Pakistan’s Death Trap?

Brig Samson Simon Sharaf (R)

SamsonBy the time Pakistan’s present Parliament hangs its gloves, the economy will be in a tailspin. Barring untoward incidents that may cause a delay in the forthcoming election schedules, the presentation of the financial budget 2012-13 will be left to a new care taker government, in all probability an extension of the economic team already in place. Deprived of time and on-job expertise, it will be an uphill assignment to make major readjustments to an economy already melted and sunk.


The Debt Trap

The first challenge for the caretakers and the new government that comes to power after the elections will be the debt trap. Debt mismanagement by the present government during its tenure needs to be marked with five black stars. From 2008 to 2012, Pakistan’s total debt has jumped from Rs 6,037 billion to Rs. 12,002 Billion, a walloping 108% nearly doubling all that Pakistan borrowed in 61 years. This unprecedented borrowing was cleverly folded into the misleading term of Debt-GDP Ratio.


The government borrowed recklessly from external sources only to waste away into a completely mismanaged and corrupt system The benefits of this inflow could not be passed on to the people. External borrowing increased from Rs. 2,762 billion in the first 61 years to Rs. 4,364 billion in the past four years, an increase of 65%. As a departure from its Debt-GDP Ratio mantra adopted in the past, the government now appears to point realistically towards revenue generation capacity, forex reserves and export earnings. Given that Pakistani currency in the same period has shed 31 rupee against the dollar, this amount will continue to rise. As an option the government will borrow to pay loans. Another option would be to increase Pakistan’s exports and drastically cut out the import bills. In view of the recession, energy crisis, high cost of transportation and a big part of value added exports shifted to other countries, this is impossible unless the environments improve over successive years.


Government domestic borrowing during the same period has jumped by 133% from Rs. 3,275 Billion to Rs. 7,638 Billion. This has been at the cost of private sector that has not been permitted to grow besides other factors that discourage investments and entrepreneurship. This has led to high levels of inflation and devaluation of the rupee against the dollar. Pakistan’s debt trap is complete.


The fact that despite its charter, the governor of the central bank is a political appointee lacking the wherewithal to challenge the government’s policy impacts particularly on the banking sector that can now ensure a bigger say in the government’s decision making by becoming a major stake holder. Effects of these strains on the public money are visible in the interest rates and cash starvation for local industries.



Where has this amount of Rs. 5965 Billion borrowed by the government till June 2012 gone? As an estimate, this government has borrowed Rs. 33,139 against every Pakistani. Overall, it places every citizen of the country under a debt of Rs. 72,000 likely to grow by June 2013. Devaluation compounds debt. The situation forced a British MP to comment on the viability of donating tax money to a country whose majority of parliamentarians do not pay taxes. Chairman NAB commented that Pakistan looses Rs.6-8 Billion on daily basis to corruption. He has also alluded to recovering trillions of rupees in his leaked letter to the Presidency. This amounts to Rs. 2190-2920 billions per annum, many times more that Pakistan’s combined debt in the past four years. Why is the chief whip of Pakistan’s anti corruption campaign constrained to tame this huge corruption cycle, particularly to redeem his record as a soldier of integrity and high honour and someone who always stood up for civil liberties?


It appears that everything is worked to a plan. All appointees of constitutional positions have been appointed belatedly and in fits and starts after filling the lower positions with political appointees and moles. So once these apparently aging and honest heads are appointed, the pressures so generated are too much for them to absorb. Controversies are then generated through disinformation and selective leakages to create an inaction that suits the powers that be. As a result, entire organizations with constitutional mandates have become contentious. National Accountability Bureau and Election Commission of Pakistan are two prominent case studies. Tainted and harmfully suggestive information leaked to media invariably tempts it into hot breaking news and telemarketing. As a result, monuments of inertia and engines of corruption manage to shift the attention of the people to a point away from the eye of the storm. Just like the Chairman CEC, the Chairman of NAB has also contended that faced by corruption within, they alone are unable to act as Lone Rangers for the aspirations of the people.


