ISLAMABAD: Aid money can only help mitigate the effects of disasters like the recent floods in the short run. In the long run, however, preventing such catastrophes from happening and mitigating their effects is not possible without building the indigenous sources to finance mega projects like dams.
Shamraiz Bhatti, a professor of economics at the University of Sahiwal, told WealthPK that Pakistan has a habit of relying on aid money for development and growth. “Pakistan relies exclusively on borrowed money to resolve its most pressing issues.”
He said that in economic parlance there is a term ‘debt-driven growth’, but it is not sustainable in the long run since it puts a lot of burden on state’s finances to service the maturing debts.
Professor Bhatti was responding to a question by WealthPK on the response of local and international organisations to the urgent need of funds to help the flood victims. He said that although Pakistan had been somewhat successful in mobilising international response to the floods, and that was a good thing given the state of the national economy, it was not a dependable way to ensure risk mitigation.
“In the long run, equitable development is not possible without building the state’s capacity to have indigenous resources to respond to such disasters. If there is no state capacity to respond to such disasters, more debt is acquired, piling up on the existing external liabilities,” he said.
Professor Bhatti underscored that policymakers’ attitudes towards aid needed to change. “We have been dependent on aid for so long now that we do not consider it an anomaly in running our economy. Aid is helpful but only to the extent that it allows us to make up for lost resources in a time of natural or man-made catastrophe.”
“In the long run, state capacity has to be built to put in place flood-prevention infrastructure like big dams. According to the principles set forth by the United Nations, states must build their own capacities to have enough indigenous revenue sources, so that raw materials and manpower can be hired from abroad to build water reservoirs,” he said.
He said that Pakistani state would have to shun the mentality that growth is possible only through foreign assistance because such a practice has caused more harm to the national economy than any good.
-INP
