Thread by @oolabmys

.... the FCD scheme that allowed
#Pakistanis to convert illegal or undeclared income into #dollar accounts, without fear of legal retribution, started in 1991 and ended in 1998. Its demise occurred when the government froze hard currency withdrawals and repaid everyone (1/13)

the value of their deposits in Pakistani #rupees to deal with the foreign currency crisis created by sanctions imposed after Pakistan’s #nuclear tests in 1998.

Other schemes to deal with diminution in concessional flow of foreign #funds have veered from the dangerous to (2/13)

the comical. In early 1991, soon after the US invoked the sanctions under the Pressler Amendment, ‘Pakistan’s army chief and the head of its intelligence agency proposed a detailed “blueprint” for selling heroin to pay for the country’s covert #military operations.’ The (3/13)

proposal was revealed by none other than the then prime minister Nawaz #Sharif.

In an interview to the Washington Post, Sharif claimed that three months after his election as prime minister in November 1990, Gen. Aslam Beg, the then army chief of staff, and Lt Gen. (4/13)

Asad Durrani, then head of the Inter-Services #intelligence (ISI), had told him that ‘large-scale drug deals’ could help pay for the money needed by the armed forces for national security–related covert foreign operations. Sharif claimed he stopped the two generals’ (5/13)

‘blueprint’ from going into effect.78In his second stint as prime minister (1997–99), Sharif himself came up with a plan to get rid of foreign debt through voluntary contributions and donations by Pakistanis at home and abroad. He launched the Prime Minister’s National (6/13)

Debt Retirement Programme with the slogan ‘Qarz Utaro Mulk Sunwaro’ (‘Pay off the Debt, Improve the Country’) amid much nationalist chest-thumping on 27 February 1997.

The idea was that a little sacrifice by every Pakistani, especially those living and earning abroad, (7/13)

could help pay off Pakistan’s national debt that was more than $63 billion at the time.79 People were invited to follow in the footsteps of the companions of Prophet Muhammad who gave their life’s savings while preparing for one of early Islamic history’s legendary (8/13)

battles.

Many people donated their savings, including women giving away their personal jewellery, while others put money into high-profit, special bank deposits to help the national treasury. But the #gimmick did little to dent Pakistan’s massive debt. In addition to (9/13)

$32 billion owed to foreign creditors, #Pakistan owed $23 billion to domestic lenders at interest rates of 12 per cent to 18 per cent. Another $3 billion would accrue in interest or service charges on that debt by the year’s end.

The prime minister and his advisors (10/13)

refused to heed criticism that a country’s debt cannot be paid down by a donations campaign.
In the end, the new programme collected only $178.4 million, of which non-refundable donations were only $28 million. Qarz-e-Hasana—an Islamic form of lending whereby the (11/13)

borrower returns the money if he can but is forgiven if he cannot—brought in another $1.6 million while profit-bearing term deposits (on which the government would have to pay some return) raised $148.8 million.81 #Patriotic exhortations had failed to be a match for (12/13)

realistic economic considerations. Pakistan was soon back where it had started, turning to the United Arab Emirates, China, the World Bank, the #Asian Development Bank and the IMF for borrowing in hard currency.
Hussain Haqani (13/13)