Chaltahai
I too would like to see pakistan prosper and get out of this terrible debt burden which is costing pakistan $6 billion + alone in intrest annually. The situation can never improve under the current system of capitalism as this makes pakistan dependent on continuous imf, world bank, paris club loans just to pay of previous loans.
Pakistan has already paid back $12 for every $1 borrowed. Islam forbids paying the interest on foreign or domestic debt so from islamic point of view the loan has been paid several times over. You made point you do not wish to have islamic point of view on this subject this is impracticle since we are muslims and wish to live under islam so therefore an islamic solution is inevitable and it is practicle regradless of the doom merchants predictions on guppshup who when i have challenged to provide an alternative they are silent.
The topic of debt repayments under the islamic state is huge topic and is linked greatly to the economic system of islam so the system in pakistan has to be overhauled and replaced with the islamic system.
With respect to the debt situation, there are a number of points to make. First of all we need to review all liabilities both external and domestic to ascertain the principal borrowed. We need to understand that despite Pakistan paying billions of dollars over the last decade why our debt continues to rise. In terms of external debt if there is a shortfall in the principal we could enter into negotiations using political, economic and military factors and arrive at some kind of solution. With respect to domestic debt this could be accounted for in terms of either a loan whose principal will be repaid or emergency taxes could be levied on the richest 1% to compensate those on moderate-income levels. On both forms of debt it will be made clear that paying of interest is completely prohibited in line with the constitution of the State.
If the Japanese government can argue that giving debt relief to any country is against their country's constitution, then the Islamic State can also argue that the paying of interest is against ours.
Interest saved from the annual budget which is approximately $5 billion or Rs. 325 billion could then be reinvested into productive industrial sectors such as heavy engineering and manufacturing, coal, oil and gas as well as investment in health and education facilities.
As domestic bonds, savings accounts and treasury bills will in essence be abolished, private domestic capital will then flow through to productive enterprises in the real economy. Consequently the current situation where many businesses in the IT, agricultural and SME sectors are credit starved will no longer be the case as capital will no longer be the preserve of the minority but will now circulate freely.
The main reason apart from debt servicing which causes the government to borrow in the first place is the huge corruption by the establishment as well as the poor running of state enterprises. There is huge corruption in Wapda, KESC, Pakistan Steel, PIA and the railways. Better management of entities and removal of corruption will result in a saving of about Rs 100bn a year. By cutting down on the corruption of the elite who control these enterprises, you can then increase the salaries in vital and deserving sectors such as teachers, the police and health professionals. Also those sectors which are vital to the economy such as oil, coal and gas should not be privatised as they are classified by the shar'a as public property.
If we invest the debt servicing and other savings in our natural energy resources so as to extract coal from Sindh and gas reserves in Balochistan, we would avoid the need to import over $3bn of oil, thus reducing our reliance for foreign exchange.
At present there are millions of acres of land in Pakistan, which are owned by a small number of landlords who largely inherited these holdings from the British colonialists. Under the shar'a land will be confiscated if it remains idle for three years and given to someone who is in need of land. Hazrat Umar bin Khattab (ra) said and this was confirmed by the consensus (ijma) of the Sahaba (ra)that ' Whoever neglected a land for three years without using it and another person came and used it, it becomes his'. This measure again encourages the principle of wealth circulation in the economy.
The currency in the economy which is currently the rupee will no longer be allowed to be used in the economy as a fiat currency, rather it will be based on the gold standard. A one-time conversion will be made to ensure that all currency in circulation will be backed by adequate gold and silver reserves. Initially this may cause some hardship as at present the government covers up its economic weakness by printing money, thus creating inflation. However in the long run our currency will be stable and will not depreciate like the Rupee has done over the last fifty years creating immense misery for all concerned in terms of higher prices. It will also ensure that our currency cannot be manipulated by the colonialists in the form of international speculators, as was seen a few years ago in SE Asia.
As a final point those that argue that not paying imf or changing the agreements on intrest repayments will cause disaster the $5bn saving we receive from eliminating debt servicing is significantly more than double the net capital inflow that Pakistan currently receives from various international sources through DFI's and project aid per annum. Net external resources inflow is only 10% of our gross capital formation. Foreign direct investment is minuscule only around about $400m gross on an annual basis and portfolio investment is in effect negative and is focused on trading of existing securities not on new issues, project aid is declining. At present domestic savings finance over 90% of our total investment, we are not a foreign capital dependent economy. In addition Pakistan like most of the Islamic world is rich and self-sufficient in all resources whether they be labour, energy or agricultural. Also detaching ourselves from the international financial system is not the same as de-linking ourselves from trading with non-imperialist nations. The Islamic State will continue to trade and seek to build relations with such nations, the State will also be interested in financially acquiring technical assistance and technological transfer as long as there are no detrimental conditions attached to these dealings.
