are getting more & more dependent on China. China will use this situation fullest to its advantage. In the meantime, America will also try to get it's dollar dependent ally ( Pakistan ) back from China & also play the double game by encouraging India to counter China. Pakistan should focus on economic reforms, job creation & stop funding terrorism. If not, then Pakistan eventually 10 to15 years down the line will not only become a bankrupt puppet of China but will be heading towards total collapse as a nation. But the real bankruptcy is in bankruptcy of ideas . To keep Pakistan United as well as to keep themselves (Pakistan's Punjabi Army) rich & led a luxurious life, they concluded that they should create a sense of religious justification combined with Islam type fear among citizens. For this, they want to keep Kashmir issue burning alive. The overwhelming debt Pakistan is taking from its so-called 'friends' is sucking it dry. Also, the military, which consumes 40% of its economic share at the expense of its other basic needs, is a major internal curse. Ideology, Extremism, bad policies, inner struggle, etc. will cause Pakistan to become a poor and unstable nation by 2020. But, I say 'no' because foreign aid will keep coming to Pakistan, and by the right use of funds, any nation can change its status economically. But it is highly unlikely that such rapid change in a country as radical as Pakistan might occur. So I say better change today than tomorrow. Pakistan's present Debt to GDP ratio is around 75 %. Pakistan is nowhere close to being as indebted as some other countries, but here's the thing: when you say "GDP," you refer to the country's total income, not what the Government has access to. So this undermines the Government's ability to repay debts, even more in the case of Pakistan because collecting taxes is a huge problem there. Their economic condition has been dull for quite a while now, in fact, Pakistan almost defaulted in 2013 if it weren't for a $6.6 billion loan from the IMF. However, with recent improvements in policymaking by the government, Pakistan is very slowly moving away from the prospect of going bankrupt. In fact, S&P (a credit rating agency) improved Pakistan's credit rating to B from B- recently. Nevertheless, they're still quite vulnerable to any sudden changes. Too many economic causes like heavy debt burden, low industrial base, very few exports, current account deficit, trade deficit over a more extended period of time, low skilled labor, heavy dependence on the agricultural sector, low level of mechanization. Societal causes include low-level education, lack of health facilities; very few have access to financing facilities, and rampant conflicts. Few but vital political causes: Highly diverse communities with too many ethnic groups and too many religious groups. None of them is controllable by any single faction. While no single party gets successful against the challenge of uniting. Eight wars in seven decades. There has to be restraint from the international community with certain legal initiatives to give a break for a few decades before another war breaks out . Pakistanis have a knack of surviving extreme situations when in hard times. The cities like Lahore and Islamabad are being developed on a rapid scale. If they are able to tackle their security issues, they will be able to get their economy back on track. But if they don't….. Their situation is Grimm as ever. They have problems everywhere they look, and they might be looking at a possible disintegration of smaller but stronger independent states. This was The Atlantis Report. Please Like. Share. And Subscribe. Thank You.









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