With the figures quoted above, where is the Federal Board of Revenue and Provincial Revenue Departments? The fact is that they have miserably failed to bring tax evasion and non documentation to the book. They neither have the desire nor the will to book these huge slippages because of rampant corruption at all tiers. Sales Tax rather than become a Value Addition for documentation has been reduced to a consumer unfriendly levy used to bloat tax collection figures. Why is a country that cedes Rs. 2190-2920 billions per annum to corruption be unable to collect enough revenue to stabilize its budgetary deficits and currency?



It has always been maintained in these columns that Pakistan’s energy crises are artificial and selectively generated to exercise a deflationary control over Pakistan’s economy. This is what happened when in 2007, fuel subsidies were removed and circular debts allowed to pile. Pakistan’s growing economy was halted in tracks and manipulated to recede.


As a tip of the iceberg, a few months back, NAB succeeded in blocking the scandalous agreement of $5 billion between PSO and Bakri Trading Company over import of furnace oil. This commodity is utilized by the entire industry and IPPS that generate electricity. Any swing in the prices of this commodity has a direct effect on the consumers due to the pricing mechanism of OGRA. Considering that this was just one deal that caught the eye of NAB, it can be assumed that many more skeletons can be brought out of the cupboard. Lt. General (Retired) Shahid Aziz’ disclosures on media and his book  about a proverbial PSO investigation that broke the back of the camel is set to open a Pandora’s Box on the activities of the manipulated energy sector.


Pakistan State Oil is Pakistan’s largest energy company currently engaged in the import, marketing and distribution of products including fuels, petrochemicals and lubricants. It controls 78.2 % of the entire Pakistani black oil market and 54.3% share in the white oil market. Hence when PSO moves, the entire country shudders.


PSO has grown since 1974 through merger of Pakistan National Oil, Dawood Petroleum Limited and Premiere Oil Company to its present shape in 2004. As a government controlled autonomous organization, its role and efficiency is crucial to Pakistan’s energy sector eclipsing the two arms of the Sui Gas companies and Pakistan Petroleum Limited. Being the sole importer of petro chemicals, fuel and byproducts, its ability to negotiate pricing mechanisms at source and dissipate the same to its clients and consumers is therefore worth a scrutiny. Corruption can only work in concert with local refineries, petro chemical producers and OGRA. It is clear as daylight that the Ex Chairman NAB during his tenure had dared to look into these affairs to which Shaukat Aziz was very sensitive.


There are many mechanisms from imports to distribution including local products that can be brought into question regarding PSO. The entire cabal of cartels will need to be investigated. Outside experts and sources inside NAB believe that a complete investigation into this holiest of holy cow could result in misappropriations and recovery of over 30 Trillion Rupees. It is only then that an approximate slippage of Rs. 3,000 billion as opined by Chairman NAB begins to make sense. Hence the logic of multi dimensional pressures generated against Chairman NAB through diverse sources.


For any caretaker or interim government in Pakistan, debt trap, corruption and the energy sectors should be the main priorities. In the interim, the Supreme Court and Civil Society should put all its weight behind NAB to provide relief to an honest man trapped in alligator infested waters. Pakistan’s recovery could then be a matter of months.


Brigadier (Retired) Samson Simon Sharaf is a political economist and a television anchorperson.

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  • M Saleem chaudhry  On February 8, 2013 at 10:44 am

    All this pelthora of grim ground realities is reflective of all round Machiavellian tactics of the current breed of rulers, who have recruited an army of stooges with the same kind of traits as enunciated by Brig.(R) Samson, to build up a cobweb in all key departments for the ulterior objectives of their masters to help them drain Trillions of public funds. Chairman NAB, has publicly told about this huge daylight loot but he has neither guts and nerves nor capacity to nab all the looters. The only answer is an Arab Spring of our own to lynch these looters before they manage to leave the country as they facilitated, Musharaf to do.

  • Khalid Rahim  On February 8, 2013 at 12:37 pm

    Well and clearly expressed but who in this circus monitored by the four Aces, three in civies and one in uniform all with their first names beginning with alphabet ”A” ! will try to see the light at the other end of the tunnel or be contented with the darkness around them and the nation. Yes the ex-NAB chief now a days speaking his mind at least has the moral courage to take a stand.

