1 00:00:00,190 --> 00:00:10,950 Welcome all to this special session on Pakistan, its economy and its political future. 2 00:00:12,180 --> 00:00:18,810 It gives me really very great pleasure to introduce Dr. if that smile, whom I'm sure you all know, 3 00:00:19,410 --> 00:00:28,260 has had a distinguished career as an economist and as a member of more than one Pakistani government. 4 00:00:28,560 --> 00:00:32,610 He was federal minister of Finance in 2018 and again in 2022. 5 00:00:33,240 --> 00:00:37,860 Before that, he was advisor on Finance, Revenue and Economic Affairs. 6 00:00:38,610 --> 00:00:44,490 Chairman of the Pakistan Board of Investment. And prior to his return to Pakistan. 7 00:00:45,000 --> 00:00:46,260 In those capacities, 8 00:00:46,260 --> 00:00:55,980 he was an economist at the IMF and has done a Ph.D. in public finance and political economy from the Wharton School at the University of Pennsylvania. 9 00:00:57,420 --> 00:01:02,969 So eminently qualified to speak of this subject. 10 00:01:02,970 --> 00:01:09,330 Subject. I would like to thank the Pakistan program for co-sponsoring, 11 00:01:09,840 --> 00:01:17,190 along with the Asian Studies Centre and the Oxford Centre for Global History, which is the overall sponsor of the seminar. 12 00:01:17,220 --> 00:01:20,880 This is the second seminar in a series on Global Order. 13 00:01:20,910 --> 00:01:28,950 The first one was held at Nuffield College and the speaker on that occasion was Wadah Khanfar, 14 00:01:28,950 --> 00:01:35,370 the founder of Al Jazeera, who spoke on the decline of American activity in the Middle East. 15 00:01:35,670 --> 00:01:44,610 So this is a seminar series that deals with the larger problems of global ordering and its future by looking at specific cases. 16 00:01:45,300 --> 00:01:50,580 So we are delighted today and please join me in welcoming Dr. Amir. 17 00:01:50,790 --> 00:02:06,280 Smile. Thank you, Professor Furstenberg and the Asia Society. 18 00:02:06,400 --> 00:02:16,840 Central Asian Studies. Asian Studies Centre. And and for inviting me an organising distraught thank you and thank you all of 19 00:02:16,840 --> 00:02:20,110 you for coming here and giving me a chance to speak to you and interact with you. 20 00:02:21,430 --> 00:02:31,540 What I'll do is I'll run through a presentation in about 30, 35 minutes, and then we can try and answer some questions. 21 00:02:31,540 --> 00:02:39,009 And I'd love to hear your comments on this, because what I'm trying to do is actually to write a book. 22 00:02:39,010 --> 00:02:46,659 And so I'm basically going to give you the outline of the first two chapters and let's see what happens. 23 00:02:46,660 --> 00:02:50,410 And then if you guys can let me know if it's worthwhile or not. 24 00:02:50,680 --> 00:02:54,730 You know, here's the road map for the presentation. 25 00:02:56,470 --> 00:03:02,790 I will first. Argue or try to make a case that Pakistan is an elite captured state. 26 00:03:05,430 --> 00:03:15,570 After doing so, then I'll try to argue that in a state like Pakistan, what is important is the maintenance of the status quo and not. 27 00:03:16,140 --> 00:03:23,940 This is not a state that is looking for social justice or a state that is looking for growth, economic growth that lifts all boats. 28 00:03:25,140 --> 00:03:29,980 And because it is state that is looking for status quo maintenance of the status quo. 29 00:03:30,330 --> 00:03:35,250 Therefore, the governance has become very ineffective in Pakistan over the years. 30 00:03:35,250 --> 00:03:41,970 And some of the reasons that we'll discuss and then I'll try and give you some examples of why the governance is ineffective. 31 00:03:42,450 --> 00:03:48,389 Then we'll talk a little bit about Pakistan being in severe economic crisis and not just an economic crisis. 32 00:03:48,390 --> 00:03:50,760 And here I'll also speak a little bit about Sri Lanka, 33 00:03:51,480 --> 00:04:02,520 about why I think they also came under a lot of pressure and because of the recent events, Bali crisis, as some call it. 34 00:04:03,900 --> 00:04:09,760 And I think that's where I'll stop. I will not go to the pillars that I think that we need to. 35 00:04:10,290 --> 00:04:14,220 Some pillars that will underpin the subsequent growth. 36 00:04:14,730 --> 00:04:22,469 But I will suggest that the crisis that Pakistan is going through in and the further crises that we will go through 37 00:04:22,470 --> 00:04:28,170 political as well as economic crises present to us an opportunity to do something about the structure of the state. 38 00:04:28,650 --> 00:04:31,229 So let's start with the elite control thing. 39 00:04:31,230 --> 00:04:44,340 And I spoke to I gave a TED talk before I became a minister this time around in 2021, when I talk about Pakistan not as an Islamic republic, 40 00:04:44,340 --> 00:04:51,530 which Pakistan fashions itself as but as the 1% republic, because Pakistan is controlled by, 41 00:04:52,170 --> 00:04:58,200 you know, 1% of Pakistanis and ill defined elites in a minute. 42 00:04:59,850 --> 00:05:13,560 But let me start with this example of one plus one plus eight, and we will talk about examples of true in education, politics, military and business. 43 00:05:14,940 --> 00:05:22,110 But let me start with education. There's a school in Lahore called Aitchison College. 44 00:05:23,280 --> 00:05:28,920 Half of Pakistan's judiciary currently right now, more than half of our judiciary come from this one school. 45 00:05:31,950 --> 00:05:34,770 60% of Imran Khan's cabinet used to come from that school. 46 00:05:35,550 --> 00:05:41,340 At any given point, I mean, it would be fairly surprising if, you know, four out of ten cabinet members are not from that school. 47 00:05:42,120 --> 00:05:51,840 There are 200,000 schools in Pakistan and one school, which only is a boys school, is giving you half of your judiciary and half of cabinet members. 48 00:05:52,380 --> 00:05:55,230 So that tells you, you know, the importance of network, 49 00:05:55,230 --> 00:06:02,730 the importance of elite control and importance of being part of that network so that you can then progress in life. 50 00:06:06,210 --> 00:06:11,970 There is another school in that adjacent colony ground. 51 00:06:12,000 --> 00:06:16,200 It just in 150 acres, which is called Aitchison Colony School. 52 00:06:16,950 --> 00:06:26,220 This is a school for the children of the drivers and gardeners and the helpers who work in the school and then for their children. 53 00:06:27,570 --> 00:06:32,040 And not one kid from that school ever goes to become a Supreme Court chief justice or justice. 54 00:06:33,900 --> 00:06:39,060 There's another school in Karachi called Karachi Grammar School, where half the rich people of Pakistan come from. 55 00:06:39,570 --> 00:06:44,070 Almost all the top bankers. Karachi based lawyers, professionals, they come from that school. 56 00:06:45,540 --> 00:06:51,300 The current chief justice comes from, you know, not difficult to guess, you know, Aitchison School, Lahore. 57 00:06:51,870 --> 00:06:55,080 The next chief justice will come from Karachi Grammar School. 58 00:06:57,120 --> 00:06:59,430 So that's the whole of, you know, these two schools. 59 00:06:59,440 --> 00:07:04,290 Now, if you add another few schools, the three American schools the got it got it in Potrero that got it. 60 00:07:04,290 --> 00:07:14,850 Got it and that's it. So you have maybe 20,000 kids whose parents today control all of Pakistan, who father, in all honesty, control all of Pakistan. 61 00:07:15,060 --> 00:07:20,040 And these 20,000 kids in these different schools will go on to control all the important positions in Pakistan. 