/

Is Pakistan going the Sri Lanka Way?

9 mins read

Dr. Rajan Katoch
Plummeting foreign exchange reserves, mounting burden of external debt and debt servicing obligations, rupee in free fall, rampant price rise, low tax to GDP ratios, heavy loans from China for infrastructure projects, political turmoil! Add to it the disruptions caused by the pandemic and the Ukraine conflict.
Yes, all these characterize the Sri Lankan economy. But no, we are not talking about Sri Lanka here. All these also characterize the Pakistan economy today. Does this mean that Pakistan is also at risk of a grave economic crisis with the kind of dramatic political upheaval seen recently in Sri Lanka?
There are so many similarities to the Sri Lankan situation that one could infer that an economic crisis may overwhelm Pakistan. However, there are also important differences.
For example, in Sri Lanka foreign exchange reserves had fallen from $ 3 billion a year ago to less than $ 1 billion, with liquid reserves down to almost zero, making it impossible for it to import even essentials like fuel and food from abroad, and compelling it to default on the upcoming external debt repayments of $ 7 billion. In Pakistan, the decline has been from $ 20 billion last year to less than $ 9 billion now. This is currently just enough to cover a month’s imports. Though not as desperate a situation, it is perhaps less comfortable than it seems. Media reports estimate Pakistan’s total upcoming external debt repayment obligations in the current financial year to be around $ 21 billion!
Inflation in Pakistan is running at 21%, which is high, but less than the skyrocketing 54% in Sri Lanka. Essential goods are still available, though there is an advisory to cut back on less essential imported items like tea. Tax GDP ratio is low, just 10%. As in Sri Lanka, the phenomenon of low direct taxes and high subsidies to the better offdoesn’t leave the Pakistan Government much room for manoeuvre. For example, even the funds for making a budget provision in the current year for an 11% increase in defence expenditure (deemed to be of high priority) had to be found by matching cuts in other developmental sectors, notably health and education.
Then there is the China factor. Sri Lanka has been hit hard by relying on high cost Chinese loans for funding infrastructure projects of doubtful economic benefit. To the extent that, due to inability to repay the debt, China took an 85% share and full control of the deep-water port of Hambantota that had been financed with Chinese loans. Pakistan is even more reliant on this source of funding, with debt to China forming as much as 27% of its total external debt, compared to about 10% in the case of Sri Lanka. However, so far it has fortunately not had to hand over assets to China in repayment of debt.
Yes, signs of an imminent economic crisis are there, a crisis that can cause much distress to the people of Pakistan, as it did in Sri Lanka. However, the Pakistan economyhas historically muddled along, with a little help from its friends. Three of these friends stand out. They are – the U.S. (and the multilateral financial institutions dominated by it), China and Saudi Arabia.
The role of the International Monetary Fund (IMF) is to be the world’s central banker and provide financial support to countries for tiding over foreign exchange crises. The Sri Lankan government had surprisingly refused to seek assistance from multilateral institutions as their crisis unfolded. Pakistan has had no such hesitancy. In the past, whenever Pakistan has had repayment problems or started running out of foreign exchange, it has turned for support to the IMF/World Bank. Notably, IMF financing usually comes along with advice to the borrowing country to put in place a structural reform programme so that such crises do not recur.
In the last thirty years, Pakistan has received IMF support 22 times. Each time, reforms such as reducing subsidies, raising taxes, bringing about discipline in expenditures have been agreed to as part of the IMF-advised programmes to overcome the crises. Most of these programmes have not been completed. Consequently, Pakistan has had to keep going back for more money. The Western countries that dominate decision-making in IMF have tended to be indulgent.
Currently, the Government is said to be negotiating with the IMF a loan of US $ 1.5 billion under the Extended Fund Facility. Indications are that the funds are immediately needed. Unusually, the Pakistan army chief reportedly made a direct appeal to the deputy secretary of state of the U.S. Government to help get the IMF loan expedited!
China has also been generous with Pakistan, unlike in the case of Sri Lanka. No additional funding was offered by China to Sri Lanka to tide over their crisis even though the Government had requested for their support. Further, China has not yet even rolled over Sri Lanka’s repayments on existing debt service obligations, despite assurances.
