The debt trap

This refers to the article, ‘Debt will choke Pakistan’ (June 7) by Ayaz Amir. One agrees with the writer that Pakistan appears to be in hot water as far as the debt regime is concerned. The debt regime is a trap in which the relationship between creditors and debtors are based on the core-periphery relationship. The debt regime, like other regimes in the international financial system is heavily tilted in favour of creditors. The set of rules fixed in the creditor-debtor formula do not support debtors.

The international economic/political system is unevenly structured. In this situation, where a sizeable number of countries belong to the ‘Third World’, the role of non-state actors has grown in the existing regimes of international system. They represent the developed world by controlling, influencing and facilitating transnational business. Pakistan is no exception to these rules. It may not be a Heavily Indebted Poor Country (HIPCs) but has a mounting external debt reaching around $68 billion ($33 billion in 2001). Out of this amount, it owes around $12 billion to the Paris Club alone.

Prof Dr Mansoor Akbar Kundi

Peshawar