62 00:07:20,430 --> 00:07:23,490 And when you give me exceptions, those are exceptions, really, that prove the rule. 63 00:07:24,420 --> 00:07:37,080 But let's generalise this a little bit more. 2% Pakistani children, schoolchildren go through the A-level and all level stream of education. 64 00:07:38,610 --> 00:07:45,000 97%, 98% of the others go through the Pakistani system, which is the metric and intermediate. 65 00:07:47,470 --> 00:07:54,490 But so this is about 40,000 or 45,000 kids who will get a lawyer who will do 11th this year. 66 00:07:55,750 --> 00:08:04,270 And that's about 2% of all the kids. Right. We have 65 million kids of school going age and he has 40,000 kids who do A-levels. 67 00:08:05,680 --> 00:08:11,020 And you can be absolutely sure that every single good job will go to these poor kids. 68 00:08:11,470 --> 00:08:14,740 These are the only ones who are actually prepared for college in the world. 69 00:08:15,440 --> 00:08:19,870 You know, best colleges in the world who are the they're the only ones who are actually given a good education, 70 00:08:21,040 --> 00:08:26,800 who are not dependent on rote memorisation and who can actually compete in the world, in today's world. 71 00:08:29,590 --> 00:08:37,270 What about the other 97%? Well, I mean, I'm just saying to in 98, 97, two and a half percent and 98%. 72 00:08:37,270 --> 00:08:43,900 But actually, half of our kids don't go to school. Half of Pakistani kids of school going age are not in school. 73 00:08:48,370 --> 00:08:59,590 The World Bank estimates that 75% Pakistani children have what is called literacy poverty, which is to say that a ten year old child cannot read. 74 00:08:59,620 --> 00:09:02,649 Age appropriate two sentences. That's 75%. 75 00:09:02,650 --> 00:09:07,210 That's World Bank's estimate. Recent estimate. The report was released, I think just this month. 76 00:09:09,220 --> 00:09:14,290 The Afghan university did a study for 50 of 15,000 kids across Pakistan. 77 00:09:15,130 --> 00:09:20,920 The average child got 27 points in math and 31 marks in science. 78 00:09:21,520 --> 00:09:33,410 So the average Pakistani child fails both math and science. 67% of Pakistanis, they say, are illiterate, but really they're not. 79 00:09:33,420 --> 00:09:38,250 I mean, you know, because if you look at 75% poverty, illiteracy, they can't really read and write. 80 00:09:40,380 --> 00:09:46,350 So of the 65 million kids and more than 20 million are out of school, another 10 million are in madrassas. 81 00:09:46,350 --> 00:09:51,960 Madrassas and half go to school. Only 45% get to 10th grade. 82 00:09:53,400 --> 00:10:00,420 Only 45% get to 10th grade. And so you have these very elite kids, the 1% Pakistanis. 83 00:10:01,290 --> 00:10:09,150 Then you have 10% middle class Pakistanis who can do, you know, O-levels, A-levels, upper middle class Pakistanis. 84 00:10:10,890 --> 00:10:15,750 You know, if you look at LUMS and ABBA and Alcon University, the three best universities in Pakistan, 85 00:10:15,750 --> 00:10:20,800 by any measure, an overwhelming majority of the children are from all level 11. 86 00:10:20,880 --> 00:10:25,290 And yet only 2% Pakistanis go to these schools, go to the system. 87 00:10:25,400 --> 00:10:29,100 So so so we have actually the best opportunities are for the elite. 88 00:10:29,550 --> 00:10:35,820 The second best opportunities are for the middle class. And then there are the 90% Pakistanis, the poor Pakistanis. 89 00:10:36,840 --> 00:10:42,990 60% of Pakistanis have family income for a family of six of less than ₹35,000 a month. 90 00:10:43,500 --> 00:10:47,430 That's less than, I think, £100 a month, that 60% Pakistanis. 91 00:10:47,850 --> 00:10:53,820 So the 90% Pakistani we've added but these are others, you know, their hunger doesn't matter. 92 00:10:54,330 --> 00:10:58,680 Their, you know, living condition doesn't matter, their health conditions doesn't matter. 93 00:10:58,950 --> 00:11:01,950 The illiteracy doesn't matter because they're not people like us, 94 00:11:02,190 --> 00:11:12,030 which is a phrase that Pakistanis use in education is not the only obviously elite controlled area. 95 00:11:12,040 --> 00:11:15,780 But we start with that. And how do we get keep this? 96 00:11:17,640 --> 00:11:26,280 We can't keep this by the English language. The ability to speak English or inability to speak English essentially divides 97 00:11:26,670 --> 00:11:31,379 Pakistanis into middle class and elite and non-military class Pakistanis. 98 00:11:31,380 --> 00:11:35,010 You know, the other Pakistanis, the lesser Pakistanis, the poorer Pakistanis. 99 00:11:36,570 --> 00:11:42,060 And that you know, that gatekeeping. And that's the best thing about English rates in Pakistan. 100 00:11:42,330 --> 00:11:48,360 And that gatekeeping continues. The government talks about, you know, medium of instructions. 101 00:11:48,360 --> 00:11:51,930 And then we have papers and papers written about this. 102 00:11:52,440 --> 00:11:55,890 But even today, you know, we are teaching kids in languages they don't really understand. 103 00:11:57,810 --> 00:12:01,290 So English access, gatekeeping, you know, gatekeeper for elites. 104 00:12:02,400 --> 00:12:06,960 And so this elitism starts early on at school. 105 00:12:07,920 --> 00:12:14,460 And then if you look at politics, politics, of course, is dominated by feudal families or, you know, rich families or elite families. 106 00:12:14,940 --> 00:12:22,140 And it continues. There's hardly a politician you can think of, really, except for maybe a fan who did not come from an elite background. 107 00:12:25,170 --> 00:12:31,200 And these things go to families. I give the example just to be neutral of a foreign. 108 00:12:32,460 --> 00:12:37,410 He in 1934 started a movement called Academic Garb Movement. 109 00:12:38,670 --> 00:12:42,360 Then his son, one of his sons, became governor of NWFP. 110 00:12:42,360 --> 00:12:47,190 The other son was Vali Khan, who became head of National Awami Party. 111 00:12:48,120 --> 00:12:51,600 Bhutto then banned the National Army Party in jail of a legion. 112 00:12:52,950 --> 00:12:59,130 So the rechristened the party as National Democratic Party, and that was headed by his wife in family. 113 00:13:00,720 --> 00:13:05,580 And then after Ali Khan's that, his son became president of his party. 114 00:13:05,580 --> 00:13:10,530 It's now called Awami National Party. And this the revolution became president third generation. 115 00:13:11,520 --> 00:13:15,870 And now, after a year, we already know that the next president is going to be a million different. 116 00:13:15,870 --> 00:13:29,250 So for generations in that family, and that's repeated everywhere, that industry in 1970s maybe will hark. 117 00:13:30,000 --> 00:13:36,180 The Pakistani economist and former finance minister did an analysis where he found that two thirds 118 00:13:36,180 --> 00:13:40,960 of industrialists and fourth fifth of our banking assets were controlled by only 22 families. 119 00:13:41,760 --> 00:13:45,720 That was a small Pakistan. The population was much less, I think, one fourth of what it is today. 120 00:13:48,180 --> 00:13:51,840 So since then, we now we should be able to come up with 80 families that control this much. 121 00:13:52,410 --> 00:13:57,450 Since then, Bhutto doesn't regard Ali Bhutto nationalised Pakistani industry. 122 00:13:58,320 --> 00:14:03,180 They did a lot of, you know, stuff. We have these rules against monopolies. 123 00:14:03,180 --> 00:14:09,209 We have these rules. Why, you know, companies have to go to stock market and load their stocks and look at what happens 124 00:14:09,210 --> 00:14:15,990 today of the top ten private banks in Pakistan that controlled 68% of deposits. 125 00:14:18,240 --> 00:14:25,860 Habib Bank is the iPhone Foundation. UBL is set on Workers Bank. 126 00:14:26,160 --> 00:14:30,120 Even having a bank are the same family, which is the Habib family. 