went up to 35.40% by 1997.
While in 1980, 62% of all lending was made in the form of grants, by 2000, grants constituted only 21% of the total.
Needless to say this debt burden has been borne by the working masses in the form of subsidy cuts, regressive indirect taxes, and a general shift towards jobless growth. Whileworker’s remittances have partially offset the huge outflow of resources since the 1970s,the debt burden has risen exponentially over the past two decades.
In 1990 total externaldebt was US$21.4 billion, a figure which had risen by 2010 to a staggering US$55billion, an increase of 157%
. As a result of this growing burden, which has beenexacerbated by numerous adverse factors such as un unsustainable oil import bill, thespread of imperialist war into Pakistan, and the continuing stranglehold of anti-peopleneo-liberal policies, the Pakistani people have been plunged into economic and socialfreefall. If the debt burden continues to grow more onerous after the devastation of thissummer’s floods, the country and its people could face descent into a never-ending abyss.
The Political Context of Debt
Debt never functions as a ‘neutral’ policy tool, and particularly not in Pakistan. The vastmajority of the country’s debt has been contracted during the illegitimate rule of militarydictators. The trend was established during the Ayub Martial Law regime. Prior to 1954(when Ayub Khan became Defence Minister), Pakistan had received virtually no foreignaid, despite its desperate appeals to the western countries. By 1968 Ayub had been in power for 10 years and was the blue-eyed boys of the western countries for his participation in anti-communist pacts; his reward was foreign aid totaling US$4.7 billion,which was equivalent to 50% of total imports and 34% of total developmentexpenditure.
The rosy predictions of Pakistan being a model of third world developmentnotwithstanding, it was already apparent by this time that Pakistan was paying for the‘aid’ it was receiving: foreign sources accounted for 3.24% of total capital receipts in1955-60 and 52.57% by 1966-7.
Through the 1970s foreign aid packages were sparse. However the heavens opened againfollowing the coming to power of General Zia-ul-Haq in 1977. Geo-politicalconsiderations mandated that Zia’s brutal regime be showered with dollars, even whiledemocratic norms were subverted and a large amount of money wasted on the country’scovert nuclear programme. Bilateral aid during the Zia years from the US alone totaledUS$4.2 billion. While this aid and large remittance incomes ensured some modicum of economic stability for the regime, the structural crisis of the Pakistani economy wasimpossible to ignore: net aid flows decreased substantially between 1977 and 1988 and
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