“Pakistan is a wealthy country. The only misfortune is that there has been a lack of good management,” Imran Khan, Prime Minister, Pakistan October 10, 2018
The good news is that Pakistan is actively considering to return the $ 2 billion loan taken from Saudi Arabia, which is due next month; the bad news is that it may once again resort to its novel scheme of ‘borrowing from Paul to repay Peter’ by seeking $ 2 billion from China to repay this loan. The good news is that it will face no problems getting this loan; the bad news for the people of Pakistan is that Islamabad isn’t disclosing whether the interest on this loan, which it takes from China, will be at concessional or commercial rates.
The good news is that Pakistan’s Executive Committee of National Economic Council (ECNEC) has approved the $6.8 billion Pakistan Railways Main Line [ML] -1 project, which is part of the ambitious China Pakistan Economic Corridor [CPEC]. But the bad news is that for this Islamabad will have to take a massive loan from Beijing for a whopping 90 per cent of the project’s cost. The good news is that Pakistan has requested this loan to be disbursed with 1% interest; the bad news is that while Beijing hasn’t yet confirmed its approval, it has informally sent across feelers that the interest rate could be higher.
The good news is that due to the poor financial health of Pakistan Railways, ECNEC will book this loan against both the federal government and railways; the bad news as per Pakistan Railways’ own admission is that the ML-1 project is coming at a time when the railways doesn’t even have the money to pay salaries and pensions to its employees, unless the government bails it out through a massive cash infusion.
The good news is that in order to avoid overstressing the country’s already critically- fragile economy and to comply with the International Monetary Fund (IMF) directives, Islamabad has wisely decided to go ahead with the ML-1 project in a phased manner- In ‘package 1’ (construction of a 527-km- long track from Peshawar to Rawalpindi and onwards till Lahore),it will incur an expenditure of $ 2.4 billion; the bad news is that with the Railway Minister making certain changes, the cost of this package has already shot up to $ 2.73 billion even before it has commenced!
The good news is that package 1 is scheduled to commence in January 2021 and will be completed by December 2014 but the bad news is that due to procedural delays in finalising the terms and conditions of the loan as well as the gestation time required for shortlisting of contractors and mustering the labour force, package 1 may not take off as scheduled and the resultant delay will only lead to further escalation in its overall cost.
The good news is that since the people of Pakistan were told that CPEC projects would generate employment, there were expectations that the $6.8 billion ML-1 project ,which also includes dualisation and upgradation of the 1,872-km- long railway track from Peshawar to Karachi, would generate mass employment. The bad news is that as per the agreement of this project signed between Beijing and Islamabad, all engineering procurement and construction- related aspects would be executed by Chinese contractors!
The good news is that the State Bank of Pakistan has diligently utilised the entire $ 3 billion additional trade finance facility available under the 2011 ‘China-Pakistan currency swap’ arrangement for the last financial year to repay foreign debt and thereby preserve its meagre foreign currency reserves. The bad news is that since Islamabad wouldn’t be in a financial position to return this money to Beijing by May next year, when this facility expires, it will be seeking a three year ‘rollover’ of this facility.
The good news is that Beijing is likely to extend this facility at Islamabad’s request; the bad news is that this currency-swap arrangement isn’t interest free- in the last fiscal year alone, Pakistan paid a princely sum of Rs 20.5 billion only as interest to China on the $3 billion borrowed under additional trade finance facility!
The good news broken by Pakistan’s Special Secretary and spokesperson of Finance Department Kamran Ali Afzal is that the $6 billion worth Extended Fund Facility (EFF) of International Monetary Fund (IMF) that was signed in July 2019 is propelling growth in the industrial sector. The bad news is that since January, this programme remains suspended, as its second quarterly review has not been completed due to Islamabad’s failure to abide by the “agreement (with IMF) on policies and reforms needed to complete the second review of the authorities.”
The good news is that Imran Khan’s government is going after economic offenders without exception, and hasn’t even spared a former Prime Minister; the bad news-despite the existence of documentary evidence of a retired army General having illegally- amassed millions of in assets and cash abroad, he has not even been investigated; au contraire, he heads the $ 62 billion CPEC project!
The good news is that Imran Khan is speaking up against Islamophobia as well as about Muslims in Palestine and Kashmir; the bad news is that the international community isn’t taking him seriously because US Acting Assistant Secretary for South and Central Asia, Alice Wells has exposed his bluff. After his tedious discourse during the 74th Session of the United Nations General Assembly, Ms Wells stumped Khan by saying “I would like to see the same level of concern expressed about Muslims also, who are being detained in Western China, literally in concentration-like conditions. And so being concerned about the human rights of Muslims does extend more broadly than Kashmir, and you’ve seen the administration very involved here during the UN General Assembly and trying to shine a light on the horrific conditions that continue to exist for Muslims throughout China.”
The good news is that immediately after coming to office, Khan identified indiscriminate borrowing by previous governments as the sole reason for Pakistan’s financial woes; but the bad news is that during his first year in office, the federal government borrowed $ 16 billion– the largest amount ever in the country’s history! The good news is that he allayed public apprehensions on this issue by asking the people of Pakistan to “stay strong,” and assuring them that it was just a temporary phase, promised that he would steer the country out of economic morasses in just six months. The sad news is that even after two years, there’s no relief in sight!
Tailpiece: The good news is that in October 2018, Khan told his people that “Nations face (economic) ups and downs, go through difficult times, and I can assure you that in six months’ time, you will look back and say this was nothing.” But the sad news is that today, when the people of Pakistan look back, they don’t say “this was nothing”– instead they just keep mum and say nothing! So, welcome to ‘master- illusionist’ Imran Khan’s “Naya Pakistan!”