Where it all began

NEARLY a quarter century ago, Pakistan stood at a juncture from which, it seems, the country has not emerged. The years in between now seem, in hindsight, little more than a brief detour that has brought us back to the same place. In the year 2000, when the regime of Gen Musharraf began its term, Pakistan’s relationship with its creditors was in tatters. The economy was on its knees, foreign exchange reserves depleted to the point where foreign currency accounts were frozen and import restrictions tightened to levels not seen since the 1960s, strong fears of default plagued the economy and multiple exchange rates were in effect. All creditors at the time — multilateral as well as private — had been severely alienated. An IMF programme signed in 1997 had hit the rocks following the nuclear detonations and the imposition of sanctions. Review after review failed from May 1998 onwards, until a year later the programme was declared off track and terminated. The price of Pakistani bonds crashed to near-default levels, its credit rating downgraded to deep junk territory.