Pakistan is on a knife edge — and a planned default beats a forced one

We are talking about external financing needs for Pakistan. It's $128,000,000,000 over five years. Each year, the level of debt servicing that is required in excess of $20,000,000,000 every year, These are more than the optimistic projections of reserves. You are on a knife edge here. Every year is going to be a difficult one. जैसे ही इस साल हुआ है, हर साल यही situation repeat होता रहेगा. Revenue आपका जो है total उसमें से almost 70%, 68% to be exact is just interest payments. If we really decide to bite the bullet and plan for all the eventualities and there is now so much of experience in the world to deal with default, It is much, much better to do it in an orderly way than to one day have it forced upon.

सामने ख़बतीना वज़रात. Welcome back to another episode of thought behind things. जैसा कि हम recently बहुत ज़्यादा economics को explore कर ही रहे हैं. जब मैं Pakistan में किसी से बात करता हूं तो audiences बहुत quickly partisan हो जाती हैं. वह कहती हैं कि यार यह बंदा जो है ना इस party का supporter होगा या उस party का supporter होगा. तो मैंने सोचा कि क्यों ना outside of Pakistan let's get someone neutral to actually look at the data and be able to give us a better sense of what the economy is going through. And potentially, जो जो principal question that we've been focusing on recently कि क्या Pakistan का debt sustainable है और क्या potentially उसको restructuring की ज़रूरत है? यह conversation again माज़रत ख्वाहूं में कि majority English में होगी because obviously our guest is not from Pakistan and he is based out of The US. But I think he is very well versed in हिंदी so दरमियान में Mix and match थोड़ी थोड़ी होती रहेगी. We have with us today Doctor संजय कथुरिया. I believe, I hope कि मैंने सही pronounce किया हो and he is a former lead economist at the World Bank. He's worked there for twenty seven years, extensively covered South Asia, Caribbean, Latin America. He's worked on a lot of different developing worlds so has a good sense of what works, what doesn't work. He did his master's in economics from the Delhi School of Economics and then did his M.Phil and PhD from Oxford University. Currently, I believe he is a professor at Georgetown University and a visiting professor at अशोका University. Sir, thank you so much for being part of the show.

Thank you, thank you. बहुत बहुत शुक्रिया और I'm very delighted. बहुत ख़ुश हूं आपके show में आने के लिए. देखा है मैंने. काफ़ी impressed हूं आपके show के देखकर past episodes और एक और चीज़ मैं कहना चाहता हूं by using it as a plug. We also मैंने एक हमने अपनी एक website शुरू करी है Trade Sentinel. जिसमें we monitor developments in all South Asian countries on a real time basis including Pakistan, all South Asian countries. And, of course, I am also affiliated where where I go a lot to Delhi. So I'm also affiliated with the Center for Social and Economic Progress.

ज़बरदस्त ज़बरदस्त. So people can check out the website as well. Starting the conversation मैं थोड़ा सा आपसे समझना चाहूंगा क्योंकि Pakistan में economics की बहुत ज़्यादा debate होती है. Recently ज़्यादा शुरू हुई है. People have gotten understanding कि detail में कि हो क्या रहा है. But थोड़ा सा base बनाने के लिए क्योंकि हमारे यहां कभी debt restructuring की बात होती है, कभी default की बात होती है, कभी reprofiling की बात होती है and more often than not rollover की बात होती है जिसको काफ़ी दवा celebrate भी किया जाता है. So I want to understand what are these terms? What do they mean just as a base to our conversation?

Sure. Sure. Thank you for that's a good start. So, essentially, these three things. So a rollover is the sort of, in some sense, the the weakest form of of your if you're on that process of debt sustainability basically you extend your debt on the same terms as is current, right? So you it's basically you can say it just एक पांच साल के

फिर और एक पांच साल में के आपको debt extension मिल गई basically. Can we say potentially that what we've done is we've taken a new debt to pay off an old debt and just paying off the interest on it?

Correct correct. It's evergreening. It's another way in the banking system you would call that evergreening. Right? So it's on this exactly the same terms that you have today. The good thing, of course, in rollover is that you actually get market access because sometimes countries in a difficult debt situation, they won't get even a rollover. So it's actually not not a bad thing actually to get a rollover. The next part is is reprofiling. Right? The so there's the next level where you basically increase the maturity of the existing debt. So you don't actually have to renegotiate all the different terms. You just increase the maturity and you say maybe sometimes if you're creditor generous, you might even reduce the interest rate. So that's what we would call rescheduling or reprofiling. But the real issue today, I think we should be discussing hopefully, is restructuring, which is basically a reduction of your debt, of your overall debt if you if you compute it in net present value terms then उसमें debt में काफी reduction होनी चाहिए and इसको हम haircut भी बोलते हैं popularly in the parlance in the economic parlance, debt haircut and it also reduces debt servicing

over the years. Right. अगर मैं आपसे पूछूं पाकिस्तानी context में you mentioned we should be talking about debt restructuring. Why do you believe Pakistan potentially requires? And I read your article. We're gonna put the link to the article for those who want to read down in the description. But you argued that even though there is an IMF program, the twenty fifth, I suppose, that is not going to cut it out for Pakistan. Pakistan requires to go for debt restructuring, and you gave an example of Sri Lanka that has recently gone recently gone through something very similar. Run me through why you believe in the context of Pakistan, debt restructuring may be the most viable option.

So debt restructuring essentially is is most viable because the way I see, Pakistan's the projections. Right? So normally, the IMF projections are quite optimistic, right? So we are talking about external financing needs for Pakistan, which are, you know, counting FY 'twenty four, which has recently finished, it's $128,000,000,000 over five years, right? These are the official IMF forecasts, right? The growth projections are also pretty optimistic. You know, it's 3.5, 4.5 and then five. Now it's it's I think we many would agree that these are quite quite optimistic. Each year, the level of debt servicing that is required in excess of $20,000,000,000 every year, These are more than the optimistic projections of reserves each year than the optimistic. You know, you are on a knife edge here every year. Every year is going to be a difficult one. जैसे इस साल हुआ है, हर साल यही situation repeat होता रहेगा. आपको जाना पड़ेगा, Dubai आपको जाने पड़ेगा, China आपको Washington trips लगाने हुए. So too you have to go to your creditors and well wishers to keep doing that. So it's at best it will be more of the same, at best. And I am not sure that a country wants to run its economic policy on such a knife edge.

Because आप firefighting में लगे रहेंगे तो how are you going to focus on anything in terms of growth, in terms of really, you know, building? And for a country like Pakistan, they really have to build the foundations right now. You got a huge youth population. You got to invest in education and lot of things. But right now, mostly हर government का वह यही रहता है कि, you know, किसी तरीके से loan secure कर लिया, किसी तरीके से यह कर लिया with not real with no real plan कि हमने long term में करना क्या है?

