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Business Last Updated: Jan 10, 2019 - 10:24:47 AM

A Silver Bullet in Sight for Rising Debts of Pakistan
By Dr. Nasrullah Khan Kalair, Blog 9/1/19
Jan 10, 2019 - 10:20:40 AM

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PTI Government has to pay interest of $685 every second, $41100 every minute, $2.466 million every hour, $59.184 million every day, 1.775 billion every month and $21.589 billion every year on the hefty $222 billion debts accumulated by forerunner regimes.  Every citizen is indebted to pay $1059. National debts are 74.48% of our GDP ($290.447 billion) [PDC 2018].


Pakistan’s and India’s per capita gross national incomes (GNI) were $4,190 and $3,620 in 2008, $4,360 and $4,270 in 2010 and $5,830 and %7,060 in 2017. Our per capita annual income is $1,641and debt is $1,059. If we live with $582 for year 2019 alone then we can get rid of all debts in 2020.

Key holy grail in hand is to crank up agriculture, industry, inland/overseas services and restrict imports. At personal level the kids do not inherit debts after death of parents [Jack 2015]. At national level the citizens inherit the debts contracted by their earlier elected regimes. However, state does not owe the odious debts disbursed in personal interests of despotic reigns [Robert 2007].

According to odious debt doctrine the national debt incurred by any despotic regime is its personal debt, not of state. A despotic regime commits a moral hazard by making the citizens debt slaves. Cases of odious debts of Nicaragua, Philippines, Haiti, South Africa, Congo, Niger and Croatia were raised whose laggard leaders looted national funds for their personal gains or spent against the public interests.

We have been voting for politicians, who increased local and foreign debts. Our current economic issue is payment of RS1500 billion interests on RS28000 billion debts. Higher imports, trivial exports, inflation and unemployment are wreaking havoc of economic maelstrom in Pakistan. Money laundering through artists, fake and dead persons’ accounts are some of our grave concerns.

PPP Government (2008-13) increased local/foreign debts from Rs.6000 billion to Rs.14000 billion and PML (N) Government (2013-18) from Rs.14000 billion to Rs.28000 billion in last decade. PTI has an easy option to increase debts from Rs.28000 billion to Rs.45000 billion and increase vote bank, or difficult option of recovering corruption money, tighten laws and face public anger.


We can pay all of our debts if we freeze every development activity and work without salaries for one year. If you want get rid of debts slowly or avoid taking new debts then you will have to face taxes, inflation and hard times. It is up to you to decide whether you want to pay bravely your debts yourself or cowardly like to inherit to your children. In my view, it is not fair to transfer debts to our dear ones, who yet have not even born.  Let us stop living in past to face today’s reality and future challenges.


More imports and lesser exports crank up the trade deficits. A trade deficit is an economic measure of international trade in which a country's imports exceeds its exports. A trade deficit represents an outflow of domestic currency to foreign lands. Money laundering, corruption and trade deficits end up in food, water, energy, and power crises.

Pakistan is stuck in the bog of debts, leaders can rescue, not laggards. An honest leader needs many professional advisers equipped with will and skill capabilities. All successful rulers had wise advisers like Chankya in Gupta (Moriah) and Bir Bul in Akkbar (Mogul) Empires. Mir Jaffer and Mir Saddik colluded invaders to plunder Mogul Empire. Salman Farouki ruined Zardari and Fawad Ahmed type bureaucrats misguided Sharif Brothers.

Not only Zardari and Sharif Brothers, we all are responsible for economic crisis. NAB has arrested many Vice Chancellors on charges of corruption and nepotism. Supreme Court has referred case of Dr. Samar Mund Mubarak to NAB after failure of underground coal gasification (UCG) project. When bigwig people appear in NAB courts media flies dust in air.


We need out of box solutions such as MIT’s silicon sun in box, NIF’s laser fusion star, China’s artificial moon, artificial photosynthesis and cold fusion experiments. Dr. Samar Mund’s idea was good and he should not be treated like money launderers. He might have committed financial mistakes, his intention and idea was good in deed. UCG experiments can give Pakistan leadership in new technology.


A basic principle is that you cannot solve a problem with mindset that created it. You cannot lead other runners at lower speed. You have to find new ways and strategies else others will maintain technological edge on you. I propose to ban MS/PhD degrees given on basis of simulation research as first step. If we do product oriented research, using simulation skills too, then we can produce smart devices having integrated IA and IT technologies.

