In what seems to be yet another bad news for Pakistan, the country’s Paper Association has issued a warning that students won’t have access to books in the next academic year beginning in August 2022 because of the country’s paper shortage. The paper crisis for Pakistan has come in the midst of a financially messy situation. Sky-rocketing debts from international agencies and next-door countries like China are big reasons for worry.
While the worldwide inflation is said to be the reason for the paper crisis, the current paper crisis in Pakistan is partly a result of bad government policies and the monopoly of the local paper industries. The country’s top economist, Dr. Qaiser Bengali, addressed a joint press conference along with representatives of the All Pakistan Paper Merchant Association, Pakistan Association of Printing Graphic Art Industry (PAPGAI), and other publication organisations. During the press conference, a warning was issued that students will not have access to books in the upcoming school year beginning in August owing to the paper shortage.
Pakistan’s local media outlet said the country is facing a severe paper crisis, with surging paper prices and daily price increases making it impossible for publishers to set book prices. It will stop the textbook boards of Sindh, Punjab, and Khyber Pakhtunkhwa from printing textbooks. As the nation remains stuck in a loop of borrowing loans to pay back the previous loans, Pakistani columnists are voicing concerns about the “incompetent and failed rulers” of the nation and asking them how they plan to address the economic issues.
China intimidating Pakistan on loan pay-back
China has struck a tough deal with Pakistan regarding the repayment of its loans and other investments. Pakistan paid approximately 150 million USD as an interest to China, in the financial year 2021-2022, for utilising a Chinese trade finance facility worth 4.5 billion USD. The country also paid USD 120 million in interest on loans totalling USD 3 billion for the 2019–2020 fiscal year. China has been stringent in matters of financial recovery from Pakistan and has displayed no leniency. Consider Pakistan’s energy sector, where Chinese investors have repeatedly urged that problems with current project sponsors must be resolved to entice new investment.
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Due to Pakistan’s enormous energy industry circular debt of over USD14 billion, some Chinese projects in Pakistan are having trouble obtaining insurance for their loans in China. Although China has significant involvement in Pakistan’s debt issue, the country’s economy has been mismanaged by successive governments, which has resulted in the current deadlock. A significant contributor to the economic downturn is the large number of loans obtained from China, Saudi Arabia, and Qatar, as well as 13 loans from the International Monetary Fund (IMF) over a 30-year period (with the majority of loan programmes being cancelled midway for failure to meet loan conditions).
Pakistan heading towards a Sri Lankan disaster?
China has dealt with Pakistan’s repeated demands for assistance. The 2019 USD 6 billion IMF loan is also on hold. But Pakistan does not hesitate to present itself as a debt addict. This approach has not worked and is simply causing Pakistan to acquire more debt. Sri Lanka suffered the effects of poor economic policies and large debt loads, so Pakistan must closely monitor events there. There’s a strong chance that the country could face a similar situation. In March of this year, Sri Lanka’s economic collapse began in a similar fashion when the country faced a paper shortage. Due to a lack of printing paper and unavailable funds to pay for imports, Sri Lanka postponed exams for millions of students. Sri Lanka ran out of food, fuel, and medicine due to a devastating economic crisis brought on by a lack of foreign exchange reserves to pay for necessary imports.
Colombo had a $6.9 billion debt that needed to be paid off, but much like Pakistan, it had only $2.3 billion in foreign currency reserves which was not enough. China played a big role in Sri Lanka’s disastrous fall, as it gave away big loans to the country. Sri Lanka was slowly made totally dependent on external funds and loans. But when the real crisis arrived in Sri Lanka, China backed out. China, one of Sri Lanka’s biggest creditors, was contacted earlier this year for assistance in extending debt payments, but Beijing did not give any official response to the request.