बिल्कुल. आप देखें ना revenue आपका जो है total उसमें से almost 70%, 68% to be exact is just interest payments. So, you know, so आप कहां से लाएंगे? Where is, where are you going to get the money for essential needs for an economy, for a growing economy with a with a growing country with population increasing? The needs are skyrocketing. But here you're saddled with, you know, just 30% of expenditure which is outside of outside of interest spend, 30% of your revenue.

Right. अगर मैं आपसे पूछूं, there are essentially three pathways, right? There is potentially, let's let's call it three pathways. There is one pathway which says कि if you if you keep on going as you're going, you'll go towards a a difficult, painful default. You're not gonna be able to return the money. And at some point, someone will say, you know, we're not going to rollover or we're not going to give you an additional money. The alternate is you're gonna keep on dragging yourself the way that you are currently dragging, the way that we've essentially currently dragged ourselves over the last ten, fifteen years. And then the third potential outlook is that, you know, some magic happens, and we grow out ourselves out of this this nightmare. And whether that is driven by our own variables or whether that is based on the global financial outlook. You know, maybe interest rates get lower, maybe, you know, money printing happens and and and suddenly debt does isn't worth as much. God alone knows. But if you were to if I were to ask you to project, which do you think is more likely?

You know, I wish I could be more optimistic about Pakistan in the current situation. I really wish the country well, the people of Pakistan really well. I have many very good friends there because I, you know, when I was in the world back, I used to come often to Pakistan and had very, very nice and pleasant experiences there. So I I have nothing but goodwill. Yes, in some situation we could see a surge in the IT sector. We could see Sialkot exports skyrocketing. We could we could see all that. But I'm afraid there are such systematic problems in the economy that even such if we could have one off surges like this, they're not going to cure, I'm afraid, the the systematic problems that exist in the economy. And therefore, I worry I worry for the for the people of the economy, people of Pakistan. And I I and I fear that, you know,

these problems will not go away. And the fact that yeah. Let's say you've you've reduced the the the the potential of, let's say, growing out of it. But between dragging yourself on the same versus, let's say, a hard default, which one would you think would be more likely based on the numbers? And I'll give you context for that. Pakistan, unfortunately, because of politics, because of a lot of things, we've made default and restructuring a dirty word. And so it's the biggest nightmare. Everybody is obviously it's you know whoever does it जिसके भी tenure में होगा politically बड़ा damaging है. Nobody wants to do it. They wanna push it to the next person and so यह conversation भी नहीं होती. हालांकि theoretically कोई problem नहीं है. आपका एक आप एक issue को identify कर रहे और आप कह रहे कि you know what, let's figure it out, let's create a plan, let's get out of it. And a lot of people in Pakistan also don't know that we've actually done a restructuring in in early two thousands and, you know, इतना कोई problem नहीं हुआ था. But just again to to understand the gravity of situation, do you think कि क्योंकि government का तो यही है कि वह शायद probably इसको drag out करेगी. Do you think कि drag out का ज़्यादा chance है? ठीक है, कुछ ना कुछ करके drag out होता रहेगा या do you think कि in its eventuality कहीं ना कहीं ना वह इतना बड़ा number हो जाएगा वह interest rack up कर कर के hard default ही करना पड़ेगा. अगर आप अपना एक digital personal brand बनाना चाहते हैं तो मैं अपनी digital media master class launch कर रहा हूं जहां पर मैं digital media और influencer marketing के fundamentals सिखाऊंगा in a two month long live boot camp where I will be summarizing fourteen years of my experience in the field. If you're interested, you can sign up with your email on the link down below. See you there. I think, सोहब, आपका first part आपका question था कि यह सब डरते हैं. क्यों? क्योंकि इसके effects

unpredictable हैं, right? So, yes. तो मैं कहूंगा कि trade off तो होता ही economic that is what economic policy making is about, right? As economist we say there is no free lunch. There is no such thing as a free lunch. Everything has a trade off. But you have to, so let's talk about the population. The net, what will be the net effect on the population? My submission is that if you actually don't plan for it, then the eventuality will take place but in a disorderly way. A default is much worse than a planned restructure. Right? And why do I say this? So, for example, look at the situation currently. Last over two years, right? Two, two and a half years, more than that, we have been seeing skyrocketing prices, some of the highest energy retail prices in the world, right? You have seen riots and protests in the Pakistan side of कश्मीर over very high prices, shrinking real incomes amongst everybody, right? So, the the so and this this is the current situation in the in the as is business as usual scenario. And, yes, inflation has come down recently. I saw news article today. It's come down into single digits. Very good, and I'm glad. But, you know, this is not something that is predictable. It can go up again. And I think the if you do it systematically, right, it a planned default, a planned restructuring, a planned default is much better because when you come out of it, right, because you have taken steps, you have your debt servicing will go down. Your you would be able to have more discretionary expenditure and do the things that will set you on the path of long term growth. You do you have to be so worried that you don't want to contemplate something? Well, you don't have far to look, right? Look at Sri Lanka. It defaulted in April 2022. And what has happened after the default? It has had three consecutive quarters of positive real GDP growth. It has declined inflation. It has built up its reserves, and it is, you know, the program is going. Now there are obviously there is a new government, so we'll have to see wait and watch what happens with the program. But as far as the default, the orderly default is concerned, it was managed well with the IMF support, and and the economy is looking much better for having done it.

Do you think the, in terms of श्रीलंका, was it something that the government decided, ok, you know, the numbers don't look good. Let's go for a default and start that conversation? Or, again, was it a hard default for them? We know that there was a political crisis. There was a lot happening at the time in in in Sri Lanka. And for a few months, we heard, you know, there's no paper, there's no fuel. It's it's very difficult. So I also wanna understand, first of all, with Sri Lanka, what was the real on ground situation that led to the default? Was it something that they preempted, or was it something that they had to do? And secondly, generally, in a in in, let's say, a planned sort of restructuring situation, what impact do you think happens to the ordinary, you know, पाकिस्तानी, let's say? Because my understanding is the the average majority that is lower middle income, middle income, they're mostly dealing with local produced food, local produced textile. And so it's mostly the upper middle and above that are very heavily reliant on imported stuff that have to really go through most of the pain, at least right now when most of your food is locally produced. And so I feel like the fear mongering is also, in a way, not very well warranted because it's your elite really trying to protect their own interests and trying to tell the masses it's gonna be bad when it's not really. So I just wanna understand what happens, you know, in in in such a situation.

