Is There a Way Out?


Had it only been the question of economic challenges, one could have waited and hoped for a slow but steady recovery. Some economic indicators have already started to show improvement. But the continued transgressions by various institutions and an open abhorrent attitude towards one another has broken all the modicum of decency and lawful behaviour. Political and economic instability within, and confusing and shifting signals in foreign relations have created a sense of uncertainty all around. But before discussing the options available to the apex leadership, institutions and the public, let us review the entire situation holistically.

The Great Economic Challenge

Not an expert of the subject, the author will rely only on some authentic facts and figures shared by the open sources. Pakistan’s public debt has surged to a record Rs.41.46 trillion as of September 2021 compared to Rs.36.95 trillion in September 2020. Since September 2021, this public debt – which includes both the domestic and external debt — continues to mount.

Another red-flag for Pakistan’s economy is the energy sector’s circular debt which is accumulating by nearly Rs.35 billion every month. During the first four months (July – October) of the current fiscal 2021-22, it increased by Rs.139 billion to hit the record Rs.2,419 billion mark. The way things are moving, the government appears without any grand plan even to manage the circular debt, let alone getting rid of it.

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The debts keep mounting as Pakistan’s economy flounders under successive governments.

The federal government under the current National Finance Commission Award and the 18th Amendment — which provides cover to the distribution of resources — has been left with heavy liabilities and little resources at its disposal. Provinces are getting record resources, but they do not share the expenditure, including debt servicing and defence. The provinces take their share as per the NFC before the subtraction of above two big expenditures, and this kind of distribution of resources is becoming more and more unsustainable.

Then, there are no Provincial Finance Awards that could ensure the flow of money down to districts as the provincial governments act like state within states and abhor the idea of devolving powers to the grassroots level. This further vitiates the political environment.

Pensions — both federal and provincial — are being paid from the annual budgets rather than creating sustainable Pension Funds. In view of a large chunk of the economy being black or grey, the amnesty scheme has been given to the Construction Industry only, and not extended to industry, agriculture and for value-addition on products and other capital intensive areas like start-up companies, establishment of large hospitals and Universities and infrastructure development.

Large amounts of wealth have either already migrated overseas from Pakistan or are in the process. Lack of automation and rampant corruption have not enabled FBR to collect all the sales tax collected from all consumers, but are being retained by restaurants, shops, service providers. The FBR is busy in squeezing and further milking the honest tax payers instead of broadening the tax-base. Yes, just increasing the number of filers is not the answer to the problem. Most of the retail shops, agriculture landholders, and the small businesses remain out of the tax-net. Plethora of taxation rules, with numerous loopholes and interpretations keep the taxpayers at the mercy of various officials. It is perhaps not an exaggeration to say that larger chunks of money is going into the pockets of corrupt officials and their facilitators than in the National exchequer. And no government, military or civil, has so far succeeded in making tax collection simple, efficient and automated in this era of Information Technology. And probably except for one odd regime, none ensured flow of capital down to district, Tehsildar and union council levels.


Needless to highlight that politics in Pakistan is all about money, power grab and retention, corruption, cronyism, badmouthing, dynasties and family, party or the so-called institutional interests. If the perpetual appearance of politicians in talk shows on the news channels are any indicators, no one seems to be genuinely worried about the welfare or plight of the public. Even if they talk about poverty or inflation, they never seriously discuss the factors behind it or try to come up with solutions.

Even if the government policies are discussed or criticised, the alternatives are seldom recommended. Democracy within parties is more of an eyewash as few rich families control their affairs in an autocratic manner. Most political and religious parties have degenerated into family fiefdoms.

There seems to be no appetite even for discussing changes and reforms in the non-performing political system. The local governments — the most vital terminus for empowering the people — remain nonexistent for a major part of the tenures of the elected governments. Political interference in bureaucracy, police and other public institutions have converted them mostly into subservient entities, and thus ineffective to provide any service to the public.

Justice System

If there is one system that hurts the masses the most, and is in real derelict condition, that is our (non) Justice System. Rather than dispensing prompt justice, it provides relief and space to criminals under various disguises, mainly through ‘stays,’ ‘adjournments,’ ‘non-appearance of lawyers,’ ‘sickness,’ and ‘holidays’ — just to name a few. Higher courts seem to have neither control, nor desire to supervise the performance of lower judiciary in terms of quality of judgments or the snail’s pace of their proceedings.

The provision in the Constitution for lateral entries in Higher Judiciary has been blatantly misused to fill slots mostly with politically aligned lawyers or those affiliated with certain favourite chambers. This has tainted the impartiality, efficiency and respect of superior judges. And it leaves no incentive for the lower judicial cadres to work with dedication and honesty to climb up their profession.

Another branch of our judicial system, the lawyers organisations are also politicised and use their clout to intimidate judges — and at times even physically thrash them with impunity. The investigation and prosecution are pathetic and thoroughly corrupted. Thus a total breakdown that may be difficult to repair, if not impossible.

Military System

We definitely need to review the following aspects of our military apparatus keeping in view the threat, affordability and its integration with society etc.:

  • Dividends of nuclear deterrence.
  • Large standing component vis-a-vis pool of trained reserves
  • Regular and short service components. Volunteer and conscripted cadres.
  • Organisational structure and induction of modern specialties, keeping in view the changing character (hybrid) of wars.
  • Nation-building tasks and integration with the civil society. Self-sustenance through agriculture, sheep farming etc.
  • Large footprint in businesses, real estate and polity. Profits should go back into the defence budget etc.