127 00:14:30,120 --> 00:14:35,460 Originally the richest Pakistan's Muslim commercial bank is Munya Allied Bank bankers. 128 00:14:36,450 --> 00:14:40,320 Mukhtar you all know Askari Bankers. 129 00:14:41,130 --> 00:14:54,060 Faisal Bank is Faisal Bank, and it's by a Saudi Prince bank, followed by a UAE prince and Misan by a Kuwaiti family. 130 00:14:54,480 --> 00:14:58,890 So they are the three or four Pakistani families that control most of the big Pakistani banks. 131 00:15:00,960 --> 00:15:05,220 38% control of listed companies is again by ten groups. 132 00:15:05,220 --> 00:15:10,200 Daoud Group, which was the two richest groups, Denver Habib in 1974, 133 00:15:10,200 --> 00:15:18,659 Habib then Daoud still the two richest Pakistani groups are have even though they controlled 9% of Pakistani industrial assets to bars. 134 00:15:18,660 --> 00:15:24,809 Lucky segment people controlling the 5.1% the Lakhani two cigarettes are now folded a 135 00:15:24,810 --> 00:15:32,490 sold out are do 4.1% house of a we have just 2.4% here as well as the big banking areas, 136 00:15:32,490 --> 00:15:35,670 the Shiraz, these do motorcycles that are not part of the cement. 137 00:15:36,030 --> 00:15:43,200 And if we, you know, again, 2.4% in one shot who also owns M.S. with us, 1.6% and the other is 1.3%. 138 00:15:43,210 --> 00:15:46,440 So I go to cycle who were also there in 1973. 139 00:15:48,930 --> 00:15:56,550 So things have really not changed much. And if Table, for instance, has come up, people are also part of the elite, just not part of the first 22. 140 00:15:57,540 --> 00:16:00,390 And and what happens is that because of this, you know, 141 00:16:00,420 --> 00:16:05,880 there is not even professionals who can come up to the elite because the families just control this and, you know, they just run it. 142 00:16:06,990 --> 00:16:13,490 The concentration of wealth in Pakistan has not changed. I was giving a talk yesterday and somebody said, you know what? 143 00:16:13,530 --> 00:16:18,920 There was one counterexample to my thought. And then when you said that malaria is of barrier down, you know, 144 00:16:18,930 --> 00:16:23,850 started from a non middle class emotionally, you know, background and that's rose to the top. 145 00:16:23,850 --> 00:16:28,710 I said, yes, that's true. So I will give him that. But but that's an exception that proves the rule. 146 00:16:30,060 --> 00:16:33,900 And then military and bureaucracy. And as we were talking prior to coming here, 147 00:16:35,310 --> 00:16:42,510 the one thing that military and bureaucracy do is that they they recruit their young officers from middle classes, 148 00:16:42,540 --> 00:16:48,570 not from the 1% elite that children go to Cambridge, in Oxford and in America like you guys have. 149 00:16:49,680 --> 00:16:56,340 But but the middle classes, that's where the army and bureaucracy officers are recruited from. 150 00:16:57,150 --> 00:17:03,630 But they live a very separate life from the lesser officers, the lesser employees of the government, the soldiers. 151 00:17:03,930 --> 00:17:11,490 You know, it's a very different life. And then once if you're retired as a general, you also become part of the elite, also rich and also powerful. 152 00:17:11,790 --> 00:17:19,170 And if you retired also as a bureaucrat and you've been, you know, kind of smart about this, you know, you also are part of the elite forever. 153 00:17:19,680 --> 00:17:22,980 So so this is these four groups. 154 00:17:24,060 --> 00:17:29,880 And they go up to other groups, the old mother, religious clergy and the media. 155 00:17:30,960 --> 00:17:35,340 And these six groups are the elite group that control Pakistan. 156 00:17:37,090 --> 00:17:43,710 And what happens is that not everybody can directly exercise control, but they can have blocking coalitions. 157 00:17:45,150 --> 00:17:50,700 So the ultimate, for instance, are not able to drive an agenda and get something done. 158 00:17:50,700 --> 00:17:57,989 But they can stop almost everything if they want to, you know, so that they are part of the blocking coalition. 159 00:17:57,990 --> 00:18:06,660 And I define and, you know, elite group as part of an interest group that can block, you know, the powers that be to do something. 160 00:18:07,020 --> 00:18:10,620 So, you know, people if you're trying to change something, you know, they can block this. 161 00:18:12,510 --> 00:18:16,589 Interest groups are not a new phenomenon or a novel phenomenon to Pakistan. 162 00:18:16,590 --> 00:18:20,309 Of course, you know, everybody in the world has interest groups and you have parliaments, 163 00:18:20,310 --> 00:18:23,160 which works as a clearinghouse for different interest groups. 164 00:18:23,520 --> 00:18:29,249 Different groups interact with each other and you sort out and you have different coalitions. 165 00:18:29,250 --> 00:18:33,780 For instance, today in India, there's a coalition of Hindutva extremist as along with, 166 00:18:33,780 --> 00:18:40,739 you know, Gujarati and Marathi businessmen and other businessmen. But these coalitions can change in Pakistan. 167 00:18:40,740 --> 00:18:44,010 This coalition and every coalition has to have the military within it. 168 00:18:44,280 --> 00:18:47,430 You know, winning every winning coalition has to have a military within it. 169 00:18:48,390 --> 00:18:55,379 These coalitions cannot remain static. And because of the the importance and power of these interest groups, 170 00:18:55,380 --> 00:19:02,760 Parliament does not become power because the interest of army in the politics and other institutions in politics, Parliament does not become powerful. 171 00:19:02,880 --> 00:19:07,140 It's not really doing the job of a clearing house amongst interest groups. 172 00:19:07,440 --> 00:19:10,770 And so you don't really have a lot of you don't see a lot of change in Pakistan. 173 00:19:11,940 --> 00:19:19,080 And as a result, interest groups hold on to their own privilege. 174 00:19:21,450 --> 00:19:23,910 I'll give you one example right now before I move. 175 00:19:26,120 --> 00:19:35,270 That we have five airlines in Pakistan for our private sector airlines and one government airline per year, Pakistan international airlines. 176 00:19:35,900 --> 00:19:44,660 This year, PIA will lose about ₹90 billion and BA has lost money every year of its existence. 177 00:19:44,690 --> 00:19:48,049 Supposedly, it made money two years in 2003 or 2004. 178 00:19:48,050 --> 00:19:52,610 But I know this. I've been a director of CIA, that those were also gimmicks. 179 00:19:52,880 --> 00:19:58,130 But really this sort of lose money every year. And yet we continue to have a government airline for no reason at all. 180 00:19:58,820 --> 00:20:04,250 The aid doesn't pay money to civil aviation. Its dues pay doesn't pay for fuel to Pakistan state oil. 181 00:20:04,850 --> 00:20:08,030 And it just creates a lot of mess. It's not safer than other airlines. 182 00:20:08,030 --> 00:20:11,389 It's not better than other airlines. Its fares are not cheaper than other land. 183 00:20:11,390 --> 00:20:17,750 But we do have a venue because the 12,000 employees of Paladin block and then sometimes they will, you know, 184 00:20:18,890 --> 00:20:27,950 make coalitions with one of those fixed forces that I talked about to to to sustain themselves and stop from privatisation. 185 00:20:28,490 --> 00:20:32,719 The salaries of these employees is about 20 billion and yet we're going to lose 90 billion. 186 00:20:32,720 --> 00:20:37,890 So we are actually better off just giving them salaries. And then we still have 70 billion, but we still run. 187 00:20:37,890 --> 00:20:42,200 Pia So that just tells you that, you know, people just don't give up on their privileges. 188 00:20:43,040 --> 00:20:49,940 So my thesis is my argument is that we have three Pakistans. 