Leaders lead their nations with innovative ideas and laggards paint the picture to win the next election. A statesman plans for next generations and a politician dodge people around instead of solving crises. I think the currency of leadership is transparency. You've got to be truthful. I don't think you should be vulnerable every day, but there are moments where you've got to share your soul and conscience with people and show them who you are, and not be afraid of it (Howard Schultz).

Wealth is created by farmers (agricultural products), skilled laborers (goods & products) and overseas workers who have no stake in governance matters. They eat neither imported foods nor use foreign make cosmetics on which scavengers and opportunists waste zillions of dollars. We all pay Rs.28/person/day to pay Rs.6 billion interests accrued on foreign debts. Our trade deficits and debts are rising with fall of rupee. Let us look on the past to plan future.

The current account deficit is a measurement of a country’s trade where the value of the goods & services it imports exceeds the value of the goods and services it exports. The current account and capital account are part of balance of payments. The current account deficit, during 2017-18, ballooned to $18 billion [Observer, 2018], which is likely to further increase in 2018-19 [Shahid 2018]. PTI Government launched a mini budget in September 2018. PML (N) decreased income tax that new government restored slightly less than previous maximum level. Tax was imposed on luxury import items like mobile phones, big vehicles and cigarettes. Our import export difference is $31 billion and debts were 67% of GDP. Fitch and Moody’s rated us B and B3 with negative outlook and standard & chartered rated B with positive outlook with total foreign reserves of $16 billion (SBP $9.6 billion and SB $6.4 billion) [Ideel 2018].

More exports and lesser imports are signs of healthy economy. Minor trade difference is reminiscent of dynamic economy. Our trade difference was $31 billion in fiscal year 2016-17, which increased even higher in fiscal year 2017-18. This colossal trade deficit has crunched our foreign reserves from $24 billion in 2017 to $9 billion in 2018. Currency devaluation gives temporary support, not long term, as currency of strong economies remains stable or grows in value over time (see mark, frank etc.). The value of your currency reflects real essence of your worth and good governance. According to State Bank of Pakistan the total debts at end of June 2018 were Rs.29, 861 billion out of which Rs.10, 935 billion were foreign and Rs.16, 915 local debts. Pakistan paid Rs.475 billion in fiscal year 2017-18 out of which Rs.355 billion were interest accrued on debts and Rs.96 billion payment of principle amounts. According to media sources our $200 billion are in Swiss Banks and $2000 billion in Dubai. Zillions of dollars are hidden in offshore banks. If all the money laundered into Swiss, Dubai and offshore banks returns back then Pakistan will be one of very rich countries having $1000 billion in foreign reserves. Pakistan’s current foreign debts are $91 billion that IMF expects to increase to $144 billion by 2023 [Mehtab 2018].

Pakistan’s economy is 25th ($1.141 trillion) in the world terms of purchasing power parity (PPP), and 41st ($313.13 billion) in terms of nominal gross domestic product. Pakistan’s population is 207 million that is 5th-largest rank with nominal per capita GDP of $1,641 in 2018 that ranks 147th in world economy.  Pakistan is one of next eleven (ten in BMI Report) countries, which have potential to become world’s big economies. Major sectors of Pakistan’s GDP are agriculture (18.86%), industry (20.91%) and services (60.23%). The agriculture, services and industry sectors provide 42.3%, 35.1% and 22.6% employment to people of Pakistan. Pakistan 68% population is in working age out of which 5.9% are unemployed. We import of $55.85 billion things and export $24.77 billion goods. Pakistan has a big trade deficit of $31 billion due to higher imports than exports.


Our exports include textiles ($13.34 billion), food ($4.79 billion), manufactured things ($4.12 billion), others ($1.39 billion) and petroleum ($574.5 million).  We export goods to USA (15.6%), UK (7.1%), China (7%), Afghanistan (6%), UAE (5.6%), Germany (5.5%) and Bangladesh (2.9%). Our imports include food ($5.499 billion), machinery ($8.7 billion), transport ($3.21 billion), textile ($4.05 billion), agriculture/chemicals ($8.31 billion), metals ($4.79 billion), miscellaneous ($1.25 billion) and others ($8.67 billion). We have largest import from China (20.5%), UAE (15.9%) and Singapore (8%), medium import from KSA (5.5%) and small from USA (3.7%), Japan (3.4%) and India (3.3%). We rely on $17 billion overseas workers remittances which are less the money annually going out into offshore companies. Pakistan can pay attention to solar drying of fruits in northern areas, develop ICT products in universities, commercial production of software, export coal, explore shale and gas fields on land and oil in sea.

