Tracing the roots of the crisis

We, as a nation, produce much less than we consume. In the predominantly consumption-led economic growth, the domestic demand is met by imports that ballooned to $80 billion last fiscal year. And imports are not a component part of the Gross Domestic Product. Workers’ remittances finance domestic consumption and are not channelled into productive activities. The brain drain deprives us of the skills and professionals needed to produce a value-added and diversified range of goods in demand in a transforming and fragmented international market. And our export earnings and foreign remittances sent by overseas compatriots are not enough to foot the import bill. Debt-financed imports have become unsustainable. We spend more than we earn. We are heavily in debt because our domestic savings and investment rates are very low. We suffer from perpetual unmanageable fiscal deficits and an adverse balance of payments. The government’s current expenditures perpetually exceed its revenues, continuously slashing development spending.