Courtesy: Azhar Ahmad, USA
Source: NY Times
By Prof. Atif Mian (@atifrmian) is John H. Laporte Jr. Class of 1967 Professor of Economics, Public Policy and Finance at Princeton University and the co-author of “House of Debt: How They (and You) Caused the Great Recession, and How We Can Prevent It From Happening Again.”
If an airplane took off a dozen times only to come crashing down each time, the only logical conclusion would be that the aircraft requires a fundamental redesign. Pakistan’s economy, like the airplane, has crashed 13 times in the last 60 years, each time requiring an International Monetary Fund bailout.
It wasn’t always so. During the 1980s, in per capita terms Pakistan was richer than India, China and Bangladesh by 15, 38 and 46 percent. Today Pakistan is the poorest. Its most recent gross domestic product growth estimate was only 3.3 percent, barely sufficient to keep pace with population growth.
Pakistan’s federal government is effectively bankrupt. Last year, the sum of interest payment due on the government’s debt obligations and pension payments owed to retired employees was more than the federal government’s net revenue. The entire government machinery, including the military, is running on borrowed money.
The consequences of Pakistan’s crashing economy have been devastating for its over 200 million people. They are instinctively aware of how far they have fallen behind and there is a clamor for change for a future where their children can live in dignity and comfort.