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Budget to plunge the country into the abyss of debt

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    Budget to plunge the country into the abyss of debt



    On Friday 15th of June, during the live PTV programme 'Face the Nation' General Pervez Musharraf said that the government has shaped a long-term strategy to get rid of debt trap and revive the economy. He further went on to say that this long-term strategy will span 3-5 years and Pakistan will receive Poverty Reduction Growth Facility (PGRF) from the donors so that debt rescheduling is possible and breathing space is provided. Over the past three years the government has been unable to meet its external debt payments without rescheduling and arranging exceptional financing from international donor like IMF, Paris Club, London Club, WB, ADB. Debt has been scheduled twice under IMF's ESAF (January,1999), (SBA, January, 2001) and now the government is longing for PRGF loan to reschedule its debt liability. This brings the total amount of foreign debt close to US$40 billion and is set to increase. The government has made no mention of the domestic debt, which stands at about US$20 billion - bringing the total debt liability to US$60 billion, which is equivalent to the GDP of the country. Tax revenues, over the past three years have shown an average increase of about 12%, but have always fallen short to meet the fiscal needs of the government. It is obvious from all of this that the debt strategy of the government amounts to no more than increasing the taxes and borrowing more from the donors to meet its debt liability. Although, the government claims that the loans will lead to growth and self-reliance the economic reality on the ground is far from this. On the 16th of June 2001, the government revealed that the outgoing fiscal year has seen the lowest growth for almost 20 years. This should come as no surprise to the government and economic observers - the government has been willingly implementing IMF conditions, which have resulted in the negative growth. IMF and other western financial institution are built upon the capitalist viewpoint about life, which seeks to maximise profits at the expense of anything else. It is this viewpoint, which drives these institutions to severely weaken the economy of the developing nation and render their economy completely dependent on the rich western capitalist and their solutions.

    Therefore these institutions are not interested in the immediate recovery of their loans, but through lending repeatedly they work to manipulate the entire economy of the developing nation till the country is completely colonised and has parted with all her wealth and resources. Because of this viewpoint, these financial institutions will never work for the interest of humanity or contribute towards creating economic prosperity for developing nations; rather the capitalist viewpoint will only contribute to the misery and impoverishment of humanity. The solution is not to beg for debt forgiveness, to hold demonstration against them or replace the IMF and the WB with other international capitalist institution as suggested by some quarters. But is to immediately default on the loans and to completely uproot the evil capitalist system from our country and replace it with the Khilafah System that will ensure long-term independence, growth and prosperity.

    Press Release from Hizb ut-Tahrir, Pakistan
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