Monday, August 08, 2022

Effects of Perpetual Dependency

By The Editorial Team Updated: Apr 10, 2022 9:51 pm

It is unfair to blame any foreign country for the present state of affairs in Sri Lanka and Pakistan. The crisis in the two neighbouring countries is a result of misdeeds, it’s leaders were more concerned about staying in power than ensuring the countries’ progress. So, the turmoil is neither a result of debt-trap, nor can the full blame go to any any foreign hand. Clearly, the crisis is a fall out of mismanagement of economic resources as each ruler put personal interests ahead of national interests. The scenario could have been different if the rulers had taken concrete measures to strengthen their respective economies. For example, as per the direction of the President, organic farming started in Sri Lanka overnight despite objections raised by various experts. Eventually such a whimsical move drastically reduced the country’s GDP as agricultural production was badly hit. Similarly, the Sri Lankan government provides subsidies in fuel and electricity, though it is known to all that such doles by the government helps only the rich. Similarly former Pakistani Prime Minister Imran Khan had visited the United States, China and finally Russia to plead for aid without making a single effort to steady his country’s economy. During his four-year rule, Imran Khan did not sanction a single rupee to build a new industry. All these years, the country has survived with the money that China had given to prepare a special security force to ensure safety in the proposed China-Pakistan Economic Corridor (CPEC).

Now the countries are paying the price for neglecting their economies for years on end. As a matter of fact, since coming into existence as independent nations, both Sri Lanka and Pakistan survived on foreign borrowing. It may be hard to believe, but at present Sri Lanka’s foreign exchange reserve is below two million dollars, whereas the total amount of foreign loans is seven million dollars. If the country cannot repay the loan on time, it will be declared a defaulter which effectively means that no financial institution will grant loans in Sri Lanka’s favour. During the mid-60s, the island nation was bailed out from a similar crisis by the International Monetary Fund (IMF). It is highly unlikely that IMF will come to Sri Lanka’s rescue once again.

Pakistan has also made it a habit to ask for loans without repaying the same on time. Several countries including Saudi Arabia, a trusted ally of Islamabad, refused to provide loans to Pakistan. Previously, Pakistan received hefty economic aid from the US for its anti-India stand. But with the end of the cold war, that source dried up as the US is now making efforts to stand beside India, the third biggest force in Asia. To prevent the US and India from coming closer, Khan is making all possible noise against Washington. But such a ploy will neither save Imran, nor Pakistan. Rather, it will further complicate the situation as the ground reality remains unchanged. In such a situation, only speedy economic development can bail out these two countries.

By The Editorial Team Updated: Apr 10, 2022 9:51:15 pm