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Pakistan suffers $68 billion financial losses in war on terror
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276
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Visits
276
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Visits
276
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June 10, 2011
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Pakistan has suffered the colossal financial losses of more than $68 billion or Rs 5036.8 billion in the so called war on terror since 2001 while human loss is around 40,000, reveals the Economic Survey report issued by the government of Pakistan.
After 9/11 Pakistan assumed the role of a frontline state in the War against terror. The onset of the war disrupted Pakistan’s normal trading activities, as the cost of trading increased substantially because of higher insurance cover. The war spread like a contagion into rural and urban areas of Pakistan that has so far, cost the country more than 35,000 citizens, 3500 security personnel, destruction of infrastructure, internal migration of millions of people from parts of northwestern Pakistan, erosions of investment climate, nose diving of production and growing unemployment and above all brought economic activity to a virtual standstill in many part of the country, says Economic Survey 2010-11.
At the start of the war, the cost of it to Pakistan was estimated at $ 2.669 billion in fiscal year 2001-02. The cost jumped to $3.98 billion or Rs 238.6 billion, 17 percent, by year 2005-6. The financial cost then surged to $13.56 billion or Rs 1136.4 billion, 47.7 percent by fiscal year 2009-10. The amount is continuously rising and has gone up to $17.83 billion or Rs 1528 billion in the eight months of current fiscal year. The financial losses Pakistan has incurred during the current month is equivalent to the country’s foreign exchange reserves. The cost has increased substantially during the tenure of current government of prime ministerYousufRazaGilani.
Initially the it was assumed that the war in Afghanistan that begun on October 7, 2001 will end swiftly by December 2001, normalcy will resume from January 2002, the Taliban government will be ousted and some low intensity fight will continue but life in Pakistan will remain normal and the additional increase in freight cargo and war risk premium will be removed. But these assumptions were not materialized and instead the war on terror continued to gain momentum and became more precarious for the entire region in general and Pakistan in particular as it shifted to its settled areas to disrupt all kind of investment and economic activity. Pakistan became more insecure in its efforts to make the world a safer place to live, the survey report says.
Due to the rising terrorism activities in Pakistan the economic growth slowed and demands for imports reduced with consequential decline in tax collection and inflows of foreign investment were adversely affected, accentuated by the travel bans issued by western governments to its entrepreneurs. The friends of Pakistan forum also failed to provide financial assistance as against its promises.
The war not only caused serious damage to the economy, but also to the social fabrics of Pakistan. Obviously, continuity of War will continue to bleed the economy and society of Pakistan. The country continued to pay a heavy price in terms of both the economic and security terms. A large portion of its resources, both men and material are being consumed by this war for the last several years.
Pakistan is also the victim of American dual standards as USA demands more actions against militants but Washington’s travel ban on US citizens is multiplying Pakistan’s economic woes. The ban has affected exports, prevented the inflows of foreign investment, affected the pace of privatization program, slowed the overall economic activity, reduced import demand, reduced tax collection, expenditure over-run on additional security spending, domestic tourism industry suffered badly, hundreds of thousands of jobs could have been created had economic activity not slowed as well as thousands of jobs were lost because of the destruction of domestic and foreign tourism industry, destruction of physical infrastructure.
According to the Survey report Pakistan’s investment to GDP ratio has nosedived from 22.5 percent in 2006-07 to 13.4 percent in 2010-11 with serious consequences for job creating ability of the economy. The Finance Minister has announced Rs 850 billion deficit budget for the upcoming fiscal year 2011-12 with huge allocations for public sector development. The allocation for PSDP is Rs730 billion which if fully utilized would create substantial job opportunities for the young Pakistanis which due to widespread corruption are joining militants’ rank. The security situation will be the key determinant of the future flow of the investment. Pakistan economy needs an early end to this war otherwise the worst will follow.
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