In the case of Pakistan, China rolled over $ 4.2 billion debt repayments in March 2022, and provided an additional loan to Pakistan of $ 2.5 billion in June. Of course, this assistance comes with much stiffer terms and shorter repayment periods compared to IMF/World Bank funding.
Another rich friend that Pakistan is relying upon is Saudi Arabia. Pakistan is reportedly hoping to receive a loan of $ 8 billion from Saudi Arabia along with a line of credit for importing oil.
So, is Pakistan likely to go the Sri Lanka way? Probably not this time. With repeated IMF support, and ever increasing loans from its all-weather friends, Pakistan is likely to be able to survive the current crisis for the time being.
However, without any significant change in the fundamentals, debt will keep ballooning, and external repayment obligations will continue increasing. There will inevitably be more crises in the future, each more severe than the last. At some point the situation will become unsustainable, friends notwithstanding. If corrective steps are not taken now, Pakistanwill be facing future economic bondage. Because, as an ancient proverb puts it
“The rich rule over the poor, and the borrower is slave to the lender”.
A well-defined and futuristic education policy is a must for every country because education is the key driver of economic and social progress. Taking into account their respective traditions and culture, different countries have adopted varied education systems from time to time. The Government of India on July 29, 2020, too came up with the National Education Policy 2020 (NEP 2020), which is a welcome and ambitious re-imagination of India’s education system into a modern, progressive and equitable one. Innumerable seminars, symposia, workshops and conferences have since been held all across India with a view to fully understand the provisions, goals and objectives of the new policy and as such Department of Higher Education, UT of Jammu & Kashmir too came up with two important conferences one at Srinagar and other at Jammu, titled “NEP 2020 Preparedness and Implementation” as a part to access our preparation and to catalyse different stakeholders to implement the policy in letter and spirit in different Higher education institutions across UT. The conferences focussed emphasised that ‘India had a great need of an education system aligned with the aspirational goals of the 21st century while remaining rooted to India’s values, systems and ethos and it is the NEP-2020 which crafted to provide an integrative yet flexible approach to education, keeping the interconnections of various phases of education. My take-up of the two day conference was that NEP-2020 is an end-to-end educational roadmap for the country with a broad view of encompassing holistic development, kindling the true potentials of the learners.
Yes, there is no doubt that NEP – 2020 is the foundation for a new India of the 21st Century which is poised to yield outstanding results in the fields of Higher Education, Research, Innovation and Science & Technology Development in the country. NEP 2020 is a game-changer for education in the country and so too in the UT of J&K. The new education policy is an all-encompassing model to cater the all-round development and cognitive learning of a child. It is a means to update the age-old educational model to leverage the latest technology, processes, and information thereby helping to increase learning and productivity and to keep up with the latest trends from around the globe. As compared to the traditional rote learning techniques, the new policy emphasizes quality, understanding of concepts, and on-ground experiences. In short, the new education policy aims to bring creativity and innovativeness to learning to prepare children for life outside the classroom and focus on building important skills such as collaboration, creative thinking, problem-solving, and logical reasoning, which have been neglected till now.
However, when it comes to proper implementation part of this policy in all institutions, you will agree with me that education should have equality, accessibility, affordability, accountability and reachability among all. In the 21st century, poverty, remoteness, inaccessibility etc should no longer be a barrier to education. But, is it possible at the present stage keeping in view the rural, remote and infrastructure of each and every institution. Hence, some novel approaches or novel schemes needs to be introduced to bring education to everyone, so as to aid and to take the NEP-2020’s recommendations forward at each institution.
The new education policy highlights the critical need to manage research at all levels- pure, applied, transactional, and research addressed to specific needs of the industry and social objectives. The primary role of the policy is to nurture a vibrant research eco-system through adequate funding, mentoring and support of multidisciplinary research in Arts and Humanities, Social and Natural Sciences, Engineering and Technology, including educational technology so as to take India as the skill capital of the world where we must lead in emerging technologies: but are we ready to provide such teaching learning environment equally to all the institutions and thereby to all the learners is a big question to think before implementation of NEP-2020 in all educational institutions.
