In response to this desertion, finance Minister Abdul Hafeez Shaikh and State Bank of Pakistan (SBP) Governor Shahid Hafeez Kardar informed the IMF in a letter that the Pakistan government will introduce a temporary 10% income tax surcharge to generate revenues to meet the costs of reconstruction.
The Monsoon floods caused havoc to the nation, but the incompetent response of the government compounded the situation. Whilst the international community managed to cobble together some funds to help Pakistan deal with the disaster, it’s only a fraction of what the West has given in the name of fighting terrorism.
With an annual budget of only $23 billion, the Pakistan government has sent the begging bowl around the world to keep its economy afloat. Irrespective of the disaster the international community expects their loans to be repaid. During the current fiscal year, the government needs to repay foreign loans of $2 billion (total debt is $50 billion) and make interest payments of $893 million. Zardari has added almost $12 billion to Pakistan’s external debt over the past two years.
Successive Pakistan governments have surrendered the nation’s sovereignty to Western economic institutions which are bankrupt of any real policies that would rid Pakistan of such servitude.
Here we present eight policies that would raise revenue, address foreign debt commitments and potentially end foreign dependency:
01. Thar Coal – The Thar Coal Field in Sindh is the world’s largest coal field. Thar coal is one of the world’s largest lignite deposits discovered, spread over more than 9,000 sq. km it comprises an estimated 850 Trillion Cubic Feet (TCF) of coal. Pakistan governments have never undertaken a full assessment of the field, neither have they plans to mine the coal. The export of Thar Coal would generate revenues of over $1 trillion. Converted into oil Thar Coal would generate over 650 billion barrels of crude oil, at the current market rate of $80 that would generate $5.2 trillion.
02. Reqo dik minerals – Reko Diq is a small town in Chagai District, Baluchistan. It possesses the world’s fifth largest reserves of copper and over 20 million ounces of untapped gold reserves. Pakistan’s gold reserves alone would bring in revenues of $25 billion (at current price of $1279 $/oz).
03. Salt – The Khewra Salt Mines are among world oldest and biggest salt mines. Salt has been mined at Khewra since 320 BC in an underground area of about 42 sq miles. Khewra salt mine has an estimated total of 220 million tonnes of rock salt deposits. At current market rates this would bring in revenues of $13.2 billion. The Pakistan government still uses outdated methods to mine the salt, due to this it has a very low annual production rate of 325,000 tons salt per annum.
04. Off-shore oil – Although Pakistan currently has oil reserves of a mere 300 million barrels of oil, most of which is located in Balochistan, its untapped reserves remain a matter of speculation. Though no scientific evaluation has been ever carried out it is believed potential off-shore oil reserves range from 6 billion barrels with the higher end of the estimate, according to Frederic Grare, a Balochistan expert at the Carnegie Endowment for International Peace, of an estimated six trillion barrels of oil. With a full assessment to ascertain if this is the case this could potentially end Pakistani foreign dependency.
05. Agriculture – Whilst Pakistan’s agriculture has been greatly affected by the devastating floods, Pakistan has no shortage of fertile land. Pakistan’ largest food crop is wheat. Pakistan produces over 21 million metric tons of wheat, more than all of Africa (20 million) and nearly as much as all of Latin America (24 million metric tons). Pakistan is the 12th largest agricultural producer in the world with agrarian output of $32 billion annually. Pakistan is already the largest producer of many household kitchen items. The Middle East, a-stone-throws away from south Pakistan, is a huge potential market for Pakistani agriculture as the region is largely desert land.
06. Debt write-off – Pakistan could default on its $50 billion debt, which it owes primarily to the IMF and World Bank. It could also argue that its debt should be forgiven in the face of its worst disaster in the 63 year history of the nation. Its debt is a huge drain on the government’s budget as over 30% of the budget is spent on various debts Pakistan owes. A default would have ramifications for Pakistan as it would create doubts about Pakistan’s economic credibility. This means Pakistan will have to pursue a policy of self-sufficiency, which will allow it to finally remove the shackles of foreign dependency.
07. War Cost – Fighting America’s war on terror has cost Pakistan dearly through the interruption to trade, instability and the channeling of vital funds away from health, education and key sectors to fund the war effort. Pakistan suffered huge losses, amounting to $34.5 billion, since 2001 for its role in the war on terror, which foreign minister Shah Mahmood Qureshi mentioned during a news briefing on the 14th November, 2008 in New York. This is money that could have easily been used for the benefit of the nation.
08. Arms Sales – The JF-17 is a fourth generation fighter jet, designed and developed jointly by China’s Chengdu Aircraft Industry Corporation (CAC) and Pakistan’s Pakistan Aeronautical Complex (PAC). The project costs were shared equally by China and Pakistan. The fighter jet is now being produced in Pakistan. All Pakistan needs to do is develop an export list. At $15 million per unit the sale of 800 jets would net Pakistan $1.3 trillion..
Pakistan has ample resources to repay its debts many times over. Pakistan from some perspectives is in a better position demographically and from the perspective of mineral wealth on the eve of development compared to nations such as Germany and Japan who lacked the population and energy resources but still overcame such challenges. What Pakistan needs is not more of the same failed policies of running to the IMF and the US but a new leadership which puts the interests of the Ummah first rather than America. (Ends/)
See Also: The Quest for Economic Progress – An Islamic Blueprint for Pakistan
