On Nawaz Sharif, IMF loan, and new privatizations: Pushing Pakistan deeper into the quagmire.

By Fazal Rahman, Ph.D.                            October 6, 2013  

This is a brief follow-up of my article, “Pakistan: A rapidly failing state. What will it take to stop and reverse the disaster?” published on February 16, 2012, on this site http://www.makepakistanbetter.com/why_how_what_forum.aspx?GroupID=5&ArticleID=16783 , and on http://imperialismandthethirdworld.wordpress.com, on February 15, 2012, http://imperialismandthethirdworld.wordpress.com/2012/02/15/pakistan-a-rapidly-failing-state-what-will-it-take-to-stop-and-reverse-the-disaster-by-fazal-rahman-ph-d/.

The new government of Nawaz Sharif is now pushing Pakistan deeper into the quagmire by increasing its already exorbitant foreign debt burden and a new wave of privatizations of vital national assets.  The total Pakistan’s debt stands at Rs14.5 trillion, including $66 billion foreign loan and sovereign guarantees. The new IMF loan amounts to $6.64 billion.  Pakistan will have to pay back $3 billion to the IMF this year.

As usual, the IMF has dictated new austerity measures to be imposed on the already terribly suffering tens of millions of common Pakistanis, as well as new privatizations.  On July 24, the government announced that it would sell 64 of the 255 state-owned enterprises in the first phase.  These include PIA, Pakistan Steel Mills, Pakistan Railways, and power distribution companies, whose 26 percent shares will be privatized.   26 percent more shares of United Bank Limited (UBL), and Muslim Commercial Bank (MCB), held by the government, will also be sold.  All this will certainly result in large-scale layoffs, a contract system, and low wages for the already underpaid workers, as had occurred in similar privatizations of the 1990s, much of it under the government of Nawaz Sharif, who was also the Prime Minister at that time.  His government had then sold 115 industrial units, including the Pakistan Telecommunication Corporation and Karachi Electricity Supply Corporation, to foreign companies.  Massive corruptions have been documented in many of those earlier privatizations.  Earlier, as the Chief Minister of Punjab, he had engaged in similar large scale privatizations.  Later, under Parvez Musharraf, the Prime Minister Shaukat Aziz, privatized 80 percent of the banking industry and the Pakistan Steel Mills.  In 2007, the Pakistan Supreme court declared the Pakistan Steel privatization null and void.

The cumulative effects of all the privatizations under Benazir Bhutto in the 1980s, Nawaz Sharif in 1990s, and Parvez Musharraf and Shaukat Aziz from 2004 to 2007-and accompanying massive corruptions-caused enormous damages to Pakistani economy and the welfare of overwhelming majority of Pakistanis, greatly increasing the problems of income and wealth inequality, social injustice, poverty, unemployment, foreign debt and subordination to foreign capital, exorbitantly higher prices of essential commodities for living, like food, housing, clothing, fuel, and electricity etc.  These are also a major factor in the current all round politico-economic, social, cultural, civil war, religious, and ethical crisis in the country. 

Now, the billionaire Prime Minister of Pakistan, Nawaz Sharif, is once again subjecting the country and its people to the same disastrous policy and actions.  This will further add to the already disastrous effects that have accumulated and are a major component of the causal complex of the current all-round crisis in Pakistan.  There is no surprise here.  All this was totally predictable, before the elections.

Of course, significant amounts of money will become available to the government from the IMF loans and sale of the state-owned enterprises, with some of which it will be able to make some minor short-term improvements in the current dire conditions, under which most Pakistanis are forced to live.  However, these would be essentially smoke-screens, which will be used to cover up the further structural development of the crisis, which will hit the country and its people very severely in the intermediate- and long-term.  By then, the millionaires and billionaires will multiply their millions and billions, transfer them to foreign bank accounts, and flee to foreign countries, if and when necessary.  However, 190 million Pakistanis will be stuck there and will suffer inter-generational damages to their well-being, security, and livelihoods. Of course, they themselves are also responsible for continuing to elect their own worst enemies to the highest levels of politico-economic power in the country.  They seem to have learnt little or nothing from the 66 years of similar history of their country.