New education policy focuses on more Holistic and Multidisciplinary Education at undergraduate level that integrate the humanities and arts with Science, Technology, Engineering and Mathematics (STEM) to yield positive learning outcomes. It is stressed that research be improved and enhanced through a holistic and multidisciplinary education approach. Thus, a holistic and multidisciplinary education is proposed to develop all capacities of human beings -intellectual, aesthetic, social, physical, emotional, and moral in an integrated manner. Such an education is said to develop well-rounded individuals that possess critical 21st century capacities in fields across the arts, humanities, languages, sciences, social sciences, and professional, technical, and vocational fields. Such a holistic education should be the approach of all undergraduate programmes, including those in professional, technical, and vocational disciplines and in all educational institutions but again there are constraints where multidisciplinary education at this stage is not possible, especially in rural colleges and the colleges with limited infrastructure which are only with arts subject at present and where the research environment is not so vibrant to cope up with the needs of NEP-2020.
No doubt the large multidisciplinary universities and colleges will facilitate the move towards high-quality holistic and multidisciplinary education. Flexibility in curriculum and novel and engaging course options will be on offer to students, in addition to rigorous specialization in a subject or subjects. This can be further encouraged by increased faculty and institutional autonomy in setting curricula in these bigger institutions but the students and the institutions which were previously deprived with all this will still continue to suffer due to one or the other reason. Thus the need of the hour is that departments in Languages, Literature, Music, Philosophy, Art, Dance, Theatre, Education, Mathematics, Statistics, Pure and Applied Sciences, Sociology, Economics, Sports, IT and other such subjects needed for a multidisciplinary education in addition to proper environment and infrastructure be established and strengthened at all HEIs before taking the first step to implement NEP-2020. Thus here comes the role of Govt, Universities, Degree Colleges, the importance of open and distance education and the role of teachers who are the pillars of the successful implementation of NEP-2020. Universities are perennial sources to generate and disseminate new ideas and knowledge and as such these require to play the first and major role in this regard without wasting any more time.
The NEP 2020 has an underlying emphasis on the use of technology in daily affairs. It will be interesting to see how the government leverages developments in EdTech, for the implementation of NEP 2020 in the coming days. It is asserted that over the next decade, India would have the highest population of young people in the world, more than 50% below the age of 35 years aspiring for high-quality education. How to reach up to them and, how to make them lifelong learners is a critical question that needs to be addressed appropriately. Furthermore, the education of the future generations needs to be reconfigured to meet the targets of the sustainable development goals, especially goals for quality education to seek higher inclusion, equitable quality education, promotion of lifelong learning opportunities for sustainable economic growth, full and productive employment and decent work for all.
In short to conclude with, the new education policy (NEP-2020) has come at the right time and the objective is very noble. But there lies a world of difference between laying down a policy on paper and following it in spirit. The success of NEP 2020 and the pace of its implementation depend to a large extent on how successfully the Universities, Colleges and Schools can tide over the practical challenges facing it. Currently, the implementation of the education policy requires multiple actions and initiatives to be taken by different bodies systematically. The Government, the Department of Education and the educational institutions (Universities as well as Colleges and schools) need to cooperate to implement the policy at all levels and effectively in all institutions. Thus the mission is aspirational but the implementation roadmap will decide if this will truly foster an all-inclusive education that makes learners industry and future ready.
(The Author is Associate Professor, coordinator IQAC at Govt. Degree College Chatroo and can be reached at [email protected])

Leave a Reply

Your email address will not be published.

Latest from From The Print