189 00:20:50,180 --> 00:21:00,860 One is the Pakistan of the elites, the very rich elites, the 1% elite, the top military, the top bureaucrats, the top rich people and stuff like that. 190 00:21:01,610 --> 00:21:07,850 Most children, you know, go to the best schools and have the best options and who will go on to become rulers of Pakistan? 191 00:21:08,300 --> 00:21:14,910 Then there are the 10% middle class Pakistanis who still, you know, have connections of this. 192 00:21:15,080 --> 00:21:20,870 You know, they can do safaris and this and that upper middle class, comfortable life. 193 00:21:21,770 --> 00:21:32,840 And then there is the 90% Pakistanis, the poor, the downtrodden, the drivers, the masses, the jockey are the guards, you know, who really? 194 00:21:35,810 --> 00:21:43,730 For whom having three meals a day is a struggle, a lifelong struggle for whom recessions really are a way of life. 195 00:21:43,740 --> 00:21:47,959 I mean, it's not a temporary thing. You know, they're they're living at the edge of, you know, this poverty. 196 00:21:47,960 --> 00:21:52,490 And I'll we'll talk about that in a minute when we talk about ineffective governance and all that. 197 00:21:54,620 --> 00:22:00,680 And so in this next walk in this Pakistan where you have these elite control, 198 00:22:01,990 --> 00:22:08,270 so if you are a Habibur Daoud or a tiger, what you really want is maintenance of the status quo. 199 00:22:08,960 --> 00:22:15,170 People don't measure their utility or their happiness in absolute terms, the measured in relative terms. 200 00:22:16,130 --> 00:22:18,830 So you want to know that you're the richest Pakistanis. 201 00:22:19,070 --> 00:22:24,440 You know, you don't really care where the richest Pakistanis are, richer than richest Indians, origin, Bangladeshi, the richest Americans. 202 00:22:25,010 --> 00:22:28,730 They want to be just the richest Pakistanis, so they don't really care about it. 203 00:22:28,790 --> 00:22:34,490 If you're the richest Pakistani, you don't really care about growth and you certainly don't care about social justice. 204 00:22:37,910 --> 00:22:45,710 If you're a rich, elite Pakistani from any of the military bureaucracy, you know, political, feudal families, 205 00:22:46,130 --> 00:22:53,510 you are more interested in this maintenance of status quo than and maintenance of your own privilege, which is bound to the status quo. 206 00:22:54,410 --> 00:22:58,790 Then you are for change, which will result which could result in growth. 207 00:22:58,790 --> 00:23:04,040 And that would be better for everybody, but which would also result in growing a different section of society. 208 00:23:04,040 --> 00:23:05,150 And it could be worse for you. 209 00:23:07,460 --> 00:23:16,040 So then, because of just society not going for growth and not going for social justice, we get a very ineffective government. 210 00:23:16,280 --> 00:23:19,940 And Pakistan is in this predicament today in all these crises. 211 00:23:19,950 --> 00:23:27,739 And these are not unique to Pakistan, the international, you know, crisis of commodity supercycle, what happened in Ukraine, 212 00:23:27,740 --> 00:23:33,680 Russia war and the price of oil and all of that that has happened to a lot of countries along, you know, doesn't happen to every country. 213 00:23:34,550 --> 00:23:37,790 But other countries have dealt with this better. 214 00:23:38,990 --> 00:23:46,460 But Pakistan was not able to hit. I'll just say that, for instance, when COVID came and tourism you know, tourism decline, 215 00:23:46,730 --> 00:23:52,190 Sri Lanka was disproportionately hurt because it really relies on tourism. 216 00:23:53,330 --> 00:23:55,280 But Pakistan was not really heard that much, 217 00:23:55,700 --> 00:24:02,870 and neither was Pakistan particularly hurt by more hurt by the commodity prices going up or oil prices going up. 218 00:24:02,870 --> 00:24:06,620 But we've not been able to face it because we had a very ineffective government. 219 00:24:06,950 --> 00:24:19,339 Pakistani government is truly very ineffective. And so all of all Pakistanis know that that population, Pakistani population is growing really fast. 220 00:24:19,340 --> 00:24:25,459 And Pakistani governments have been trying for 30 years to try and control population growth, at least 30 years that I know of. 221 00:24:25,460 --> 00:24:28,100 The governments have been trying to control population growth. 222 00:24:28,100 --> 00:24:31,970 We have a ministry for the entire, you know, controlling government and population growth. 223 00:24:32,870 --> 00:24:41,540 And yet an average Pakistani woman has fertility rate 1.8 times that of average Bangladeshi woman and three times that of an average Sri Lankan woman. 224 00:24:42,320 --> 00:24:46,040 We have up until the last census we were growing at 2.4%. 225 00:24:46,040 --> 00:24:52,220 Now we are still growing at 2.1%, one of the largest, highest, fastest growth population, growing population in the world. 226 00:24:53,270 --> 00:24:58,849 We can stop the population for now. We try to make a virtue out of necessity and to talk about demographic dividend. 227 00:24:58,850 --> 00:25:06,950 But the fact of the matter is that Pakistan has 5.5 million babies every year, 5.5 million babies every year, 228 00:25:06,950 --> 00:25:12,799 which means even if 2 million babies are not going to have to go will not go to school and all that. 229 00:25:12,800 --> 00:25:16,550 You still need 3.5 new school admissions every year. 230 00:25:17,330 --> 00:25:24,830 If there are if there is one teacher for 70 kids, you still need 50,000 more teachers, you need 50,000 more classrooms. 231 00:25:24,830 --> 00:25:29,030 And then when they grow up, you need so many more jobs, you know, a couple of million more jobs. 232 00:25:30,050 --> 00:25:33,350 And we are obviously not resourced. 233 00:25:34,370 --> 00:25:38,029 And we why do you have this kind of ringtone but anyway. 234 00:25:38,030 --> 00:25:42,650 But that's anyway. 235 00:25:45,350 --> 00:25:52,459 But and the government of Pakistan knows this and we are trying for 20 years, 30 years to try and do population control. 236 00:25:52,460 --> 00:25:58,460 And look where we've got if you normalise this in 1960, Pakistan, India, 237 00:25:58,460 --> 00:26:03,680 Sri Lanka and Bangladesh, Pakistan's population is five times what it was in the 1960s. 238 00:26:04,700 --> 00:26:09,050 That is. So that guy is going to be twice in India and Bangladesh about three times. 239 00:26:09,920 --> 00:26:15,440 So and look at the share of our population. We are now 3% Pakistanis are now 3% of the world's population. 240 00:26:18,670 --> 00:26:24,460 While over 10% was alerted. And Pakistanis, every ten child with a latrine in the world of the Pakistani, 241 00:26:26,050 --> 00:26:32,110 every three out of 100 people are Pakistanis, but ten out of 100 illiterate but good to the Pakistanis. 242 00:26:32,830 --> 00:26:40,600 So Pakistani population is overtaking Sri Lanka as Bangladesh population and we are obviously growing so much faster than the rest of the world. 243 00:26:40,600 --> 00:26:47,650 So we are obviously not able to do this. So in spite of our trying very best to try and control population, we have completely failed. 244 00:26:49,030 --> 00:26:55,480 We have tried also to stem the tide of terrorism in Pakistan. 245 00:26:55,750 --> 00:27:04,959 If you ask me why Pakistan is the way it is today in terms of lagging behind Bangladesh and India in economy, and there are many other factors. 246 00:27:04,960 --> 00:27:08,230 But the single biggest factor in Pakistan today is terrorism. 247 00:27:09,430 --> 00:27:17,500 The fear of terrorism in Pakistan drives foreign investments away, and there is no foreign investment that comes to Pakistan. 