Right. Yeah. No. Very very, very suitable, very opposite questions. So श्री लंका's situation was that the so many things you will find you know you will find similar. When as I recall the situation in श्री लंका there was an infrastructure binge that happened starting 2005 when महेंद्र राजा पक्षा came to power and that accelerated after the end of the civil war in 2009. So, debt started accumulating rapidly, especially external debt. Export growth was poor. There was an unprecedented decline in the trade to GDP ratio, which is terrible for a small economy. I think that trade to GDP ratio fell from 89% to about forty-forty 9% or so. So 40 percentage point decline in the trade because of erection of trade barriers starting in the early 2000s. Right? So the reserves started dwindling because they had to start making all these payments, external payments, and resulted in rising inflation, rationing of food, fuel and even medicines started getting rationed. Eventually, the reserves became so low that the policies makers had to make a choice between paying external creditors or do you allow your poor people or general population, but especially the poor, do you allow them to consume food? Do you allow them to get medicines and fuels for transport? And I think the policymakers decided that it was best that they spend their very scarce foreign exchange reserves on their people and not to pay off external external creditors. So they did default in April 2022. Now I think it's a very important question that you ask. The second part of your question is the the the local produce issue. Now I think Pakistan is in a much better situation compared to Sri Lanka when it comes to local sufficiency, self sufficiency. आप अपने खुद उगते हैं आपके agriculture marshals, quite a, you know, it's a wide and varied. You grow a lot of things yourself, unlike Sri Lanka. Right? Sri Lanka also grows, but it is more limited. It's very strong in horticulture, but you have a wide range of agriculture production. So, you're absolutely right that, the that in that kind of situation it is more of a, you know, elite goods scenario that will get affected rather than those that are affecting the domestic population. As long as you take care of some fundamental things like the savings of poor people, they should not vanish. Right? So you need to protect protect those. You need to guard against enough. There is a huge increase in inflation. You can guard against that in in a preemptive way. And Pakistan has a good, cash support. बेनज़ीर income support program and all of that. That that is that can be increased. You know, it is done through IT technology. So I think that can be buffered, you know, increased still further and so on. So I think if we really decide to bite the bullet and plan for all the eventualities and there is now so much of experience in the world to deal with defaults.

It is much much better to do it in an orderly way than to one day have it forced upon you. Makes sense. You mentioned the infrastructure development in Sri Lanka. You know, again, Sri Lanka and Pakistan had a similar situation where they were participants of the One Belt, One Road and got a lot of investment from China, that really increased their, sort of overall debt number. Pakistan is facing a similar situation right now, particularly in the power sector where there's, you know, $1,617,000,000,000 dollars of of Chinese, debt essentially in the power sector that they have to return. And so right now, the the average unit cost of power is almost three to four times what is, you know, the average in the region. In Bangladesh, for example, if you are getting an average unit for 17 rupees in Pakistan, you're getting that for 65 to 70. And so it almost makes it impossible for you to even grow out. Yeah. Our first scenario, right, to actually grow out of the problem. If the core energy is three to four times more expensive, it suddenly creates a, you know, everything becomes more expensive. And so there is a there is there is that problem as well where, you know, you you may have to go and talk to China for reprofiling of that debt or restructuring of that debt. I want to understand two things. I know that there is a geopolitical situation here as well. There's a lot of polarization globally. And so there's gonna be a ping pong. And we've we've seen that with the IMF program where they've, in a lot of ways, intentionally tried to poke China and said, okay. No more special economic zones. Go talk to China first, and then we'll give you the money. And so they're we're we're sort of stuck there in the middle between two giants, you know, playing their own, know, geopolitical situation. And so if we are to go towards a a a restructuring, looking at China's example, how do we ping pong between these two? Because if they're just sort of gonna drag us out, that is gonna be very painful for the local population.

Right right. Well, again, श्रीलंका has exactly this. In terms of geopolitics, they face the same thing. Right? They China is the biggest bilateral creditor in in in Sri Lanka, And it is it is managing. It is very after a lot of difficulty, it has managed to secure a deal. Although the terms of that deal with China are not clear, they have not been put out, but at least the past president stated stated that they had a deal. Now China is, of course, very difficult to deal with when it comes to debt. Right? The world knows that. Right? They're the biggest single biggest bilateral creditor in the world. And so it has, you know, maybe a trillion dollars of debt in different countries or more. And its debt dealings are not transparent. But but, you know, it is unlike other countries in South Asia. It is the single most steadfast supporter in of Pakistan. Right? So, I think Pakistan has to tell China, look, you you have to come on board. We are let's let's assume that we are going with a restructuring situation. You have to come the extra mile because you have to, you are our best supporter or our biggest supporter. Without your support, debt restructuring will not happen. Right? Nobody, the Western World, the Paris Club, the IMF will not, allow us to go in for a debt restructuring and a proper haircut, which is required for debt sustainability. So you, China, have to come on board and be as transparent as is possible. I mean, I'm caricaturing, of course. Of course. You know, this has to be put in diplomatic speak. Right. But I'm seeing in in effect, Pakistan has to really insist and plead with China to come on board in a full throated way so that this restructuring

can actually be enabled. And we've seen this happen already in श्रीलंका's case? Like, they were able to talk to both parties and were able to get their restructuring through.

There were assurances. श्रीलंका went, the IMF went through with the program based on assurances. After the program started, the actual deal was worked out after the program started. But a deal was struck with China and separately with the Paris club, right, where the the two biggest creditors and with India. India's not a formal member of the Paris club, but it adheres to our Paris club terms. And India, Japan, I believe, were co chairs of the debt roundtable for for Sri Lanka. China, श्रीलंका had to negotiate separately with China, but it did that. And, so something if श्रीलंका can do it, so can so can Pakistan. Right. I want to also understand because there is this confusion.

You know, we when when this sort of CPEC deals were coming in and a lot of the money was put into power production, you know, again, $1,617,000,000,000 dollars that has to be returned within ten years. So they've the the payments have already started. A lot of these, plants went live anywhere between 2018 to 2022. And so as soon as they started going live, they were basically, they had to be returned in within the within ten years. These are these are sort of commercial projects for जिसके लिए essentially आपने debt लिया हुआ है, right? And इस पर Pakistan में यह बड़ा एक basic चीज़ कही जाती है कि इसमें sovereign guarantee है कि यह debt निकलेगा ही निकलेगा, government ensure करेगी कि वह debt निकलेगा ही निकलेगा and the reason why there is a lot of confusion is कि the last time जब एक commercial deal के ऊपर we, you know, went away from that तो वह Rico Dick की एक mine थी बलूचिस्तान में जिसके ऊपर फिर eventually, you know, international court में चली गई दूसरी party and they had to impose fines of billions of dollars and then we had to really go through an entire cycle of renegotiation and cost us a lot. जब यह debt restructuring की बात हो रही है तो इसमें क्या मतलब I'm I'm trying to understand again I'm not an economist. एक आपका debt है जो government to government आप या या या multilateral to government आप ले रहे हैं और आप कह रहे हैं कि भाई मुझे debt चाहिए मैं इसके साथ जो भी करता हूं we'll figure that out. एक आपकी commercial deals के अंदर debt लगा हुआ है. Essentially private entities हैं जिन्होंने अपने projects को fund किया है through debt जिसमें government ने sovereign guarantee दे दी है. Can this debt also be restructured? Can that conversation also be done? Or is it like कि बस वह legal document signed है, sovereign guarantee है? तो आप पूरी ज़िंदगी इसको touch ही नहीं कर सकते.