  • Shafiq Maitla  On February 9, 2013 at 8:03 am

    Dear All, Debt, Energy & Corruption are issues of extreme national concern. Pakistani nation is fully capable & has potential to overcome such difficulties.
    Pakistan is facing real problem of leadership as dishonest & incompetent. Four mentally retarded dictators AyubYahyaZiaMush have stabbed the Nation by their unlawful intervention & then miseries added by Corrupt political leadership. Issues like Debt, Energy & Corruption can only be resolved by competent & honest leadership. I understand that Judiciary, Media, Civil Society with help of honest & competent political leadership can overcome such issues. A new social contract amongst Judiciary, Media, Civil Society with help of honest & competent political leadership can transform Pakistan into peaceful & prosper state. With prayers for Pakistan, Eng. Shafiq Maitla

  • Muhammad Javed Iqbal  On February 9, 2013 at 8:04 am

    Easier said than done. Unless we give chance to a new leadership,
    by helping and supporting it with our vote and funds, the present
    decadence will continue. We must rise, now as country is on the
    brink. Let us support Imran Khan for a change and devise a system
    of proper governance, accountability and independent Judiciary.

    May Allah help our nation so that it can help the Ummah.

    Muhammad Javed Iqbal

  • Salim Ishrat  On February 9, 2013 at 8:09 am

    Maitla Sb…

    – What this govt & politicAL PARTIES HAVE GIVEN HE MASSES FOR THE PAST 5 YEARS ?

    – You realised too late although I had warned of the present scenari 5 years back….I know you have no answer !

    – It has become a fashion to blame predecessors for all the present ills.Pls learn from the some good of the American or other European / Asian political parties….has Obama ever mentioned Bush jr govt of the present ills that his country is facing, although all are ware that the wars of Iraq & Afghanistan has drained their resources to such an extent that it has effected the economy of USA which the govt of Obama has to face, but has never mentioned Bush govt ? so let us not blame all others of the past including the period when civilian govt were also there….it is the resposibility of the present elected govt to put things on track and prove itself worthy of being elected to correct those mistakes done by others….not passing the buck & we the general public also do the same…we elect new govt to do better than what the predecessors have done….

  • Dr Jamil Rizvi  On February 9, 2013 at 12:55 pm


  • Faisal Imam  On February 9, 2013 at 1:03 pm

    Thank you, brigadier sahib.
    Islamabad has become a mandi where nearly all men and women can be bought for services rendered.
    I have been playing this song for the last x number of years.
    People got offended.
    The only thing I can say is that we cannot afford it for the next five years,
    Hang this govt., no harm done.

    Sent from my iPhone

  • ahmed rizwan  On February 9, 2013 at 1:32 pm

    ….but who cares……

  • Nasim  On February 9, 2013 at 4:53 pm

    I agree with you but how the influential rich people who are a part of this charade will allow anyone else to succeed?

    Sent from my iPad

    • FM  On February 12, 2013 at 3:46 pm

      Rauf Bhai if I say nothing will happen as usual,has anything to do by a caretaker. How about that? Analysis are for those who have will to do some thing and not pass the time? We are time passing Nation,one may call it negative thinking but this is a ground reality?

  • Rauf  On February 12, 2013 at 3:45 pm

    An excellent analysis of the current economic conditions in Pakistan.
    Brig Samson used to correct workd “Debt Trap”.

  • Husain Naqi  On February 13, 2013 at 10:54 am

    where did the government spent all this borrowed money. please share your information. how much waster on nuclear tip capable arms,how much on keeping such a large army with its officers’ brigades and their perks. how much was gobbled up by large landowners who did not return their much was written off as loans to the rich. how much money should have been earned by taxing the incomes of large agricultural landowners. how much was wasted on inefficient and corrupt bureaucracy. how much extra amount was paied on imports that could be availed from neighbours at cheaper rates.
    would you share facts about the aforesaid with social media pals? i doubt.prove me wrong.
    husain naqi

  • Sohail  On February 13, 2013 at 10:55 am

    Wonderful piece,thought provoking
    Sent from my BlackBerry® smartphone from Warid.

  • Parvez  On March 17, 2013 at 4:47 am

    While the analysis of debt trap is good, the assumption that it is for the caretakers to tackle is misplaced. Caretakers will have their hands full in holding fair and transparent elections. Tackling major issues means prolonging the caretaker setup, a recipe for disastor.

  • cliquez  On October 4, 2014 at 4:51 am

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