Beg and b0rr0w p0licy !

ARTICLE PRESENTED BY:

• NAVIN KUMAR

• BBA ( 1-B )

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• ASSIGMENT => ARTICLE RELATED ECONOMY

SINDH-MADREESATUL-ISLAM UNIVERSITY

Article Related Economy


BEG

&

BORROW POLICY

Article by ABID HUSSAIN( a former operation adviser at the world bank )

• For decades, the political and military elite governing Pakistan have followed a beg and borrow strategy for financing government expenditures, rather than raising taxes


In addition


In addition, this elite stole from these resources to benefit themselves, and their family and friends. This financing strategy has made Pakistan much more dependent on foreign grants and loans,

compared to other countries of similar size, endowment and level of development. Foreign borrowings for bad projects and programmes have mortgaged our future generations, while excessive foreign grants have mortgaged our national sovereignty.

Over The Last Two Decades

Pakistan has received close to $40 billion in foreign grants (mostly from the UK and the US) and loans from the World Bank, the International Monetary Fund and the Asian Development Bank.

As in all developing countries, the impact of this aid on Pakistan’s socio-economic development is directly linked to Pakistan’s own performance in respect of structural reforms and the effectiveness of the current and development spending by government.


• Around half foreign assistance, roughly $20 billion, was for development projects. Of this, around $10 billion has been put to good use. These include Ghazi Barotha Dam, national highways, barrage improvement efforts, power-generation, pipelines, ports, earthquake reconstruction, banking-sector reforms, micro-finance and polio eradication. These projects have yielded visible and lasting results.


Financed Projects With Limited Impact.

• Another $10 billion in project aid has financed projects with limited impact. These include support for education and health, the water sector, institution-building and access to justice. Despite decades of donor support for health and education, results have been disappointing.


While many of these projects showed good results in the short term-a new school, additional teachers, increase in piped water-these improvements were short-lived. Within a few years: the school building deteriorated and its toilets became dysfunctional; new Health Centres neither had Doctors nor medicines; new piped water systems became non-functional because there was no money the repair of pumps. SINDH-MADREESATUL-ISLAM UNIVERSITY

• Because of decades of borrowings to finance high fiscal deficits, Pakistan now has one of the highest interest expense in the developing world as ratio of tax revenues.

• Pakistan’s economy is stuck in a “low growth-high inflation” trap and Pakistan could soon once again face a foreign-exchange crisis.


Reason For poor Impact Of Aid

• There are two key reasons for poor impact of aid. First, poor performance by the government itself– One step forwards,

– two sideways

– three backward.

• There is no penalty within government for bad borrowing decisions or poor project implementation.


SOLUTION

• Pakistan needs a new aid strategy.

• First, Pakistan must get out of its shameful begging behaviour. Addiction to aid has become opium for the country.

• Second, aid effectiveness must be improved so the country does not incur foreign debt with no benefits to the economy or ordinary citizens.


Graph Represnt The Borrow Rate From 1995 To Date


Refrence =>

• http://www.thenews.com.pk/Todays-News-9-99758-The-beg-and-borrow-policy


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Beg and b0rr0w p0licy !