Sir देखिए वह जो government की official debt है वह भी वह भी guaranteed debt है. I mean by definition, right? तो formal government debt है. This is de facto kind of government debt because it has a sovereign guarantee. But the if you can renegotiate government debt, there is no reason why you can't renegotiate private debt. But it will be done separately. It it could be done. Like, श्रीलंका again has been talking to the private bondholders. It has actually quite a lot of, bondholder, private bondholder debt. And they have also, I understand they are coming on board with because, you know, unless they come on board, you know, we won't get achieve the sufficient degree of haircut. Right? Now so if even if some something is called private, nobody comes and invest these large sums of money without guarantees. Right? So with this and that is why prudent fiscal calculations always include such debt in overall government debt calculation. But, yeah, I mean, the bondholders or the private debt holders have to come on the table just like the other debt holders. It can very well be done. There's no legal sort of, you're not stuck forever and now you have to, it's not loan sharks essentially after you. Because you're negotiating with the very same people who have written, whom you have signed the contract and they are willing to say ok, it is force majeure, you are we know you are in a very difficult situation. So it is a negotiation, right? It is a is a contractual renegotiation. If, of course, if they want, they can enforce the terms of the contract. But then, you know, then they won't get their money. This way, at least, they can get some part of their money back. That's what brings them to the table. They know that if they don't come to the table, they may get nothing or they may get very little. This way, they might get 60¢ on the dollar instead of 20¢ on the dollar. You know? Right. That's the calculation they make when they come to the table. Right. And on average, I mean, when you're talking about debt debt restructuring and haircuts particularly,

are we looking at, like, what do what happens? Are we looking at interest being waived off? Are we looking at actually the the the principal, you know, getting waived off? Is it dependent on the situation? How does that work?

Yeah. I think so many different ways of doing it. But, you do have to, come about at the end of the day significant reduction in interest. Usually, it does require if you're going to achieve a reduction in the present value of debt, right, it normally requires some reduction in the principal as well, right, Unless you extend the maturity so far out with very low interest that then the present value comes down very significantly. Right? So, ultimately, this is a spreadsheet calculation. You can try different permutations and combinations with a smaller reduction in principal and a much heavier reduction and extension of maturities to, you know, from, say, five years to twenty years. That brings down your value. Or you say, okay, let's just let's just be done with it. Let's just reduce the principal. Right? So you have to have an end target कि what do I want my debt to GDP to ratio to look like? Right? Right. And then I can play around with different combinations of principal and and interest.

Makes sense. I believe you mentioned in the article that you didn't just focus on the external debt. You also said, you know, whole government official looking at against HCB center. Guarantee that mean, by definition, right, the repayment this

is a lot of the banking sector. Kind of government debt because it has an environment. Lazy wages takes the capital and just let it further down. If you can renegotiate, government A lot of analysts, is an encountered reason why you can't renegotiate private environment. It will be done. Rates fall Separately, that it could done. That श्रीनाऊंगा again has been talking to the private bondholders. Have actually quite a lot of into. A bond hold of is going to devastate your banking industry. They have also will collapse the I understand they are coming on board with When you're looking at the Pakistani bankers as the local tax. You know, the We want to you

Can the restructuring be done in a way that does not, again, destroy or usher chaos in the entire system? Right.

No. That's a very important question. So the the good thing is, based on what you just said about, you know, that they buy government debt, high interest rates. So actually, the banking system is quite profitable. Right? It's highly profitable according to the IMF's last report. And therefore, I think it has some cushion there. It has some room to take a haircut. I think a deal can be worked out. Obviously, again, the government has to sit down with all different kinds of creditors. Right? And in this case, the domestic credit domestic debt is higher than external debt. So it is important. But, you know, external debt is always the the bigger problem because you can't print dollars to pay back. Right? Right. Can print, you can have inflation, you can have domestic rupee printing and all of that. Not that that's a great idea. But domestic debt is easier in many ways from a macro point of view. It is easier to handle than external debt. I believe that a deal can be worked out in श्रीलंका although its problem was mostly external debt, but it also had a domestic debt restructuring component in there. Right? One of the countries that I worked with, Jamaica many years ago, they did. Then I I believe Pakistan can look to to Jamaica. They have worked a domestic exchange program. Most of their debt actually was held by domestic banks. So they worked out a reduction in coupons, you know, interest payments and so on with the domestic banking sector without affecting its credibility. They, in fact, came out of a when I was working on Jamaica, they had in in just in in two thousand onwards, they had just recovering from a massive financial crisis and so on. But starting 2012, 2013, they went in for this domestic debt exchange with the banking system. So what I'm trying to say is, with with proper will, this kind of thing can be managed without disruption. Right? It can be again, look at the alternative. You can have disruption. Right? In the event of a default, all holders will get affected. So the counterfactual is that even the domestic banking sector will get disrupted. The poor savings account, there could be runs on banks, and all kinds of things could be happening. Alternative is do it properly. Make them sit across the table and say, okay. How much can how much haircut can you are you willing to give me? How much am I willing to give you? All of that, you know. So that's a negotiation. So they are part part of the overallity.

I think it it can be managed. Makes sense. You mentioned the IMF projections to be very optimistic, and this is something that was echoed by the, you know, one of the former governors of the State Bank as well where he said it doesn't it's mind boggling, you know, how IMF believes we might be able to get the numbers that they think we might get to get out of this. Right? So in terms of growth, in terms of tax collection, we've gotten a shortfall of tax collection this time as well, that is on the back of massive tax increases. And so what's and what, in your opinion, is the reason why IMF was not able to sort of, a, project and, b, push for a restructuring right now? Because my understanding is, I mean, it it would have made more sense for them to be rather than just saying, ok, just in a lack for a lack of better word उन्होंने ना वह निचोड़ दिया कि यार जो जो है ना उसको निचोड़ो और निचोड़कर जो निकाल सकते हो, निकाल दो. And so, you know, the government is celebrating. They're saying the numbers are coming down, the inflation is down, everything is very stable. Really, if you go on ground, joblessness is just on a massive scale. You know, buying power has just completely eroded. Economy has basically massively slowed down. And so it's not really the solution. You you haven't gotten a stable economy that is ready for growth. You've basically gotten an economy that's just not working. And so with with all of its experience and particularly its own experience with Pakistan 2524 times before, I would have thought they would be more forward with this idea that make, okay, Pakistan, it seems like you're unable to figure yourself out. Let's start talking about a restructuring and see where that takes us.

