The shackles of foreign aid — by Munir Attaullah

I am a practical sort of fellow, who thinks of most matters largely in practical terms. What self-sufficiency and self-reliance buy is, essentially, a certain freedom of action

There has been a lot of talk recently, in the context of the American aid package, both by opposition politicians and media personalities, about how easily we can — and should — do without foreign aid. If only we, as a nation, would blah blah blah...goes the pious refrain.

Listening to these grand and simplistic visions, my initial and uneducated guess was that most such talk was just airy-fairy, pie-in-the sky, wishful thinking. Was I right or wrong? That question deserved a serious answer. So let me today, and tomorrow, share with readers the results of my own perfunctory research in what was a personal quest for understanding the hard realities of our situation. And, perforce, given the subject, the search for that answer was conducted largely in numerical, not hypothetical, terms.

But first a couple of caveats are in order.

I am not a trained economist or an accountant, so it is possible my analysis may be error prone. This possibility does not deter me. For, it could be a blessing in disguise to try and understand matters from a simple and commonsense perspective, much as the average rational reader might himself set about doing so.

Of course, the reader (and I) would prefer a professional opinion on this matter, in easy to understand language. So, should this and the following column spur someone more competent to undertake that task, I will be more than gratified. I am pretty sure it has been done in the past but it is certainly worth doing again now. It will make an important contribution to sorely needed public understanding of a complex matter. Meanwhile, I must do the best I can, and hope to be corrected if I make a mistake.

Secondly, it should be clear that I do not disagree with those expressed lofty ideals of self-sufficiency and self-reliance. That is a status devoutly to be wished for, and worth striving for (even if this latter injunction is in apparent conflict with that cherished and much touted guiding principle of my own life, the ‘principle of least action’). And, praying for, should that be considered the key to this magical kingdom. (But on this particular matter, I cannot help but think what Shakespeare had Caesar say, and then twist it around so that it reads: “If prayers could move me, I would pray to move”).

But let me also be clear that my concurrence with those ideals is not based on considerations of national izzat or ghairat. I am a practical sort of fellow, who thinks of most matters largely in practical terms. What self-sufficiency and self-reliance buy is, essentially, a certain freedom of action. And all these three notions will always be both limited and have a large relative content because there is no such thing as complete self-sufficiency, total self-reliance, and absolute freedom. But to think of these desirables as tonic supplements for further boosting already inflated egos is a mental trap we should avoid.

A personal confession here, as a prelude, might well serve as a clarifying analogy for the later discussion of national attitudes. For example, there is nothing better I would like for myself from the world at large than a modest, no-strings attached, annual stipend for life of, say, $1 million (US, not Hong Kong). Okay, if forced, in return, I will even accept the odd condition or two, such as never again watching a Dr D&G programme, giving up golf, and even writing a column every week in support of IK. No sweat. You get what I mean.

But would I do it for Hong Kong dollars? I just — barely — might, though in such a case I would argue long and hard for at least relieving me of the burden of that IK column.

What is more, should someone be foolish enough to deposit a hundred million US, in advance, (Okay, even fifty) in my secret Cayman Islands account, you might even get me, additionally, to denounce the Punjab Governor and sing endless hymns of praise of the unparalleled intellectual prowess of one Zaid Hamid (he of Brasstacks infamy).

But what if the promised stipend was a lousy million Italian Lire annually? Come on, man! What do you take me for? Am I not known as a person of high asooli muaqifs? Do you really think I can be bought?

As the conclusion to all variations of this oft told parable goes, that last question has already been answered; the only thing left to discuss is the price. Yes, yes, I know: how dare I think our supremely moral and high minded media personalities would ever stoop to even contemplate such grubby and immoral conduct? The only excuse I can think of is that my concern is with ordinary mortals, not supra-humans.

Incidentally, from the above discussion one can easily deduce Attaullah’s First Law of Ego Fragility: considerations of izzat and ghairat are inversely proportional to the absolute quantum of the lifafa offered. Expressed mathematically, (I+G) = K/L, where those nebulous entities izzat (I), and ghairat (G), are quantified in standard units of blood pressure; L the quantum of recompense is measured in gold dinarii; and K, the constant of proportionality in this case, a pure number, uniquely associated with the particular country or person in question (as defined by the UN Human Development Index).

I add two clarifications to the formula for the sake of the more inquisitive reader. I have specified gold denarii rather than ounces of gold to pander to our Islamic sensitivities, much as we deal in mark-up rather than interest. And, though the formula would suggest that theoretically there is no upper limit to (I+G), in real life the limit is reached when the blood pressure causes an apoplectic fit or a stroke.

With my usual aside over (would this column be worth reading — or writing — without it?) let us return to the business of the day. And what could be a better starting point than extracting the relevant figures (all in billions of rupees) from the budget of the federal government for the current year? So, here is the bottom line (details to be discussed tomorrow):

(A) Budgeted Expenditure: (i) current expenditure, 1700 billion; (ii) development expenditure, 563 billion. Total: 2263 billion.

(B) Budgeted Receipts: the accounting here is somewhat complicated but, in essence, the total net funds available to the federal government from all internal resources is estimated at some 1609 billion.

As you can see, this is a sorry state of affairs. Net total internal generation of funds is less than even current expenditure. And, overall, there is a deep hole of some 654 billion (a third of the budget). To cover this shortfall, the government proposes to borrow 144 billion locally, and is relying on external funding (not to be confused with our remittances; they are irrelevant in this context) of 510 billion.

Also, please note that these calculations exclude the other requirements of our army (running into hundreds of billions) that are currently satisfied by other means and direct external military aid.

So, how are we going to plug such a huge hole? By sacking most ministers, eliminating corruption, and reducing government expenditure on bulletproof cars, foreign trips, and lavish entertainment, etc.?

Let us be serious. Desirable though all these belt tightening actions may be, they will, even cumulatively, hardly dilute the deep red colour of the ink in which we are barely floating. Is it really then necessary for me to say we need all the foreign assistance we can get — and then some — for all its misallocation, wastage, and other well documented ill-effects?

What is even more painful, there seems little realistic hope in the short-term for us to escape from this debt trap. Long-term, there is only one real and practical option: to grow the economy at a healthy and sustained pace for a decade or so. This matter, and other important details I have glossed over today, I will take up tomorrow.

The writer is a businessman. A selection of his columns is now available in book form. Visit munirattaullah.com