Governance & Internal Security Apparatus

After the initial imbalance at the time of partition, our bureaucracy and police kept developing during the first few decades and turned into effective and reasonably efficient cadres, propping up able officers who contributed significantly in creating and maintaining order, providing various services and a sense of security to the masses. And then started the political interference and institutional high-handedness, resulting in total destruction of the fabric woven on merit and professionalism. Syndrome of ‘my patwari,’ my DC,’ ‘my inspector,’ etc. thoroughly destroyed the institutions. The result is near nonexistent governance and order at all tiers. Ad-hocism and strong political affiliations are the prerequisites if an officer wishes to flourish and continue upward mobility.

Foreign Policy

There is a clear dichotomy and internal split on some of the vital issues, creating confusion within our polity and even with our friendly countries. We need:

  • Balancing between US and China. (CPEC and IMF as well as balancing a reliable friend and an unreliable one).
  • Balancing between Iran and Saudi Arabia. (neighbour vs. an old friend)
  • Settling the basic questions about Kashmir (nature of support) and deciding whether trade with India is worth it at the cost of abandoning Kashmiris. As all our economic woes will fizzle away with this great leap?
  • Deciding our relationship with Afghanistan and the Afghan Taliban. Ironically, we still think that the greatest spoilers would come to the help of hapless Afghans.
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Balancing the US and China ties will be crucial for Pakistan’s stability.

Repairing this derelict and broken system is neither easy nor can this venture be undertaken by any single political party or institution. It requires a new resolve by all and everyone to adhere to a modified (not necessarily a new) social, political and economic contract. If we fail to do this, our beloved country will transform into a lawless jungle — if it is already not the case.

What to do?

One person even with a lot of knowledge, experience and insight cannot come up with a comprehensive solution for all the ills. A collective effort by the sane political segments (there are plenty of them in each political party), higher judiciary, top bureaucrats, armed forces leadership, lawyers, businessmen, religious scholars, and agriculturists is the need of the hour. A consensus arrangement under the guidance and guarantees of higher judiciary and arranged by the armed forces should be the way forward.

A Grand National Dialogue is immediately required that acknowledges the blind alley we have been pushed into due to faults and intransigence off all the parties and institutions, and the need to immediately remedy the situation. The stakeholders should honestly draft the ‘Terms of Reference’ and a timeframe to introduce major economic, political, judicial and institutional reforms, including in the armed forces, and decide upon a mechanism to ensure that it becomes part of the Constitution and the law.

Who will take the initiative?

Group of big personalities or Institutions, who care about the future of their generations and this Country.

The following points need consideration.

  • There should be no finger pointing. Everyone is responsible for this situation.
  • Repent and move forward, doing away with all bitterness, forgetting and forgiving all. Ensure that intransigent, incorrigible and confirmed black elements do not again become part of the National Exercise, as happened earlier.
  • Shun all the known ills that have crept in our politics, and draft stringent laws to prevent forming of dynasties, employment of money, guns etc. in politics.
  • All erstwhile Commissionaires to form provinces for good governance.
  • Elections should be held from bottom upwards. Local governments, Provinces and then Federal.
  • Taxation reforms through automation, simplicity, reasonable and flat rates — no exemptions etc. Collection and distribution should be done from bottom upwards.
  • Suggesting implementation of agreed upon Islamic injunctions, like abolishment of Usury, distribution of inheritance etc. Unearth fake pirs/dargahs, making tons of illicit money and ensuring exemplary punishments.
  • Suggest ways and means to bring black and grey money into national circulation. Temporary fiscal and monetary emergency by reduction of pay and privileges of top officials and enforcing upper ceiling in packages of CEOs, bank presidents, lawyers and consultants etc.
  • Judicial reforms to create an honest, impartial and efficient cadre of respected judges.
  • Institutional reforms including in police, bureaucracy, forest, agri research sectors etc.)
  • Educational reforms with special emphasis on promoting the right social behaviour and real spirit of religion.
  • Media reforms to curb sensationalism, exaggeration, half-truths and fake news.
  • Foreign Policy debates on vital issues.
  • Strict laws that ensure prompt and exemplary punishments for heinous crimes, constituting special or military courts to bring the situation under control.
  • Laws be enacted and enforced to bring about a change in social behaviours that waste time and resources in ugly show off power and money.
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Local governments need empowering.

This author is not competent to suggest details of reforms in each area. However, we have enough experts, who can come up with comprehensive plans for each sector. The Apex Dialogue Group can achieve this task by forming sub-groups for each sector and giving them a maximum of three to four months to present practical and inexpensive reforms.

During this exercise an interim setup (as per constitution) be mandated to hold elections under the new laws (Presidential Ordinance) and all suggested Constitutional amendments be placed before the new parliament for  approval and the country starts moving on new paths of national cohesion, unity, development and progress. If we fail to take such an initiative to right the wrong, then Pakistan may face a great political upheaval or a civil strife, creating more chaos and obliterating all the social and governmental structures. Alternatively, if Allah is Kind, a new political group may emerge with a new manifesto and appeal to the populace to ensure a change for the better.

Lt. Gen. (R) Naeem Khalid Lodhi
Lt. Gen. (R) Naeem Khalid Lodhi
The writer is a former defence minister and defence secretary. He has held major command positions in the Pakistan Army.
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