Yeah. No, I think so at the end of the day, the IMF and the World Bank are sort of they're global cooperative public sector institutions. Right? So in some sense, they are they can only suggest it is ultimately a country's decision. So they, you know, these institutions, both all the multilateral have to be politically correct. They can explain the scenarios privately. I don't I am not privy to the discussions लेकिन मुझे लगता है privately उन्होंने बताया होगा कि अगर आप ऐसे करेंगे तो ऐसा होगा. Right? Explaining upside, downsides, they would have explained. But at the end, it is very much of a country sovereign decision and for the reasons that we have already talked about, the government at least so far seems to have decided and seems to have stuck to its guns that it will not

it will not restructure. Right. Assuming that we do end up in a restructuring situation, let's say, the next couple of years, we've had a restructuring before as well. And so the fear is we'll we'll restructure, and then ten years from now, we'll be in the same place. And so I'm trying to understand, you know, we've done this in in early two thousands. We had a good run for for a few years. We had a war and terror going on as well. There's a lot of aid money coming into Pakistan. And so, you know, government, the पाक्षानी government basically, they they control the dollar. They didn't really open up the economy as they should have. They didn't really reform the economy as they should should have. And so, you know, how does if I were to ask you, can you potentially suggest based on your understanding of पाकिस्तानी economy, some reforms? Because just restructuring is just going to give you some space. Let's say if you're looking at one, two years of sustenance right now with an IMF program, maybe restructuring might give you ten years. But it's not really the solution unless tied with certain reforms that will put you on a path of long term growth. What would those and and and this is something that I've, you know, whenever I speak to a thought leader in Pakistan or a business leader or an economist, they're always talking about, you know, we we need structural changes. It's an it's unfortunate that we've I've never been able to. In 04/2030 conversations, I've never been able to identify what that structure is that needs to be changed. And so I'd like to get your input as an outsider. What potential reforms can Pakistan take followed by the restructuring?

Sure. Sure. Very important question. Before I answer that precise question, let me also see that the that I'm we should not only pick up the the श्रीलंकान examples. There is a World Bank study which I have quoted in my in my essay. There is a there there were 177 sovereign external and domestic defaults that after successful defaults, the governments had reduced the debt to GDP ratio somewhere between 24 to 34 percentage points, years after correction. So there is hope. It is there is a there is macro data that is showing. It's it's not easy but there is hope. Ok, now coming back to your very very important question. क्या Pakistan को क्या करना चाहिए, right? So, restructuring is obviously just a start of this of the program. The hope is that the crisis that restructuring represents, right? It is a there is what could be a bigger crisis than that restructuring. You defaulting on a contract. So this is a crisis situation. The hope is that crisis allows fundamental reforms. Right? That is what I very much hope that that it will and and it should, you know, the country should policymakers should sit up. So I have four or five things that I talk about a lot. I have written quite a lot about about this, about Pakistan as well. So the the first first thing is that introduce competition in the economy. Allow the, your youngsters to contribute to the economy as as as enabled in India to a lesser extent Bangladesh, which means reducing these high protection walls against importers, domestic producers. This is a bias against exporters. Basically, import tariff is nothing but what we call an anti export bias because it, the two things happen. You get a wall of tariffs, so you're comfortable produce high high profitability production for the domestic market. Secondly, your input prices go up. Right? So your export production becomes expensive. So, reducing tariffs, rationalizing tariffs, which will help to reduce this anti export bias. Another element of reducing, I'm still on that first bucket of increasing competition, leveling the playing field, which means all these state owned enterprises who get undue subsidies, favors, and they basically suck out resources from the economy, level the playing field, right, you know, put them on a path to profitability. If they can't, then you have to put them on the market. Right? India's had done that with Air India. Right? So there are many examples even, you know, in the region. Right? So that's the first bucket is introduce competition in the economy in in different ways. Second, of course, and this is very much a part of the IMF program, is increase the tax base, right, and and tax collections overall. Tax people who who are wealthy tax them, right? So high value agriculture should be taxed and so on and broaden it, broaden the tax base. Right? So that this will allow. So it cannot be simply a reduction of spending will not cut it because tax collections are 11% of GDP. That's simply unsustainable. So you have to increase the tax base. Again, it gets back to, you know, addressing those this this whole what many people have called it Pakistan, the मनीद elite or the, you know, the the the the 1% economy as your former finance minister called it. So I think it they have to come on board when it comes to increasing the tax rate. Otherwise, it will not be successful. Third part is leaving leave economic policy to economic policymakers. Right? It should not be done by others who have much less understanding of the of the economy. Right? Talking about, you know, that there is a lot of the army is entrenched in in economics. Their four g foundation, real estate, logistics and so on. I think economists understand the economy, and they should be they should be running the economy. The fourth thing is fixing public expenditure management. Very important throughout the region. We saw it in Sri Lanka. We're seeing in Pakistan this this entire debt of CPET, including now you mentioned the power sector. Was all of it done guaranteeing strong social returns, positive and strong social returns? Or was it done for as pet projects of leaders? Right? Did they have, you know, so public expenditure management, fundamental ABC of that has to be put in place so that future projects do not come like, come up like this, which have negative or or very low social or any economic rates of return. And the final thing I would say here is that fix your economics with India. Right? This is something I feel very passionate about. Again, I've written a lot about this. India is the largest, fastest growing large economy in the world. How can you afford to be shorn of economic engagement with this with this dynamic powerhouse which imports $700,000,000,000 worth of goods and almost $900,000,000,000 worth of goods and services? Right? If you just exporting to potential, Pakistan's exports would go up by 80% to India. And then not to mention that the prices, you know, all this inflation that you've had, energy prices. There was a deal almost happened from to export energy from India to Pakistan. It it fell through. But all of these things should get fixed. You have to ride on the coattails of India to improve your economy. Otherwise, it is, as I also wrote in my foreign policy piece, it is Pakistan's biggest missing market. Right? So so there there's a bunch of, some are not easy to do, but I feel you all these are fundamental to Pakistan coming back to sustainable

and inclusive growth. Makes sense. I want to understand, sort of, you know, moving a little bit away from current पाकिस्तानी crisis. I want to go back in history, particularly in 1991, with with India when they actually took took out their reforms. And in 1998, when the Asian financial crisis essentially pushed a lot of, you know, Far East Asian countries to restructure the way that they run the economy, not necessarily their debt. I want to, first of all, understand correlations between these crises that they faced and and and the crisis that Pakistan has faced. Again, while Pakistan has had its own set of problems, there was a global situation as well. There are a lot of countries that that have been going through economic crisis recently. And so if you were to compare these two situations again with India, back in the day, it was a closed off economy. You know, they did not have a lot of dollars left again for imports, and so they had to really think about how to now move forward. How would you compare both, and what were some of the reforms that really worked for India that allowed for them to never go back to IMF?