248 00:27:17,830 --> 00:27:23,440 The only foreign investment that comes to Pakistan is the one that foreigners need to sell to Pakistani. 249 00:27:24,100 --> 00:27:30,960 So if you want to sell mobile telephony services to Pakistanis, you have to set up jihad or telephone or whatever. 250 00:27:30,970 --> 00:27:32,620 Then you come and invest in Pakistan. 251 00:27:33,310 --> 00:27:39,700 If you want to sell cars to Pakistan and you have to some cars in Pakistan, then Toyota, Honda will come and assemble a plant in Pakistan. 252 00:27:39,910 --> 00:27:47,799 And even then they don't invest. They actually ask Pakistanis to invest, but nobody invest in Pakistan when they want to send shoes to America. 253 00:27:47,800 --> 00:27:51,100 So they will set up a plant in Vietnam. They would set up a plant in Cambodia. 254 00:27:51,370 --> 00:27:54,560 They will set up a plant in Ethiopia, but they will not set up a plant in Pakistan. 255 00:27:54,580 --> 00:27:58,810 Pakistan is not a preferred destination for any investor anywhere in the world. 256 00:28:00,910 --> 00:28:05,860 And so we only have 30 billion of exports in 1992. 257 00:28:06,670 --> 00:28:10,930 Pakistani and Vietnam's exports were the same thing, about 12 billion or so. 258 00:28:11,860 --> 00:28:15,610 Today, our exports are 30 billion. This year probably won't even get to 30 billion. 259 00:28:15,970 --> 00:28:25,090 Vietnam's exports are north of 300 billion. In 1999, Pakistan was doing .18 percent of the world's export. 260 00:28:26,440 --> 00:28:31,390 Today, we are doing .13 percent of world exports. So our export as a percentage of world has gone down. 261 00:28:32,800 --> 00:28:36,040 Everywhere. Everywhere you see that Pakistan is going down. 262 00:28:36,970 --> 00:28:48,220 And the paper that you sent me this morning, Professor Mullick, showed that in the last since 2012, Pakistan's import restrictions have gone up. 263 00:28:48,220 --> 00:28:53,110 And you can see just as import restrictions have gone up and exports have gone down as a percentage of GDP, 264 00:28:53,500 --> 00:29:03,730 and from 2012 to now, our exports as a percent of GDP have gone from 8.16% to 16% to 12%, or in fact, a 9.8%. 265 00:29:04,180 --> 00:29:07,360 So terrorism is really hurting Pakistan. 266 00:29:07,360 --> 00:29:13,420 And we've we've lost 65,000 soldiers in this war against terrorism. 267 00:29:13,840 --> 00:29:18,910 And I mean, this this number, I think 400 is still April. 268 00:29:21,220 --> 00:29:22,840 And it's, again, rearing its head back. 269 00:29:23,920 --> 00:29:33,219 But unless and until you make Pakistan a normal country with essentially no fear of terrorism and no fear of, you know, law and order issues, 270 00:29:33,220 --> 00:29:40,680 it's difficult for me to see how we get foreign investments in Pakistan and foreign export and foreign buyers to come to Pakistan. 271 00:29:40,690 --> 00:29:45,160 It's impossible to get a foreign buyer to come and visit our factories in Pakistan, and so we can't export. 272 00:29:45,670 --> 00:29:54,760 When I was growing up in Karachi in the 1970s, almost every foreign airline, European airline, would come to Pakistan. 273 00:29:55,270 --> 00:29:59,710 You know, Italian airline, British Airways, just not be able, in fact, dohc. 274 00:30:00,670 --> 00:30:07,659 Some of you may know the KLM and Air France and all of the Lufthansa, 275 00:30:07,660 --> 00:30:11,080 all of these guys would come, Philippine Airlines would come, Japan Airline would come. 276 00:30:11,680 --> 00:30:15,430 Now, nobody comes to Pakistan. Nobody wants to actually have the crew stay overnight. 277 00:30:15,430 --> 00:30:19,660 In Pakistan, there's only one European airline, British Airways, I think that comes to point when nobody else comes. 278 00:30:21,820 --> 00:30:25,090 And so, you know, that tells you that how the world sees Pakistan. 279 00:30:26,140 --> 00:30:28,959 So nothing should be more important for economic growth. 280 00:30:28,960 --> 00:30:34,150 Nothing should be more important for fighting extremism in the society than to, you know, get rid of terrorism. 281 00:30:34,150 --> 00:30:38,170 But we have not been able to do it. I understand the very severe problem, very significant problem. 282 00:30:38,440 --> 00:30:45,780 But this is another failure of our governments. I mean, I don't unfortunately have full data. 283 00:30:45,780 --> 00:30:51,990 But look at where Sri Lanka is, look at where Bangladesh is and look at where we are in education. 284 00:30:53,640 --> 00:30:59,310 Bangladesh today has been able to control its population primarily because it has educated women. 285 00:31:01,520 --> 00:31:06,410 And if Pakistan were to educate its women, it would actually be able to reduce its population growth as well. 286 00:31:06,830 --> 00:31:15,210 And if you educate the women, especially if they've done 10th grade, then it turns out that their propensity to work outside home also increases. 287 00:31:15,800 --> 00:31:21,080 And if today, for instance, Bangladesh exports a lot more than Pakistan, it's not a good government there in Bangladesh, 288 00:31:21,080 --> 00:31:27,190 it's an authoritarian government, corruption, rape, very hard, difficult place to do business. 289 00:31:27,200 --> 00:31:34,040 It's, you know, very resource poor country. And yet it's doing so much better than Pakistan because there are women who are 290 00:31:34,040 --> 00:31:37,610 working outside the home for stitching garments and selling to the rest of the world. 291 00:31:38,030 --> 00:31:42,320 Whereas we are not, you know, no women work in Pakistani garment sector, for instance. 292 00:31:44,990 --> 00:31:52,980 Education. I want to also talk to you about. The fact that we spent ₹2,000 billion on education. 293 00:31:55,490 --> 00:32:06,060 And we have nothing to show for it. In the first ten years of Pakistan, we had seven prime ministers. 294 00:32:07,680 --> 00:32:10,500 India built five Indian Institute of Technology. 295 00:32:10,800 --> 00:32:15,930 Every Pakistani prime minister warns that it explodes from double and quadruple in the next five years. 296 00:32:15,960 --> 00:32:17,100 Nobody understands that. 297 00:32:17,100 --> 00:32:25,229 You know, you really need a, you know, group of engineers, computer engineers and, you know, applied mad guys who understand how to do this dispute. 298 00:32:25,230 --> 00:32:31,110 Mad guys understand how to do this. Nobody pays attention to educating our kids, but they want it to export. 299 00:32:31,110 --> 00:32:38,370 You can't do it exports. You can't do exports of computer stuff unless and until you have educated workforce. 300 00:32:38,550 --> 00:32:48,390 But we've not been able to do that. Before you look at this graph and I mean, just tell you the numbers today. 301 00:32:49,200 --> 00:32:49,499 Today, 302 00:32:49,500 --> 00:33:00,540 the number is that 40.2% of Pakistanis children under the age of five were stunted and 17.7% of Pakistani children under the age of five are wasted. 303 00:33:01,110 --> 00:33:10,979 Now, look at 2013, 27% of stunted and 9.4% harvested from 2013 to 2018. 304 00:33:10,980 --> 00:33:17,940 The government worked hard, but nonetheless another 5% become stunted and another 4% become wasted. 305 00:33:18,390 --> 00:33:27,990 And today, as I said, 40.2% or 40.2% are stunted and 17.7% wasted. 306 00:33:28,020 --> 00:33:30,810 Now, what does that stunting, investing mean? Let me just define that for you. 307 00:33:30,900 --> 00:33:39,330 When a five year child is considered stunting, if his height, his or her height is nought according to the age. 308 00:33:40,470 --> 00:33:44,880 And this is primarily because you've not given enough nutrition or enough food 309 00:33:45,180 --> 00:33:50,430 throughout the life of the child so that his height has not come up to his age. 310 00:33:52,140 --> 00:33:56,400 A child is wasted when his weight is less for his height. 