Develop dams, start CHP projects, geothermal cooling/heating, solar cooling/heating, build solar parks and wind farms to replace oil and coal LNG power plants. We 99% PhDs in ICT, force them to increase export to $10 billion by 2020 rather than wasting million dollars on open access journal papers. Ask the Chairman HEC to put up strategy how to implement UN 17SDG goals. Direct Chairman PEC to enforce specialized BE programs to prepare highly specialized engineers in different technologies rather than producing donkeys of all trades master of none. Ask HEC to check one by one education/experience of teachers who teaching the subjects. Appoint management people on all academic posts rather than doctors and engineers to do the administration works. We can reduce import of cosmetics, snacks, cars, fertilizers, textiles, mobiles and show off luxury items. Trump’s trade war with China, Russia and Turkey can affect Pakistan. Our foreign debts exceeded $96 billion in December 2018.

Instead of recruiting experts at high salaries of Rs.15 lac to Rs.25 lac per month in economy, energy, health and advisory councils better recruit on open merit based on relevant education and experience. They are willing to work at Rs.3lac to Rs.5lac salaries. Importing management experts from WB, UK, EU, IMF and USA is a mirage that will further increase imports and reduce exports. We have thousands of PhDs with long experience in all disciplines. They know the solution of all problems the issue is the dual national and local elite groups do not want them contribute to this nation. At first incumbents can force FBR to enable people submit their returns online using their NIC without having need to talk to any income tax employee! Sell the GOR and ask occupants to rent houses as per their scales.

Stop incumbents to use GREEN plate cars for personal use and transporting their children from/to schools. You can see GREEN plate cars are used to buy vegetables, bring water from tanks, to go to mosques and even jogging everywhere. This is misuse of tax payers’ money who walk on roads under sun and they ride hitting them in air conditioned cars. Public does not allow anyone use their tax money to buy bullet proof cars for his/her safety. Convert all governor houses into universities, colleges, schools and hospitals. Ask executives to keep one and surrender other plots to give to homeless employees. The CDA, LDA, FDA and KDA employees, who rent half of their officially allotted double story home, to sell the rented portion to tenants at actual prices. This is exactly what will make Pakistan a MADINA like state.

Gujranwala, Sialkot and Gujrat triangle contains most of Punjab population, agriculture and industry, which has only four universities. Federal area of Islamabad is much smaller than above three districts and has 21 universities, which are more than Blachistan, Kashmir and Gilgit Baltistan. National skills and media universities are also being proposed for Islamabad that will increase public flood. These universities have increased traffic jam and supply shortages in city. To facilitate their own children, the incumbents, propose new university projects in Islamabad and force students all over Pakistan to come here.

World top ranking university like Oxford and Cambridge were built in towns not in big cities. It is time to build new cities and universities in Baluchistan to populate the region. Half of Karachi needs to shift to Baluchistan to better manage the city. Alone Karachi has 61 universities which are more than 55 universities in Sindh and 35 in KPK. There are 163 recognized issuing legal degrees and 154 unrecognized universities issuing illegal degrees (102 in Punjab, 36 in Sindh, 11 in KPK, 3 in Kashmir and 2 in Islamabad) same as 50% white and 50% black economy.

Do not concentrate universities and hospitals in big cities as these institutions increase demand of transport and road infrastructures that increase pollution. Lahore has 34 universities and all the south Punjab has hardly a few. Lahore, Karachi and Islamabad are crowded with universities and hospitals, and rest of country has rare health and education facilities.

Out of total 1463,279 university students in Pakistan, there are 623,017 in Islamabad, 425,019 in Punjab, 231,737 in Sindh, 129,936 in KPK, 27,464 in Baluchistan, 21,972 in Gilgit Baltistan and 4,134 in Kashmir. The number of outside students in Islamabad are comparable to actual local population. Women and men students in universities are 4.5% and 5.1% of the 17-21 years age youth population. You can buy degrees and skills with money the talent comes naturally.

Private colleges, universities and hospitals are built on public property allotted to elites who are looting people by both hands. Shifa hospital and Beckon House type health plaza and education panoramas are built on public property serving rich communities. If public cannot avail the services of any education/health institute then it should not be built on public property. They do Holy Business not any service to common people of Pakistan. Shifa Hospital implicit rerouting of kidney patients from Lahore is so ugly and disgusting, the management deserves punishment. Government is urged to charge land cost from private schools, colleges, universities and hospitals to build dams. Profits in healthcare and education in Pakistan are far more in Pakistan than other countries. High EROI in health and education sectors is cause of poor research in Pakistan. If EROI of university is 10:1 then the university must spend 10% of the EROI on research to maintain itself. HEC and PEC develop means to ensure compliance.


