The August 5 Bangladesh revolution shows that repressive and corrupt regimes have no future in the new political order being defined by the repressed yet ambitious youth. The sooner all concerned in Pakistan learn this lesson, the better.

Since former prime minister Hasina Wajid headed a corrupt and repressive regime, even the appreciable economic progress Bangladesh made during her time could not save her from falling from grace.

That said, there is enough time for our current hybrid regime to control corruption in all its forms with as much seriousness as it rightly demonstrates in containing terrorism. The country’s hybrid leadership must not show any leniency to the terrorists and their local or foreign supporters.

But, it must also ensure that law and justice take their course without any interference and that all corrupt elements are dealt with in iron hands. An unfair, unjust and corrupt system only expands income inequality and poverty — two major promoters of terrorist and extremist mindsets.

Bangladesh’s youth-led revolutions indicate that even appreciable economic progress cannot gloss over corruption, which is a lesson that Pakistan has to learn

On the other hand, political parties in the opposition must also realise that their ultimate success lies not in creating or promoting chaos but in becoming a bankable source of change for the better for 241 million Pakistanis.

If they can bring about the change society is yearning for by compelling the government to do the right things, they must do this while resisting the temptation of destabilising the state in the name of politics.

During the last fiscal year, Pakistan’s domestic and external debt servicing devoured the net revenue of the federal government — a matter of serious concern.

This warrants a collective pause of all political forces as they consider how best to avoid this situation in the future. Parochialistic politics by political parties in the government or in the opposition will not help.

It is against this backdrop that the establishment is trying to create a stable political environment in the country, though it is visibly tilted towards the ruling parties and trying to seek the cooperation of the largest opposition party — PTI — with a carrot-and-stick formula.

Without political stability, no significant amount of foreign investment is going to come in; no substantial increase in exports can be expected and a big rise in remittances may also remain elusive.

This means the external sector may continue to remain weak necessitating enhanced dependence on the International Monetary Fund (IMF) and friendly countries (China, Saudia, UAE and Qatar) for additional borrowing, on top of what we have already borrowed in recent years. The IMF’s $7 billion loan package has yet to be approved by its board of directors, though our friendly countries have rolled over $12bn in debt, a requirement of the Fund.

The opposition need to realise that its success lies in becoming a source of change for the better

A wider military conflict in the Middle East is a possibility and if that happens, Pakistan will find itself on a very tight rope to walk on. Similarly, after making it clear to the US that Pakistan wants to repair its ties with Washington but not at the cost of China, Islamabad must realise what cost the country may have to pay as it moves on boldly on implementing the second phase of the China-Pakistan Economic Corridor (CPEC).

Pakistan’s political forces — both on the treasury and opposition benches — have no other option but to agree to a multi-year charter of the economy instead of engaging in the kill-or-be-killed type of traditional politics that neither suits the larger interest of the state nor is our all-powerful establishment in the mood to allow.

The Bangladesh episode has opened new dimensions of geopolitics and Pakistan needs to move cautiously on that front too. How the interim government of Bangladesh headed by eminent economist and Nobel laureate, Dr Muhammad Younus, would like to position itself in the greater game of regional influence between India and China is yet to be seen.

But, keeping a close watch on this front is a must for Pakistan because whichever way Bangladesh leans or if it manages to strike a balance will have repercussions for Pakistan’s foreign policy and that, in turn, will have implications for our economy.

The new fiscal year that began in July is full of challenges partly due to regional and local political situations and partly due to inherent weaknesses of the economy. And the number one weakness — disappearing fiscal space for doing anything without borrowing — will continue to give policymakers a headache throughout the year.

What many politicians do not seem to realise is that in the last fiscal year, the entire business of the government — from the cost of running day-to-day government to paying pensions to retired employees to meeting the requirements of national defence and security and whatever meagre development activities were undertaken — was done largely on borrowed money.

During the last fiscal year, net government borrowing from banks (for budgetary support) soared to an all-time high of Rs7.4 trillion as the net federal revenue (after transferring of provincial shares) totalled Rs7.1bn whereas a substantially larger amount, aboutRs8.2tr, had to be expensed for internal and external debt servicing. For this fiscal year, debt servicing will require Rs9.8tr, according to the budget estimates.

Published in Dawn, The Business and Finance Weekly, August 12th, 2024