311 00:33:57,630 --> 00:34:04,560 And this primarily happens when, you know, in the first three or four years of his life, he got enough food, so his height was okay. 312 00:34:04,830 --> 00:34:10,620 But last year, some economic catastrophe happened. Maybe the parent lost a job or maybe there was a health catastrophe, 313 00:34:10,830 --> 00:34:16,290 or maybe there were floods in the town and that child was not able to get enough food last year. 314 00:34:17,250 --> 00:34:25,719 So his weight actually shrunk. So 58% of Pakistani children are either stunted and renew stunted. 315 00:34:25,720 --> 00:34:31,660 Your mental growth development also stops or, you know, 58% Pakistani. 316 00:34:32,050 --> 00:34:36,340 They're stunted or wasted. The government of Pakistan, there's no controversy here. 317 00:34:36,350 --> 00:34:39,730 There is no politics here. There is no interest groups here. 318 00:34:39,970 --> 00:34:44,799 These are five year old kids. Nothing stops the government for being effective and do something about this. 319 00:34:44,800 --> 00:34:50,040 They can't. And they've been trying for the last 20 years. 320 00:34:50,070 --> 00:34:52,410 That just shows you how ineffective this government is. 321 00:34:52,860 --> 00:34:59,189 And when I said this government, I mean all governments of Pakistan, we've seen every government in Pakistan in the last two, three years. 322 00:34:59,190 --> 00:35:03,350 All the major political parties have been in government. This century, we've seen martial law. 323 00:35:03,360 --> 00:35:07,020 We've seen People's Party, we've seen PTI. We've seen Muslim League. We've seen PDM. 324 00:35:07,290 --> 00:35:13,170 We've seen hybrid. We've seen semi hybrid. The one thing we've not seen is any improvement in the life of an ordinary Pakistani. 325 00:35:14,280 --> 00:35:19,500 So at some point, you have to understand that it is governance in Pakistan that really is ineffective. 326 00:35:23,230 --> 00:35:34,240 And why do we have to look at this? If you have so much stunting and wasting, then obviously you'll have greater infant mortality. 327 00:35:34,240 --> 00:35:39,610 We have 50 children out of 1000 who die in Pakistan in the first year of birth. 328 00:35:40,510 --> 00:35:46,600 And we have 44 kids out of a thousand who die in the first four weeks, 30, 40, not 44. 329 00:35:47,260 --> 00:35:50,770 Lesotho has 44 children out of 1000 who die in the first four. 330 00:35:51,040 --> 00:35:59,559 That's the worst in the world total. The second worst is Pakistan and South Sudan combined both jointly, Pakistan and South Sudan. 331 00:35:59,560 --> 00:36:03,730 Both have 40 kids out of 1000 who die in the first four weeks of poverty. 332 00:36:04,330 --> 00:36:10,149 And one reason we have children with low birth weight is because 42% Pakistani women have iron 333 00:36:10,150 --> 00:36:14,440 deficiency deficiency that can go away with a couple of injections and slightly better diet. 334 00:36:14,950 --> 00:36:26,659 But we can't do it. We can't seem to do that. So we have one of the highest infant mortality rates in the in twice as much 335 00:36:26,660 --> 00:36:30,230 of India and Ghana at five times as much as four times as much as Sri Lanka. 336 00:36:30,770 --> 00:36:33,230 This is worse than most countries in sub-Saharan Africa. 337 00:36:38,580 --> 00:36:46,830 And so we have one of the worst human development indices in the world, and there is no politics here involved here. 338 00:36:47,550 --> 00:36:59,040 And yet really simple in effectiveness. This is my favourite example to give a circular that is something which is it's a misnomer really. 339 00:36:59,040 --> 00:37:05,730 It's actually accumulated power sector losses, accumulated and non-paid power sector losses. 340 00:37:07,770 --> 00:37:21,600 In 2006, there were 84 billion. This is the first time people heard of circular debt, that 84 billion was the accumulated power sector losses. 341 00:37:23,100 --> 00:37:26,370 2008. When Musharraf left, there were about ₹100 billion. 342 00:37:27,900 --> 00:37:35,910 And then People's Party came in. The power sector accumulated losses of 100 billion, and People's Party worked really hard to try and curtail this. 343 00:37:35,910 --> 00:37:40,020 And after five years when they left, it were 504 billion. 344 00:37:41,520 --> 00:37:47,910 And when PML-N came to the government, we said, Well, people's party people are incompetent, they're corrupt, they don't know what they're doing. 345 00:37:48,240 --> 00:37:56,820 We know exactly what we are doing. So PML-N worked really hard at it and after five years circular, that went up to ₹1,100 billion. 346 00:37:58,390 --> 00:38:02,110 And then Imran Khan came along with manna from heaven. 347 00:38:02,950 --> 00:38:06,519 And then Imran Khan says, Of course I am not corrupt. 348 00:38:06,520 --> 00:38:10,360 And I have this team of heroic people and will set everything right. 349 00:38:10,360 --> 00:38:13,270 And two years we will get rid of circular debt. 350 00:38:13,690 --> 00:38:20,800 And Imran Khan's team worked really hard for four years and circular debt went up from ₹1100 billion to ₹2350 billion. 351 00:38:22,060 --> 00:38:25,389 So again, this time PDM governance is way brown and of course it's incompetent. 352 00:38:25,390 --> 00:38:30,430 You know, he doesn't even know what he's talking about. We're going to fix it. So the PDM government comes in after this year. 353 00:38:30,430 --> 00:38:36,090 I promise you it will be about 2700 billion. So every single government has come tried really hard too. 354 00:38:36,130 --> 00:38:42,370 And I know this because I've been in the sector and I've worked very close with people and whether in our party or in opposition parties, 355 00:38:42,370 --> 00:38:46,940 every one of these ministers I've been a personal friend of mine, I promise you, they're all great. 356 00:38:46,960 --> 00:38:51,660 We tried to work and worked hard at this and yet they've not been able to do it. 357 00:38:51,670 --> 00:38:57,520 The problem's only getting worse. And the structure that, you know, there is no solution to this problem. 358 00:38:58,540 --> 00:39:03,849 And now we used to just have accumulated losses in the private sector, in the power sector. 359 00:39:03,850 --> 00:39:07,900 Now we have accumulated losses in the gas sector to ₹1,500 billion. 360 00:39:13,730 --> 00:39:16,850 Then we have extremism is a problem in our society. 361 00:39:17,510 --> 00:39:24,419 We sometimes have. You know, unsavoury behaviour. 362 00:39:24,420 --> 00:39:28,050 I'll just say that toward minorities, especially among these and other minorities. 363 00:39:30,150 --> 00:39:37,620 And the Government is trying to register madrassas that how many murders are there in Pakistan and let's try to register the estimated there, 364 00:39:37,620 --> 00:39:43,260 about 40,000 mothers so they don't even know what madrassas teach. The only the only been able to register 12,000. 365 00:39:44,340 --> 00:39:49,350 They tried to bring madrassas in the mainstream the failed into a still to this 366 00:39:49,350 --> 00:39:52,950 day Pakistan government has no control over the syllabi taught in these models. 367 00:39:54,300 --> 00:39:58,410 Then we come to state owned enterprises and this is my favourite graph. 368 00:39:58,410 --> 00:40:01,560 Now this is space losses this year. 369 00:40:02,970 --> 00:40:06,420 Every year it has lost money from 2013 onwards. 370 00:40:06,870 --> 00:40:13,710 And it's actually the graph, just the data from 2013 lost money except for two years every year, I think in the last 40, 50 years. 371 00:40:14,430 --> 00:40:19,739 And this is going to lose 90 billion. And yet we can't privatise the law of Pakistan. 