Energy returned on energy invested (EROEI) or energy return on investment (EROI) is the ratio of the amount of usable energy (exergy) delivered from a particular energy resource to the amount of exergy used to obtain that energy resource.  EROI of hydropower is 100:1 compared to coal (45:1), oil & natural gas (25:1), wind (20:1), photovoltaic (13:1), nuclear (10:1), geothermal (9:1) and biomass (5:1). EROI is a highly nonlinear variable that may vary with place and time. Coal EROI used to be 135:1 in USA in 1918 that has declined to 10:1 in 2018. EROI of oil & gas and wind is same in many parts of world. EROIs of Art, healthcare and education are considered 14:1, 12:1 and 10:1to be reasonable for civilization. As long as the EROI is 5 to 10 it is considered adequate for business. If the environmental impacts of coal, oil and gas are accounted then their EROI cannot compete renewable energy sources. According to Charles Hall, EROI of fossil fuels is declining compared to renewable energy over time [David 2013, Hall 2014].

Rise in oil prices triggers renewable energy research. Arab and Iranian oil embargos against western countries in 1973-74 and 178-79 initiated research in renewable energy. Global warming and climate change sustained the alternative energy research efforts in 1980s. Great oil price plunge of 1998 ($17.27) cranked up global warming in Asia that subsided in 2005. Rose wood and acacia trees died in wide swath of Pakistan. Decline in oil prices increase GHG emissions and rise in oil prices boosts renewable energy research. Historically oil prices varied from $17.42 in 1947 to $27.88 in 1973. Arab oil embargo against western countries first time raised the oil price to $54.71 level in 1973-74. Iranian embargo further raised the oil price to $97.35 in 1978-79 and Chinese/Indian demand and US militarization in Iraq pushed oil price $148.36 in 2008. Market forces plunged oil prices down to $49.85 per barrel in 2009. Arab Spring and US militarization in Libya pushed oil price again to $127.23 in 2011. Economic growths increase oil demand and oil production, and wars raise oil prices. First oil price rise to $120 was observed during US Civil War in 1864. Historic oil peak prices occurred in 1974 ($53.39), 1979 ($97.35) and 2008 ($148.36). Steady state oil price is today $77.41 (Nov 2018), which is higher than true worth of oil yet lower than $97.35 and $148.36 prices recorded during 1978-79 (Iranian embargo) and 2008 (US militarization in Iraq). US sanctions against Iran may escalate oil prices by 2020 [Macrotrends 2018].


Current economic sanctions against Iran, in principle, should raise prices. Fortunately, Saudi Arabia raised production to meet demand and prices fell from $77 to $66 within one week. Kings have given a loan of $3 billion to pay interests on loans and $3 billion oil on few years later payments. China has signaled that CPEC has nothing to do with Pakistan’s economic woes.

PPP Government faced hard time from 2008 to 2013 when oil prices varied from $53 to $148 per barrel. PML Government picked the windfall profits of cheap oil in 1997-98 ($18-$38) and 2015-17 ($35-$50). PTI took charge of governance in 2018 when oil prices started rising worldwide. Large fleet of vehicles on roads need oil and big 210 million population needs electricity. PML won the credit of ending load shedding by contracting expensive power plants and LNG imports for which PTI has no money to pay the interests, forget about principle debts. Bigwig economists, management pundits and energy experts are holding meetings how to pay interests, debts and operate the basic lifelines.

In presence of falling rupee value, the State Bank of Pakistan, warned of inflation tsunami on the long hauled unemployment, current account and budget deficits {News 2018]. According to FBR about 700,000 (0.00003%) people submit tax returns and 40 million pay tax at source [Faisal 2018]. PML ended 99% taxes in an attempt to fail the PTI. Finance Minister declared going to IMF to ward off economic crisis and Prime Minister preferred going to friends rather than IMF [Sanaullah, 2018; Muhammad 2018].


East India Company occupied India using local traitors and China using opium traders. American got freedom from British Empire in 1776 and emerged as a superpower after WW-I (1914-18). America decided to transform political colonialism into economic colonialism during WW-I and implemented the idea after WW-II (1939-45) by founding World Bank (1944), IMF (1945), ICJ (1945), UN (1945), WHO (1948), IAEA (1957), BWC (192) and WTO (1995).