Right, right. Again, very important. So we, you as economists, we say that crisis breeds reform. Right? And if you so you so we often say use the crisis. Right? So, okay, nobody wishes a crisis upon you. But if you have it, then for economists, the opportunity because then you can get things done which you normally may not, but you would have lots of vested interest blocking fundamental reforms. But in that situation, you will have a lot of people supporting you, especially the general population. So you're the societal support for fixing, because maybe in some ways you hurt the country very badly that you have allowed yourself to get into this crisis. So at that point of time, there is much more widespread support for doing things which you otherwise may not be able to do. So both these examples you gave are very important. The 1991 and nineteen ninety seven, ninety eight Asian crisis. It is interesting that this was the last time these countries went to the IMF. India, '91. East Asian countries, '98. That was it. Right? Because what they did is they they began to crisis proof their country. Right? So one of the biggest things that happened is is reserve accumulation. Right? So what because as I said earlier, external debt is a big problem. Right? So you want to make sure that you never have the problem of external debt. So there have been East Asia, India, many countries have been accumulating insane amount of reserves. Right? So you never have to put yourself in the situation that you that you have to go back to the to the IMF. And so others say, compromise your country's sovereignty and all of these things, people often say. So what did India do? Right? So India today has close to $700,000,000,000 of of reserves. Right? It, you know, it the good thing is that often they say these were reforms imposed by the IMF and the World Bank in '91. Actually, the truth is different that India had been seeing. There were far thinking economists in India who had already been thinking about these these reforms for quite a while. Right? There was a core team out there, and they developed them. My my current colleague in CSIP, Mr. Montek Singalu earlier, he created something. He wrote up something called the M document and which was formed the basis of many of the many of the reforms. There was very broad societal consensus. Mister नारसेमा राव who is the prime minister was a consensus builder. Right? So he was able to actually paradoxically through consensus, take some hard decisions that again a tougher person perhaps may not have been able to do because he was is consensus. Right? So India righted, fixed some of its most ridiculous economic policies like, you know, the license राज, industrial licensing, which I think was the extent of it was almost unique in the world to the extent that we had to, you know, almost to, you know, to to go to the bathroom. The industrials had to take permission. I'm caricaturing, but that's what they had to take permission for everything. Right? So they got away, rid of that industrial, that licensed Raj regime. And then they started reforming the exchange rate, started and and reduces reduced tariffs dramatically from excess of 100% to very significant tariff reduction. So that was round one. And then it was followed up with generation second round of reforms with banking and, you know, more fundamental things that institutional set of What I'm trying to understand is were these reforms

extremely radical or was it that the, the pain I mean, what the was the pain because of the reforms or the pain because the situation was so bad that the pain came in and because the pain had already come in, the reforms followed? Because, again, a lot of the reforms that we look at in Pakistan right now, when it's business as usual, they're so painful, at least for the elite and those who are connected to the elite, that, you know, it's something that when you're looking at it from a political economy standpoint, it almost becomes impossible that that's gonna happen. Right? Because it's not something that can be easily be done without ruffling a lot of a lot of feathers. And so I'm trying to understand what these sort of radical reforms where they came in and they said, listen, we have to do it. Doesn't matter what that's gonna do politically. Doesn't matter if people agitate. We have to do what we have to do.

Yeah. So the, you know, so the interesting, so so remember, we are not talking of a crisis has already happened. Right? You have to sell gold, put your gold in the Bank of England, you know, physically fly the gold to the to the Bank of England. That was the erosion of credibility of of the of the Indian monetary system. In that, you have to do that. So the fiscal deficit had skyrocketed. So the pain was already there. It was reflected, you know, in the economy, in the macro economy. So the pain was already there. So from the pain and it hurt Indian, you know, their economic self belief, the fact that, you know, you were supposed to be the largest democratic and, you know, country in the world with a strong economy. Because in the mid eighties onwards, the economy had started to do better. They had some gradual, you know, licensing or deregulation had started in a in a small way. So it hurt India to the quick, right, and gave that political space actually for the reforms, right? And a a consensus builder then managed to pull that through with very wide consensus from all strands of society. I think the the difference in Pakistan is Pakistan has felt this pain so many times. Right? And it is yet, no sir, 24 time, 25 times to to the IMF. It has not been able to use this the opportunity of the crises because I think of the stranglehold of, as you said, the stranglehold of the current or the people who currently either manage or influence the economy. It influence the policymakers, and it is not allowing the classic crisis dry reform scenario to take place. It would be so easy to actually, in some sense, it's a dream for an economist to to to think economic reforms from a from a because there is much less constraint in a crisis situation. Right? Because political space is much more. So I think if the crisis, if the current crisis is to be properly utilized, then I think this has to be a more, let's say, inclusive, more consultative reform process, co opting wide swaths of the country, going outside the elite, right, going to the provinces and saying, you know, consulting and then preparing a blueprint for reforms, which takes into account what people need, right, and how did how then you get they are not economists, but they can tell you what they need. So then the economist can figure out what is needed to get to to those kinds of outcomes. So elite capture has to go away. Otherwise, then it it won't, they won't allow. Elite will not allow, the reforms that are needed from a long term sustainability

perspective. Makes sense. When I look at elite capture, this is not a uniquely Pakistan problem. I mean, Asia, by and large, of the countries, you know, when I've been studying a lot of these countries, I saw, again, very sort of slow growth, a lot of these problems, a lot of rent seeking, a lot of corruption. And then, you know, you you then see a crisis and then a hockey stick growth where you the countries essentially begin to reform themselves. And so if if I were to just look at it in a very simple lens, a country essentially like a business can keep on hacking the economy, can keep that control. But if it's inefficient, at some point in time, nature is going to creatively destruct the economy and going to start to focus towards efficiency. Right? In Pakistan's case, we had that opportunity in the fifties, in the seventies, in the late nineties as well. But every single time, you know, there was a every time the the the the crisis emerged in terms of the politics because of the economy, you had the military takeover, and more often than not, Americans plugging in a lot of money for one reason or the other. Initially development, eventually in a couple of wars and military aid. And so you were able to get a semblance of prosperity that really confused the audience where they don't, you know, for a lot of people in India, like, for example, I'm sure the crisis must have existed multiple times in the past. And then there was this one point where the crisis were now so big that it was almost impossible to sustain it or to kick the can down the road because the can has become so heavy. And so when I was looking at a lot of these countries, Indonesia is a very similar example, you know, very similar to Pakistan. You had a military regime, military had a lot of control over the economy. They were there for thirty years. There was a lot of rent seeking, big population. Again, there was this one moment that where it almost became impossible. So a lot of times in Pakistan, people are like, oh, you know, we're uniquely positioned where our elite are special, and they just, you know, they they wanna make sure that we don't grow. When it's actual actually human nature, if you have a good thing going and it's complicated to change it, you're not gonna do it. Right? And so we've seen that across the region. What I wanna understand is, is there a scale beyond which nature doesn't allow? And and my thesis for Pakistan is, and actually India was around $303,150,000,000,000 dollar economy. Indonesia was around a similar number. Turkey was around a similar number when you actually see the hockey stick. Right? And so there is a certain point where the economy becomes so large that the hacks that governments historically use where they plug in some money from, you know, a foreign country or they control the dollar or they show you a semblance of prosperity. I feel like for for a country like Pakistan, we've now begun to pass that phase where, like you mentioned early early on, to sustain it in a way that the population can feel like, oh, it's all business as usual. Things are working fine. It's increasingly impossible, and it seems more likely that a default will be an inevitability, followed by a lot of political and social instability. Yeah