372 00:40:19,740 --> 00:40:26,400 Pakistani privatisation law is so complicated that if everything goes right, it will take you 461 days to privatise any entity. 373 00:40:27,570 --> 00:40:32,910 But the best example is the bank called Small and Medium Enterprise Bank. 374 00:40:34,680 --> 00:40:42,040 That bank has been losing money since 2007. Every year in Pakistan, banking licences are essentially license to print money. 375 00:40:42,040 --> 00:40:47,519 It's difficult to lose money. No other bank can lose money. That bank has been losing money for 15 years in a row. 376 00:40:47,520 --> 00:40:53,970 I mean, that really is a matter for that. And the government of Pakistan has been trying to privatise that bank since 2008. 377 00:40:54,840 --> 00:40:57,300 And after 15 years we have not been able to privatise. 378 00:40:57,750 --> 00:41:04,170 And so as a result, I think this year they will have to shut it down, but they can't privatise because we have too many accountability laws, 379 00:41:04,170 --> 00:41:07,980 too many procedures, too many processes, and we can't do anything about this. 380 00:41:08,310 --> 00:41:15,110 You know, basically it's just paralysis. And then these are all state owned enterprises losses. 381 00:41:17,220 --> 00:41:24,360 And they keep going up. I want to show you something here. Look at Pia's losses going down in 2020. 382 00:41:26,280 --> 00:41:32,220 You know why? Covered the left the fly the of. 383 00:41:37,460 --> 00:41:40,700 With this money you can do for our Rowan University hospitals every year. 384 00:41:44,310 --> 00:41:48,720 This is the loss of state making to state owned enterprises. They don't do. 385 00:41:48,960 --> 00:41:52,950 They don't. Now you do data since 2019. 386 00:41:53,860 --> 00:41:57,900 Uh, but. But know about 500 billion. 600 billion every year. 387 00:42:01,320 --> 00:42:05,490 And we talk about catchy about regulation. That's another example that, you know, everybody talks about, you know, 388 00:42:05,490 --> 00:42:10,740 how these these shantytowns need to regularise and people have to be given documents and all that stuff. 389 00:42:10,770 --> 00:42:14,020 I mean, I fiercely dispute this is for a 40 year old. 390 00:42:14,020 --> 00:42:18,120 The governments have been trying to do it for at least 40 years and they haven't been able to do it. 391 00:42:18,690 --> 00:42:22,950 My my my thesis is that the government of Pakistan is simply very ineffective. 392 00:42:23,190 --> 00:42:24,320 It can't do anything. 393 00:42:24,330 --> 00:42:30,120 And unless and until we change the structure of our governance, because our governance is completely ineffective, we can't go anywhere. 394 00:42:30,150 --> 00:42:35,970 So that's why you see India going ahead of us, you know, in the 1990s, Bangladesh going ahead of us. 395 00:42:36,240 --> 00:42:41,310 Sri Lanka is in deep trouble. But I mean, obviously, all the statistics show that when Sri Lanka gets it right. 396 00:42:41,820 --> 00:42:48,180 You know, things will be okay. One problem that I think that the POSCO, 397 00:42:48,180 --> 00:42:52,110 the president rather Bhaskar and Prime Minister Rajapaksa and Finance Minister Pascoe made 398 00:42:54,210 --> 00:43:00,450 and Defence Minister that POSCO also made was that they decided that oil was worth $60, 399 00:43:02,130 --> 00:43:08,040 but international price of a barrel of oil went to $70, but rather POSCO decided that it was $60, 400 00:43:08,040 --> 00:43:12,620 so they would sell it at $60 as if it were $60, and then the price went to $80. 401 00:43:12,630 --> 00:43:16,980 They said, no, we will sell it as if it's $60. Then the price went to $90. 402 00:43:16,980 --> 00:43:23,160 They said, No, we will sell as if at $60 they went bankrupt. So if you close your eyes to reality, you know something? 403 00:43:23,340 --> 00:43:32,490 You know reality bites. So now we are in a very severe economic crisis because we have also closed our rights to reality. 404 00:43:32,970 --> 00:43:34,650 So I want to talk to you about two things now. 405 00:43:36,720 --> 00:43:44,730 The first is I'll give you first the Pakistani rupee story and ignore me in it, and then I'll give you the dollar story. 406 00:43:46,350 --> 00:43:52,530 This year, Pakistani government revenues are supposed to be ₹7,500 billion. 407 00:43:52,530 --> 00:43:56,040 They won't be there. They won't they will get to about 7200 billion. 408 00:43:56,040 --> 00:44:03,179 But they're supposed to be 7200 billion. ₹3,500 billion of which the prevention share is ₹4,500 billion. 409 00:44:03,180 --> 00:44:09,090 It's actually a little bit more, but let's just give them that simple. So ₹4,500 billion will go to the provinces. 410 00:44:09,780 --> 00:44:12,780 So you're left with the federal government is left with ₹3,000 billion. 411 00:44:13,860 --> 00:44:19,170 The federal government has to pay ₹5,500 billion as interest on debt, 412 00:44:20,610 --> 00:44:29,070 just the servicing of the debt at ₹5,500 billion this year, which means that you have to borrow money to pay your interest. 413 00:44:31,170 --> 00:44:33,810 And then you borrow money to pay interest. That's called a debt trap. 414 00:44:34,350 --> 00:44:38,010 That means that the more you dig the you know, the more further you'll go in the hole. 415 00:44:39,840 --> 00:44:44,880 Now, suppose next year the government is able to double the deficit, double the revenue. 416 00:44:45,840 --> 00:44:51,540 It will never happen. You know, we won't get more than 20% increase or 5% rate increase or 10%. 417 00:44:51,930 --> 00:44:56,190 But suppose we were able to double the revenue and suppose by some chance we were 418 00:44:56,190 --> 00:45:00,959 able to keep the expenditures where they are and not increase in spite of 35%, 419 00:45:00,960 --> 00:45:03,090 you know, growth in inflation. 420 00:45:04,200 --> 00:45:12,580 So next year, we'll get ₹15,000 billion revenue and 9 billion will again go to the provinces and it will be ₹6,000 again. 421 00:45:12,810 --> 00:45:20,880 And next year we will be basically just being the interest and our deficit again would be six or 7000 billion when you have such high fiscal deficit. 422 00:45:22,140 --> 00:45:25,920 And those of, you know, economics were not something called twin deficits. 423 00:45:25,920 --> 00:45:32,640 The fiscal deficit will give rise to a current account deficit that when governments borrow money, 424 00:45:34,290 --> 00:45:41,700 when governments run deficits, they need to borrow money. They can borrow money either from your local banking sector. 425 00:45:42,810 --> 00:45:48,180 And if they borrow money away from the private sector, that that's called crowding out. 426 00:45:49,200 --> 00:45:52,320 If the private sector saves more, that's called ricardian equivalence. 427 00:45:54,120 --> 00:45:58,890 But typically, Pakistani savings rates and investment rates are the same. 428 00:45:59,880 --> 00:46:03,390 So foreigners have to lend money to us. 429 00:46:03,630 --> 00:46:07,050 And when foreigners lend you money, they lend, they give you imports. 430 00:46:07,890 --> 00:46:13,440 And so you have run a current account deficit. So every time you have a fiscal deficit, you end up running a current account deficit. 431 00:46:13,770 --> 00:46:18,390 So Pakistan has been running its current account deficit 72 out of 75 years. 432 00:46:19,890 --> 00:46:27,969 And as a result, we now all about $100 billion to foreigners that we have to produce in a five year cycle. 433 00:46:27,970 --> 00:46:33,030 So every year we have to give a debt amortisation of about 20 billion between 20 and 25 billion. 434 00:46:33,990 --> 00:46:38,010 And we don't have that money. And the world is not willing to lend us this money. 