Media subliminally engineers opinion, WMD treaties limit warfare capacity, financial and trade organizations control third world economies. UK and USA control developing countries through the corrupt leaders, NGOs, dual nationals and education networks. WB/IMF give debts and corrupt politicians launder money back to western banks. Economic colonialism increases debts of developing countries to engineer their opinion and control their assets. Foreign education system keeps scholars loyal for 15 years. The returning scholars and dual nationals remain loyal forever. These are the broken windows through which they sneak and peek. If dual nationals control NADRA and HEC then nothing is secret to foreign agencies. Our media has been reporting live to guide the terrorists. Our population is 210 million out of which 84 million (40%) people earn less than $2/day, 84 million (40%) less than $4/day, 40 million (19%) middle class and 2 million (2%) industrialists, landlords and politicians. Salaries vary from Rs10,000 to Rs10,00,000 per month.

Our rupee has been devaluating, foreign debts mounting and population multiplying in last seven decades. One dollar equaled Rs3 in 1954 that slipped to Rs5 in 1970, Rs10 in 1972, Rs20 in 1988, Rs40 in 1997, Rs60 in 2001, Rs80 in 2008, Rs100 in 2013, Rs104 in 2017 and Rs130 in 2018. Our foreign debts were $121 million in 1955 (LA Khan), $2.7 billion in 1969 (Aub Khan), $6.3 billion in 1977 (ZA Bhutto), $12.91 billion in 1988 (Zia ul Haque), $36.50 billion in 1999 (Nawaz/Benazir), $40.5 billion in 2008 (Pervez Musharaff), $66 billion in 2013 (Asif Zardari) and $95 billion in 2018 (Nawaz Sharif). Our population was 33.7 million in 1951, 42.8 million in 1961, 65.3 million in 1972, 83.7 million in 1981, 132.3 million in 1998 and 207.7 million in 2017. When Pakistan separated from India in 1947 her Rs1 billion was not credited and when Bangladesh separated from Pakistan its $1 billion liabilities were debited to Pakistan in 1971.


Our education system has been rendered infertile and nonproductive. Young scholars go to UK and British education system charges heavy fees for simulation based research degrees. British council uses earlier scholars and dual nationals in key positions to attract more scholars. Chairman HEC knows very well that American Universities are the option left for learning skills of new technologies. HEC should plan to restrict scholarships for American, German and Chinese Universities. There is urgent need of transforming the ranking based education system into ICT integrated hardware based research. Zillions of students submit research thesis everywhere out of which there is not any single one that could be marketed.

Vice Chancellors in 75% universities, one decade ago, granted scholarships to incompetent scholars on race and faith basis. They deprived the deserving scholars and promoted incompetent idiots. If majority of Punjabi, Baluch, Pakhtoon and Sindhi scholars were deprived then who on what basis got scholarships? Race and faith based scholarships and employments, especially executive positions, has pushed Pakistan into Stone Age. It is time to punish white collar crimes. It is time for IT, ICT and IoT integrated hardware research to ensure our share in international markets. If India can earn annually more than $100 billion then why not our 99.99% IT/ICT PhDs. Software without hardware is mandate for nowhere. I love knowledge based economy but do not believe the strategy being used to implement it.


PDC, Pakistan’s Debt Clock, 2018, https://www.nationaldebtclocks.org/debtclock/pakistan

Jack R, Your Children Probably Won't Inherit Your Debt — But There Are Exceptions, Business Insider, 15 January 2015, https://www.businessinsider.com/your-children-probably-wont-inherit-your-debt-2015-1

Robert H, The Concept of Odious Debt in Public International Law, Geneva: UNCTAD, July 2007.

Observer, Current account deficit ballooned by 14pc in July, Pakistan Observer, 18 August 2018


Shahid I, Current account gap widens 16pc, Dawn, 21 August 2018


Iseel IS, http://www.sbp.org.pk/ecodata/forex.pdf, 2018

Amin Y, Pakistan’s total external debt and liabilities have reached $91 billion, Pro Pakistani, April 2018

Mehtab H, IMF expects Pakistan’s external debt to reach $144 billion by 2023, The News, 17 March 2018

Hall CAS, Lambert GJ, Balogh SB, EROI of different fuels and the implications for society, Energy Policy, Energy Policy 64 (2014) 141–152

David J. Murphy, The implications of the declining energy return on investment of oil production

Source:Ocnus.net 2018

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