yeah yeah. No, I think so this is a, this is the fund, this is the fundamental issue. Right? So, the elite capture is there. It takes manifests itself in different ways. Perhaps Pakistan is unique in the in the in terms of the number of times it's had crises and therefore the number of times it had it's had to go to the IMF. I think श्रीलंका has been 17 times, so they've had their fair share of crises. And I would say in the region, the closest in terms of elite capture that I would say to Pakistan, but different orders. One is श्रीलाका and one is बांग्लादेश. Right? They've had different degrees of elite capture as well. But certainly in बांग्लादेश, they managed to combine that with some strong, good, common sense economics. Right? So to enable the country to grow. And I remember that I've when I presented a बांग्लादेश story to, you know, in Pakistan, there were lots of people who sat up and said, it's amazing how, you know, they've they've exceeded now Pakistanian exports. They are a bigger economy, and I'm sure there are many people who who still can't get over that, can't believe that, you know, Bangladesh is a richer country today, both per capita and despite being a much smaller country, its GDP is now larger than than Pakistan's. Right? So the, I think the economies in Indonesia, if you gave an example, they they have managed to use their their bad periods, right? In a way, yes, I'm not saying there is no elite capture. There is certainly it exists in India, Indonesia, you know, there are but it's in a different orders of magnitude. Right? Here, I think in Pakistan, it is so deeply entrenched. And there is a also there is an alliance, right, between different sections of elites who are all powerful. Therefore, it does not allow sort of the groundswell or the public opinion to sway sway that. And so perhaps public opinion doesn't get reflected and maybe it is not even canvassed in economic policy making and it doesn't get its fair hearing. And as you said, you know, it is easy because people's memory are very short. Every time there is a crisis, you get some benefactor comes and bails you out, including the IMF. Then the The US comes in, China comes in. And then for a while, you have a period of calm for a while, for a while till the next till the next. So people are confused. You tell them a story, tell them a spin and they say, you know, we are now on on a good track. So चलो भैया, you know, let's our work. हम अपना काम करते हैं. उनको अपना काम करने दो हम अपना काम करते हैं. But we know this is confusing because it's a very short term view. As I said, it is not being run on the basis of strong economic fundamentals. The economy is very much tilted towards a very narrow section of and all those reforms that I pointed out. There are different vested interests in different against each of those different kinds of reforms. How how do you get that is is the million dollar question. Bangladesh has a has an amazing example. Right? The Bangladesh of August, has an amaze amazing example for for the rest of the world, and especially for us in South Asia and for Pakistan. It was it is a people a student revolution, a people's revolution. And there is now, there is hope that all the governance issues, many of those which mimic Pakistan, especially the elite capture part, though not as fundamental as deep seated as in Pakistan, but there is certainly elite capture. And they want to get rid of that completely, that kind of elite capture in Bangladesh. So, you know, so so if you're going down to the root causes, one is to say that we don't there is elite capture and economic policy making. How do you address that? That is political economy issue. Right? So that's beyond my Of course. I understand. I understand. Piece. But I certainly can, I think Bangladesh is a is a fantastic example of of of grassroots revolution?

Makes sense. Think one of the reasons why Of course. I think one of the reasons why I had that question, lot of people in Pakistan have that question, is because people are tired to, like, tired of waiting for that smart leader or those smart leaders who will sit down together and be able to bring that reforms. And so they're trying to project whether through chaos theory beyond a human being coming in and solving this, can nature at bring us to a point where concessions become inevitable by the elite rather than, you know, someone taking out and being the bigger man or bigger person. I wanna wrap this up with at the one hour, two minute mark. But I I I wanna understand India's 91 example now increasingly is quoted a lot in Pakistan. And, you know, it's it's considered as, you know, as as as this, you know, मनमोहन सिंह साहब came in and he brought these reforms and that put India on a trajectory of growth. And today, it's all about India. You know, the media and the news is all about India. It's the next, rising power. And there's a lot, there's definitely a lot to learn. But, alternatively, while for for a country like Pakistan that's really building its framework. Right now for a lot of young people and a lot of viewers on this channel as well, they're really beginning to build that framework for the first time of what the structure should be and what the narrative should be when it comes to really arguing about or debating about the economic policy. I would definitely look at India in '92 and then China in '92 and then see that growth and then identify that there is that growth has been not very equitable. Right? And so, you've seen, you've seen massive amount of wealth, a wedding done with $300,000,000 spent on that. And then you see a a lot of poverty there as well. And I don't want to go into a lot of detail in terms of grassroot individual factors, but I want to get a sense. You know, what we understand is again, and this is not a very educated, understanding of India's economy. You know, it was a it was a socialist sort of closed off economy, and then they embraced capitalism and free markets and and and neoliberal reforms, and, you know, they've grown so much. But in a lot of ways, as an outsider, it also seems like, you know, a lot of that capitalism and that neoliberal reforms created a or or or radically increased inequality. And for me, that would be a very big question mark of whether we should be looking at the same similar reforms, as as as India just to get the macro number out there, but with the not a lot of people or a lot of our, poor population get out of poverty, if that makes sense.

Right right. No, I think it's a very important question. But I would I would, what I would say a few things. One is that, what worry less about the inequality than about absolute poverty. Right? So, you know, you have if the economy is growing, right, then no matter what the level of it, as long as the poor are getting, you know, an increase in their income, in their real income, you know, after adjusting for inflation,

then that in that sense, that's a better scenario than the previous one. Right. So you're basically saying if the poorest of the poor has the basics sorted out and their education is sorted out, food, housing is sorted out. It doesn't really matter what the richest of your rich is doing. Yeah. I mean, it matters in some sense, in a moral sense. It matters in a way that

that it it at at some point, it has a demonstration effect, and it matters because it leads to cronyism.

Right? Right. And they start to And that's probably my so cronyism is the reason why I ask this question. How do you how do you ensure that while you're doing free market, you don't end up in a in a crony situation?