435 00:46:38,700 --> 00:46:43,920 What typically we do, because we run our current account deficit, we have no money of our own, dollars of our own. 436 00:46:44,250 --> 00:46:49,080 So we will borrow from World Bank to the IMF. We will borrow from IMF to Patient Development Bank. 437 00:46:49,320 --> 00:46:52,290 We will borrow from China, Saudi Arabia and some other countries. 438 00:46:52,920 --> 00:46:58,140 But now the world is very reluctant to fund this because our economy is also not growing. 439 00:46:58,410 --> 00:47:01,500 There are no chances of investments. And by. It's not for now. 440 00:47:01,500 --> 00:47:08,940 We don't know how to prepare foreigners. And that's why IMF becomes important and that's why we are skirting with default. 441 00:47:09,060 --> 00:47:16,920 Once you start starting with default, your demand for dollars go up, goes up, and people want to fly to the safety of a U.S. dollar. 442 00:47:17,370 --> 00:47:23,229 And so the price of dollars goes up and really gets even more trashed in the market and then inflation becomes higher. 443 00:47:23,230 --> 00:47:31,709 And that's why we are where we are and our debt amortisation is 80% of our exports and exports are only financing 40%. 444 00:47:31,710 --> 00:47:37,350 Nowhere in the world you will see that export and financial only 40% of your imports, which is where Pakistan is. 445 00:47:37,350 --> 00:47:42,180 So Pakistan really now we need to rethink what we what we need to do with our country. 446 00:47:43,200 --> 00:47:53,310 We really need to. Figure out how to save these this crisis, how to save Pakistan from this crisis. 447 00:47:53,520 --> 00:47:57,780 I don't really see Pakistan getting out of this foreign currency crisis any time soon. 448 00:47:58,800 --> 00:48:01,920 The next two, three years are going to come up with $25 billion every year, 449 00:48:01,920 --> 00:48:06,420 which means that we'll have to borrow money and have to do, you know, listen to conditions of the world. 450 00:48:06,510 --> 00:48:12,330 And even then, it will become very difficult. That's why Pakistani bonds are today selling for $0.40 on the dollar. 451 00:48:13,770 --> 00:48:23,640 So the market expects a default outcome. But if there were a default in Pakistan, which is not a good thing, and because of the political crisis, 452 00:48:23,940 --> 00:48:34,800 these twin crises then give Pakistanis an opportunity to rebuild Pakistan, a better Pakistan, a Pakistan that goes for two things, in my opinion. 453 00:48:37,080 --> 00:48:40,910 One is economic growth. You want markets to function. 454 00:48:40,920 --> 00:48:44,400 You want privatisation where privatisation is unnecessary. 455 00:48:45,390 --> 00:48:51,660 You want a minimal state aid or a state footprint because Pakistani state is very ineffective. 456 00:48:52,500 --> 00:48:58,710 But the fact of the matter is that in a country which is as uneven in Pakistan, where there's a sea of poverty, 457 00:49:01,110 --> 00:49:06,690 it's very difficult for a driver's child to come compete with an elite persons child. 458 00:49:07,620 --> 00:49:09,780 So you need to have social justice as well. 459 00:49:11,130 --> 00:49:18,720 And there was a Harvard philosopher, John Rawls, who talked about beyond the veil of uncertainty or beyond the veil of ignorance, 460 00:49:19,920 --> 00:49:25,230 that if you didn't know before you were born whether you would be a male or a female, you'd probably not be a misogynist. 461 00:49:26,460 --> 00:49:32,430 If you didn't know before you were born, you would know that you would be Sunni or Shia or Muslim or an M.D. in Pakistan. 462 00:49:33,540 --> 00:49:39,719 You'd probably not be going after minorities so much if you didn't know what the ethnic group would be. 463 00:49:39,720 --> 00:49:44,700 You'd probably be okay with all ethnic groups if you didn't know whether your father would be, 464 00:49:44,700 --> 00:49:47,460 you know, the prime minister of Pakistan or your father would be, 465 00:49:47,490 --> 00:49:54,940 you know, a sweeper in some college, you'd probably be a little bit more for social welfare and social justice. 466 00:49:54,970 --> 00:50:03,390 So if you think about this, if you are deciding this beyond the veil of ignorance, then you would come up with a society which is more egalitarian, 467 00:50:03,390 --> 00:50:08,610 which actually sort of builds up the poorest Pakistanis so that they're able to compete. 468 00:50:09,480 --> 00:50:11,080 And there are two ways to think about this. 469 00:50:11,100 --> 00:50:17,820 I used to actually, to be very honest, I used to think like that once Pakistan becomes rich, we can make all our people richer. 470 00:50:18,450 --> 00:50:22,139 But that's not right now. Pakistan doesn't make rich. 471 00:50:22,140 --> 00:50:27,210 Pakistan doesn't become rich if everybody else is poor. Pakistan only becomes rich if people become poor, richer. 472 00:50:27,630 --> 00:50:31,140 So first you make people richer. Automatically, Pakistan will become rich. 473 00:50:31,710 --> 00:50:38,400 So if you give Pakistanis education, you can't have 60% Pakistani standard administered and then expect economic growth. 474 00:50:38,400 --> 00:50:45,740 That's just not going to happen. You cannot have 75% functional illiteracy and then expect Pakistanis to progress. 475 00:50:45,750 --> 00:50:48,840 That's not going to happen. I mean, you can visually all it's not going to happen. 476 00:50:49,200 --> 00:50:53,220 You can't have an ineffective government in Pakistan if you have these four provinces, 477 00:50:53,490 --> 00:50:57,390 Punjab province, that would be as big as it drove largest country in the world. 478 00:50:58,770 --> 00:51:02,580 We need to have more provinces and we need to devolve power to the local level. 479 00:51:03,090 --> 00:51:13,470 But we really need to rethink Pakistan. And I think that right now what is the objective function in Pakistan, but that you want to maximise? 480 00:51:14,550 --> 00:51:20,370 The objective function in Pakistan is that every elite group wants to maximise its own objective or own utility, 481 00:51:20,370 --> 00:51:24,930 subject to the blocking coalition, subject to the constraint put on by the other blocking coalition. 482 00:51:25,440 --> 00:51:30,480 Instead, we should have this concept that we want to maximise economic growth, 483 00:51:31,170 --> 00:51:38,760 but at the same time we want to be absolutely social justice has to be important so that if a sugar mill comes to you and says, 484 00:51:38,760 --> 00:51:45,750 I want subsidies for exporting sugar, or if a yarn manufacturers comes to you and says, I want import tariffs for the imports of yarn, 485 00:51:46,440 --> 00:51:53,520 you ask yourself whether it's going to be enhancing economic growth, but you also ask whether it's going to be good for social justice. 486 00:51:53,940 --> 00:51:59,370 Or are you just giving subsidies to the richest Pakistanis, which is what we end up doing mostly, most of the time. 487 00:52:00,240 --> 00:52:03,930 And if you do this and this crisis actually gives Pakistanis an opportunity, 488 00:52:04,650 --> 00:52:08,040 because otherwise the way Pakistan is going with the deficits that we have, 489 00:52:08,040 --> 00:52:14,460 8% of GDP, budget deficits and with the financing issue holds that we have dollar financing holes. 490 00:52:14,730 --> 00:52:22,410 I don't see Pakistan going moving forward. You know, we can have a low level equilibrium of 2% growth, another growth under growth, another crisis. 491 00:52:22,410 --> 00:52:31,860 And we have a two and a half percent growth of population. We can either go through this sort of a semi-feudal straightaway or we can reduce Pakistan. 492 00:52:32,220 --> 00:52:37,770 And and I think that this crisis, if anything, offers an opportunity to redo Pakistan. 493 00:52:37,890 --> 00:52:39,930 Thank you so much for your vision.