Yeah. So it's a it's a tough thing to manage. The I would say that you the the you you manage cronyism. The best way to do it is through competition. You know, let let lose competition. India is one of the most dynamic venture capital markets in the world. Right? Then a number of new companies, unicorns that are coming up. The fastest growing companies now in India are the medium and small scale. What what somebody, सौरव मुका जी, I think, has called the challengers. Right. तो so they are the fastest growing segments of India's economy today. Right? So I would say that introduce competition both import and domestic. Right? India's has also reversed. It has started increasing tariffs in a very wide range of sectors. That's not a good thing. Right? So you don't want to learn everything from India. Right? But there are many fundamentals which it is a very dynamic environment for the private sector. More and more entrepreneurs, women entrepreneurs, private young people have come on to the market. VC market, unicorns, it's very, very exciting. Get growth, get growth. Ok? And a very important thing, I think India's most fundamental challenge for the next decade is creating good quality employment. Right? Because we are having eight or 10,000,000 people coming onto the labor force every year, guaranteeing or giving good employment, not just disguised underemployment in agriculture or in peri urban areas. That is the biggest challenge because India's enterprises are more service oriented, capital intensive. We're not creating enough labor intensive jobs. That's a whole different seminar. It's a whole different topic how to get more good labor intensive jobs. Right? But getting that is important and creating the safety net, which India is doing actually brilliantly because of its mastery of the digital infrastructure. It is actually doing, the safety net part is doing very well. Some people would say doing it too well. It's what called new welfareism. It has been done. Makes sense.

I wanna wrap this up. I just wanna ask you one last question. It's it's a macro question, but on a on a short enough timeline. Again, we saw the Asian financial crisis. It's the global financial system is so well entrenched that a spark in The US tends to create reactions all across the world. We saw that in o eight as well. And so we saw that in '22, with the inflation rising and the Fed interest rate increasing, a lot of stress was put into a lot of these developing nations who who had bad books. We're also now seeing that there's a reversal happening where China, you know, introduced a lot of liquidity very recently into the markets. US is aggressively reducing interest rates. And so we're potentially going towards a, again, a a a money printing, money in circulation increase, cost of money reducing cycle. And so for for a lot of developing or underdeveloped countries, they don't really know what's going on. And, you know, again, if you look at The Middle East, if you look at Europe, they're very well entrenched. They they they project accordingly. They deal accordingly. For a lot of countries like Pakistan, which is so focused inwards, we don't really understand how macro, international, you know, financial systems impact us. And so I wanna get a sense of, you know, we saw the twenty two, twenty three, twenty four, cycle where the stress came in and, things were extremely difficult. Do you think now with a potential reversal and and and easing up of the cost of capital and and and more money entering the market, there is going to be some sort of space for countries like Pakistan to breathe a little.

The short answer is no. I think debt is there are now the world has accepted more spending. There are elevated levels of debt that are, you know, the post COVID, in a sense, almost a consensus is that significantly higher levels of debt have become the norm, for for the world. Unfortunately, this can be handled better by the nonpoor countries. Right? So emerging markets and the developed world, I think they are, they have better management, best better physical space to handle this. And I think there are so many new needs in the world, right? So one is to prepare for pandemics. That's why better educate your people, health and education. Climate change. They require huge investments. Right? The challenges of AI. Right? There's climate change. Right? Industrial policy. Can you mimic the trillions that, you know, that US is spending on industrial policy? No. You cannot, and you should not even go there. Right? Right. But that's where the so I think emerging, the poor countries, the least developed and poor countries, have a very difficult task ahead of them. And, therefore, it requires more than ever a reversion to fundamentals and to create a fiscal space for these all these eventualities. Not to mention taking care of current problems, right, all these current problems that we talked about. So so I think it makes looking at the forward scenario, I think it makes it more imperative than ever to go back to fundamentals and and including restructure debt, pay attention to to, you know, economics one on one, all these things that we talked about. Otherwise, it's going to be a tough tough future with, you know, with the whole world spending more and, challenges mounting globally.

Makes sense. Doctor Sanjay, I'm gonna wrap this up. I'm gonna ask you one last question. You are an Asian at the end of the day even if you live in The US and so we're hearing a lot about this being Asia century. Notwithstanding the political crisis here and there, I hope they get sorted out soon enough. But in a long enough timeline, let's say 2050, 2075, how do you see Asia? What's the image of Asia that you get, let's say, thirty years from now? Does it look similar, or does it look radically different, you know, once a lot of these countries have stuff sorted out and are able to, usher in potentially, hopefully, an age of collaboration rather than competition?

Great. I'm very much an Asian. In fact, a South Asian. मेरी माता जी राहुल प्रिंदी में पैदावनी. My father was from डेरा इस्माल खान. Really? देवदस्त. And I lived for three years in Bangladesh. And then the World Bank, this was my my most passionate, my most fruitful and fun period of my time at the World Bank was working on South Asia. So very much a South Asian without a hyphen, as I say. I very much look for a one South Asia non hyphenated. And I do believe the economic forces will are inexorably going back to what they were, you know, a few 100 years ago. Right? It is going back to Asia, coming back to the two giants to India and China. But also not just them. It's Japan and South Korea and so many others. Right? Indonesia. So I think it is going to be an ancient century. If it was a collaborative one, it would be an, it would be a better for all people in the world without geoeconomic fragmentation. Hopefully, that is the only part that it doesn't spill over into other kinds of conflict that we confine ourselves to economic conflict. Hopefully, even this people see that it is not productive and it is not useful for anybody. Right? These US China wars, trade wars, which are, you know, creating a geoeconomic fragmented world, which is not good for for the people of the world and for Asia. But, yes, I think the rise of Asia, it has already happened. But continued rise and greater and greater share of world GDP, greater and greater share of incremental world GDP. I think nothing can stop that.

Makes sense, sir. Thank you so much for taking the time out and and sharing all that insight. You know, I'm I'm मेरे बहुत सारे सवाल answer हुए हैं. I hope बाकी लोगों के भी हुए होंगे. Thank you so much.

Thank you और मुझे बुलाने के लिए बहुत बहुत शुक्रिया.

And for all of you guys, thank you so much for watching. अगर आपके episode पसंद आई है आप दोस्तों से ज़्यादा ज़रूर share करिएगा. Let me know in the comment section below what are your thoughts on Pakistan's economy. I know news के ऊपर easing की ख़बर आना शुरू हो गई है, finally stability आ गई है, you know, interest rate भी कम हो गया है, inflation भी कम हो गई है. A lot of the the finance capitalist bros are gonna tell you कि भाई अब तो जो है ना pump cycle आने वाला है लेकिन really fundamentally what do you think about the पाकिस्तानी economy and particularly when it comes to debt sustainability, what are your thoughts? Do you think कि, you know, restructuring होनी चाहिए? Does it make sense? I would love to read your comments in the comment section below. But, anyways, this was सैयदिम उज़ामिल हसन सैदी. You're watching ThoughtBank things. Thank you so much for watching, and I'll see you in the next one.